The effect of government R&D subsidies on corporate R&D investment in South Korea: verification using meta-analysis

ABSTRACT Whether public R&D subsidies complement or substitute private R&D investment has long been a subject of debate. Also, the results of previous studies on whether R&D subsidies are effective for large corporations or more effective for SMEs have been mixed. This study analyses research studies in Korea over the past 20 years and provides comprehensive conclusions on these controversies. As a methodology, firstly, meta-analysis is performed to synthesise the results of previous studies. Secondly, more sophisticated effect sizes are estimated by meta-regression analysis, and then panel analysis is performed to confirm robustness. The results indicate that government R&D subsidies have a positive (+) additionality effect on corporate R&D investment. It is also found that the additionality effect is larger when R&D subsidies are provided to SMEs rather than large enterprises. Analysis by time showed a negative (−) effect appears initially, and the trend improved over time to a positive (+) effect. The results of this study can be used as primary data for verifying the economic feasibility of the government R&D supports and setting the basic direction for the R&D subsidy policy in the future.