USING PUBLIC AID PROGRAMS TO FINANCE INNOVATION IN MULTI-LEVEL GOVERNANCE SYSTEMS

This paper explores how different public administrations (regional, national, European and Framework Program) allocate public resources to promote innovation among innovative companies in the Spanish manufacturing industry. We incorporate variables that have never been treated in this line of research before, such as exportoriented and Pavitt’s taxonomy among others. In order to know the preferences of each public program aimed at promoting innovation we use two econometric estimation techniques: rst, a binary logistic regression and, second, another binary logistic regression corrected for selection bias derived from the lack of consideration of certain relevant characteristics of manufacturing rms that do not innovate. We check if the importance and statistical signi cance of certain explanatory variables depend on the estimation method used. We found that the four public administrations preferably assign public resources to Spanish companies that cooperate with other domestic companies. We also found that European programs (EU and Framework Program) show their allocation preferences towards innovative rms that export outside EU. The public aid from the Spanish central administration seeks to promote the creation of large ‘national champions’.