R&D subsidies in permissive and restrictive environment: Evidence from Korea

R&D subsidies in permissive and restrictive environment: Evidence from Korea

This paper investigates the extent to which a regulatory environment for R&D subsidies shapes the magnitude and direction of R&D subsidies set by a government and consequent innovation paths. When the WTO adopted a permissive regulatory environment, we find that the Korean government increas...

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Bibliographic Details
Main Authors: KOH, Yumi, LEE, Gea M.
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2023
Subjects:
Innovations
Patent
R&D subsidy
Regulatory environment
Utility model
WTO subsidy rules
Asian Studies
Industrial Organization
Technology and Innovation
Online Access:https://ink.library.smu.edu.sg/soe_research/2629
https://ink.library.smu.edu.sg/context/soe_research/article/3628/viewcontent/Koh.Lee.July29.2022_sv.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:This paper investigates the extent to which a regulatory environment for R&D subsidies shapes the magnitude and direction of R&D subsidies set by a government and consequent innovation paths. When the WTO adopted a permissive regulatory environment, we find that the Korean government increased R&D subsidies significantly (89.21%) and selectively so for firms and industries with higher returns. Recipient firms conducted less basic research and more development research. Improvements in innovations were mostly incremental and minor. However, such changes did not persist once the WTO switched to a restrictive regulatory environment. Our findings show that the regulatory environment imposed by the WTO largely affects allocation of R&D subsidies and suggest that a permissive regulatory environment may not necessarily maximize the potential for breakthrough innovations.

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