Economics & Finance / Business & Management / Business Models & Innovation

Government R&D Grants Double Innovation: The Shocking Truth About New Zealand's Hidden Edge

Adam B. Jaffe, Trinh Le

Think government subsidies for R&D are just a waste of taxpayer money? Think again. A groundbreaking study by Adam B. Jaffe and Trinh Le (2015) reveals a game-changing reality: R&D grants nearly double the probability of New Zealand firms introducing world-first innovations. Using rich administrative data from the Longitudinal Business Database (LBD), the research tackles the classic 'selection bias'—where only the best firms get funded—to prove causality. Key findings? Project grants outperform capability building grants; patents surge, but trademarks don't; and small firms benefit just as much as large ones. If you're a policymaker, entrepreneur, or investor, this is the data you need to rethink innovation strategy. Dive into the full breakdown of how targeted subsidies can unlock real economic growth, without the fluff.