The Regional Dimension of the Distribution and Effects of Public Incentives Directed towards Innovation of Firms

Abstract

This study is based on the recent vision that the innovative activity is a territorial phenomenon which is enhanced by the cooperation between actors and local infrastructures. The aim of this study is to determine whether the specific economic and institutional conditions of a region have an influence on the results of a national policy intended to support entrepreneurial innovation. The analysis is directed towards comparing the effect of this policy between firms located in Madrid, Catalonia and the Basque country, regions which concentrate around 70% of Spain’s innovative activity. The type of analysis undertaken allows to approach a situation which lies close to solving two of the most important methodological problems which arise when the evaluation of innovation policies is put into practice: the lack of control over the aid distribution process, and the non-estimation of a counterfactual state (the scenario without public support). The results of this study allow to conclude that the region plays an important differentiating role in the final result of the national innovation policy. Therefore, this study recommends to include the localization of the firm in future evaluations.