The impact of innovation and innovation subsidies on economic development in German regions

Public innovation subsidies in a regional environment are expected to unfold a positive economic impact over time. The focus of this paper is an assessment of the long-run impact of innovation and innovation subsidies in German regions. We scrutinize this by an estimation approach combining panel model and time series characteristics and using regional data for the years 1980 to 2014. The results show that innovation and innovation subsidies in the long run have a positive impact on the economic development of regions in Germany. This supports a long-term strategy for regional and innovation policy.