Download or read book Promoting Innovation: The Differential Impact of R&D Subsidies written by Reda Cherif and published by International Monetary Fund. This book was released on 2022-09-23 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries.