Additionality of public R&D funding in business R&D within the life science industry

In what way public research funds affect a company’s propensity to make private investment in R&D a structural selection model have been estimated, using R&D data from Danish firms from 2000 to 2013, within the life science sector. This is an important contribution on whether publicly funded R&D is a substitute or a complement to privately funded R&D. The results finds robust evidence of significant complementary effects, with a 1% increase in public funding yielding between 0.15% and 0.39% increase in privately funded R&D across the different models.