R&D Centers, Innovation and Productivity

Research and development (R&D) and innovation are fundamental drivers of firm competitiveness in both domestic and international markets. Recognizing this, governments worldwide provide various incentives to firms to enhance overall technology and productivity through process and product innovation. I investigate the effects of such an R&D support on private firms' performance in Turkey, focusing on the outcomes of the Law on Support for Research and Development Activities which came into effect in 2008. Using subsequent changes in eligibility requirements in a regression discontinuity design, I estimate the causal effect of R&D subsidies on Turkish firms’ patenting, firm performance and productivity.