Research Insights: Does R&D Activity Stimulated by Chile’s FONDEF and FONTEC Programs Lead to Knowlege Spillovers?
Peer Reviewed
Date issued
Aug 2020
Publication
Journal version
Subject
Productivity;
Productivity Growth;
Science and Technology;
Knowledge Transfer;
Productive Development Policy;
Research and Development;
Knowledge Dissemination
JEL code
O32 - Management of Technological Innovation and R&D;
D24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity;
O38 - Government Policy;
L60 - Industry Studies: Manufacturing: General;
D62 - Externalities;
H43 - Project Evaluation • Social Discount Rate
Country
Chile
Category
Catalogs and Brochures
Chile's FONDEF and FONTEC R&D grant programs both boost the productivity of direct beneficiaries, increasing total factor productivity (TFP) by around 4.2 percent. However, spillover effects are contingent on program design. Only FONDEF funded projects (requiring collaboration between firms and research centers) generate positive spillovers. FONTEC projects, which fund R&D within the firm, do not. Spillover effects are nonlinear according to the share of firms within a sectorregion receiving subsidies. Positive knowledge spillovers dominate when the share of treated firms is small. However, if the program supports a large share of a firms rivals, spillovers decline as a result of a business-stealing effect.
