Template-Type: ReDIF-Paper 1.0

Author-Name: Gabor Katay
Author-X-Name-First: Gabor
Author-X-Name-Last: Katay
Author-Email: gabor.katay@ec.europa.eu
Author-Workplace-Name: European Commission, Directorate‐General for Economic and Financial Affairs

Author-Name: Palma Filep-Mosberger
Author-X-Name-First: Palma
Author-X-Name-Last: Filep-Mosberger
Author-Email: mosbergerp@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)

Author-Name: Francesco Tucci
Author-X-Name-First: Francesco
Author-X-Name-Last: Tucci
Author-Email: francesco.tucci@uniroma1.it
Author-Workplace-Name: Sapienza Università di Roma



Title: The Impact of EU Grants for Research and Innovation on Firms' Performance
Abstract: The paper evaluates the impact of the European Commission's Seventh Framework Programme (FP7) grants on profit-oriented
firms' post-treatment performance. Using a quasi-experimental design and a dataset covering applicants from 46 countries, we
find that FP7 grants increase firms' sales and labour productivity by about 18%. However, there is no significant impact on employment
levels, pointing to potential growth barriers that prevent firms from scaling production despite improved productivity.
The effectiveness of these grants varies significantly based on factors such as financial constraints, project risk profiles, market
structure, and the innovation environment. Smaller, less productive firms with tighter financial constraints in technologyintensive
sectors operating in concentrated markets and favourable innovation environments, particularly those undertaking
longer and riskier projects, tend to benefit more.

Length: 40 pages
Creation-Date: 2025
File-URL: https://www.mnb.hu/en/publications/studies-publications-statistics/working-papers-1-1/wp-2025-1-gabor-katay-palma-filep-mosberger-francesco-tucci-the-impact-of-eu-grants-for-research-and-innovation-on-firms-performance
File-Format: Application/pdf
Number: 2025/1
Classification-JEL: C31,G28,H57,O31
Keywords: EU funds for research and innovation; firm productivity; regression‐discontinuity design.
Handle: RePEc:mnb:wpaper:2025/1