Comparative Effectiveness of R&D and Inward Technology Transfer as Innovation Activities in Chile

This research work develops a methodology to evaluate the effectiveness of two main sorts of innovation activities, Research and Development (R&D) and Inward Technology Transfer (ITT), or technological absorption in terms of incrementing innovation at firm levels. Using information provided by five Chilean National Innovation Surveys developed between 1997 and 2008, two models allow us to analyze the effectiveness of both innovation activities. The first model, in a cross-sectional analysis of Chilean firms' behavior in one period (2007-2008), the effectiveness of R&D and ITT innovation activities is evaluated in terms of how the firms' innovation levels are incremented, using a system of equations estimated by Ordinary Least Squares regression model and Propensity Score Matching, respectively. The second model, based on ten years data from the Chilean Innovation Survey, uses the classical Difference-in-Difference methodology to evaluate six years operation of the Chilean regional innovation policy called Innova Bio-Bio; by the second model, our findings from the first model results are confirmed in the long term. The results of both models suggest that the overwhelming support of R&Ds by Chilean innovation public policies is not consistent with its low efficiency in terms of increasing innovation at firm levels, compared with those reported by technological absorption or ITT innovation activities