Are firms that receive R&D subsidies more innovative?

This paper looks at the effectiveness of R&D grants for Canadian plants that already benefit from R&D tax credits. Using a non‐parametric matching estimator and data from the 2005 Survey of Innovation from Statistics Canada, we find that firms that benefited from both policy measures introduced more new products than their counterparts that only benefited from R&D tax incentives. They also made more world‐first product innovations and were more successful in commercializing their innovations. The paper gives also a detailed step‐by‐step explanation of how to apply the non‐parametric matching technique.