Public funding effects on inputs and outputs from the innovative process in Chilean firms

The objective of this study is to identify the effect of public funding instruments on the innovation expenditure intensity, percentage of innovative sales, and the number of intellectual property rights (IPRs) applications performed by Chilean firms using pseudo-panel data. Given the lack of panel data to perform this type of evaluation for a long period, repeated cross-sectional data of the different versions of the Innovation Survey are used to generate a pseudo-panel in which the firms are grouped in cohorts according to the economic sector to which they belong. The results estimated using linear and Tobit models of pseudo-panel with instrumental variables show that the use of public funding for innovation has a positive and significant effect on the innovation expenditure intensity and percentage of innovative sales, but that the effects on the number of IPRs applications performed by firms are not robust to different methods.