1 The Effect of Public R&D Subsidies on Private R&D Spending in Chilean Manufacturing Firms*

(English not revised) This study analyzes the existence of a complementary relationship between public and private spending on Research and Development activities. The results show that public funding does not produce a substitution effect on private spending. In fact, depending on the methodology used, public subsidies actually produce a crowding in effect of up to 49 % on private spending. JEL: C23; L11