Macroeconomic and sectoral effects of Finep grants in Brazil

Abstract

Public policies to promote research and development (R&D), such as subsidies for innovation, have gained attention in several economies because they induce the competitiveness of the productive structure. The impacts of these policies are systematically spread by the economy, and to analyze them, this paper presents a computable general equilibrium model that, due to the different treatment of knowledge capital and investment in R&D, is able to assess the macroeconomic and sectoral effects of the grants. The results indicate that the grants generate knowledge capital gains and, similarly, their absence retracts industrial activities of greater technological intensity, penalizing their productive capacity.

Keywords:
Economic subsidies; Finep; Innovation policies; General Computable Equilibrium