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Science & Technology Policy Institute (과학기술정책연구원)
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The Impact of Government Innovation Subsidies on the Survival of SMEs in Korea

  • Published : 2018.11.30
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Abstract

This study analyzed the effect of the government R&D subsidy program on long-term firm survival. In order to estimate the average treatment effect for the treated group, we used the survival analysis and matching method by constituting a comprehensive dataset of more than 90,000 observations. The analysis results show that the government R&D subsidy has a negative impact on long-term firm survival. In particular, not only the subsidy does not have a statistically significant effect on firm survival in the relatively short-term, the survival probability of the subsidized firms is statistically significantly lower than the non-subsidized firms after six years. These results can be seen as weakening the justification of government R&D support. There may be problems in the subsidy policy itself and the process of selection of subsidy awardees; however, the more fundamental problem is that the subsidy policy is concluded as the one-time event. Admittedly, it would be difficult for the government to precisely manage the subsidized projects over a long term period. However, in the case of a project in which short-term performance is detected, it would be necessary to provide a step-by-step support to strengthen the firm's competitiveness through further support and continuous development of performance. Of course, mid- and long-term evaluations of subsidy support policy should be performed in parallel with such phased support.

Keywords

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Figure 1. Kernel Density Estimates of the Propensity Score Distribution

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Figure 1. Kernel Density Estimates of the Propensity Score Distribution

Table 1. Status of Technological Innovation R&D Program

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Table 1. Status of Technological Innovation R&D Program

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Table 2. analysis Results of logit Model for estimation of Propensity Score

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Table 2. analysis Results of logit Model for estimation of Propensity Score

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Table 3. Mean difference of Covariates Pre and Post-Matching

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Table 3. Mean difference of Covariates Pre and Post-Matching

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Table 4. Defnition of Variables

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Table 4. Defnition of Variables

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Table 5. Descriptive Statistics

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Table 5. Descriptive Statistics

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Table 6. Summary Statistics of Survival Time

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Table 6. Summary Statistics of Survival Time

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Table 7. Results of log-Rank Test for equality of Survivor Functions

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Table 7. Results of log-Rank Test for equality of Survivor Functions

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Table 8. Results of Survival analysis

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Table 8. Results of Survival analysis

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Table 9. Results of Survival analysis at Short- and Mid-Term

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Table 9. Results of Survival analysis at Short- and Mid-Term

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Figure 2. Kaplan-Meier Survival Estimates

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Figure 2. Kaplan-Meier Survival Estimates

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