SOTA Review

Policy instruments and private R&D investment


Associated Themes
  • Innovation

Public funding to support firm-level Research and Development (R&D) is mainly delivered through three types of policy instruments: R&D grants; R&D tax credits;
and publicly-supported academic-industry collaborations. Vast amounts of scarce public resources are dedicated to these policy instruments in many countries. Of particular note, the United Kingdom (UK) has recently launched an ambitious Innovation Strategy which involves increasing public R&D funding to private firms (BEIS, 2021). This necessitates a deep understanding of what current state of the art (SOTA) evidence says about the impact of different policy instruments on firmlevel R&D. A focus on firm-level R&D is imperative, as it is key driver of firm
innovation and performance, which underpins economic growth and productivity.