Research subsidies, industry-university cooperation and innovation

We evaluate the impact of the EC's Seventh Framework Programme, a large-scale research subsidy programme, on the innovation activities of subsidized firms, with a particular regard to industry university partnerships. Using matching and difference-in-difference estimation, we find a positive effect on a range of innovation indicators. The number of project participants in general and university participants in particular positively affect performance, suggesting knowledge spillovers between project members. Research centres, on the other hand, do not exert positive externalities. We also find that the benefits of collaborating with universities are amplified by their academic quality.