Evaluating a place-based innovation policy: Evidence from the innovative Regional Growth Cores Program in east Germany

Publication date: Available online 5 October 2019Source: Regional Science and Urban EconomicsAuthor(s): Oliver Falck, Johannes Koenen, Tobias LohseAbstractWe evaluate one of the largest place-based innovation policies in Germany – the Innovative Regional Growth Cores (IRGC) program. It subsidizes collaborative development and commercialization projects of firms and public research institutes co-located in regions in eastern Germany, with the explicit goal of generating local spillovers to promote regional economic development. We evaluate three potential types of effects with regard to a broad set of outcomes at the firm and regional level: (1) The policy's effects on directly subsidized firms; (2) spillover effects on non-subsidized innovative firms located in the same region; (3) (aggregate) effects on regional-level economic outcomes. We find that directly treated firms increase their R&D activities in the short- and medium-run. On the other hand, we are not able to provide significant or economically meaningful evidence for the effectiveness of channels (2) and (3), applying a wide range of econometric methods. Overall, these results cast doubt about the effectiveness of the program.
Source: Regional Science and Urban Economics - Category: Science Source Type: research