TY  - JOUR
AU  - Hall,Bronwyn H.
TI  - The Financing of Research and Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8773
PY  - 2002
Y2  - February 2002
UR  - http://www.nber.org/papers/w8773
L1  - http://www.nber.org/papers/w8773.pdf
N1  - Author contact info:
Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
AB  - Evidence on the 'funding gap' for R&D is surveyed. The focus is on financial market reasons for underinvestment in R&D that persist even in the absence of externality-induced underinvestment. The conclusions are that 1) small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital; 2) evidence for high costs of R&D capital for large firms is mixed, although these firms do prefer internal funds for financing these investments; 3) there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are not highly developed; and 4) further study of governmental seed capital and subsidy programs using quasi-experimental methods is warranted.
ER  -