Abstract
The existence of market failures induces that private investment in innovation activities is less than socially optimal. Hence, state intervention can be essential to promote innovation activities aimed at correcting this problem. This article, by estimating a system of equations in its reduced form, evaluates whether public financing stimulates investment in innovation and improves innovative and economic business performance in Ecuador, using the Innovation Activities Survey of the National Institute of Statistics and Censuses, versions 2009-2011/2012-2014. Public support was found to increase investment in innovation, fundamentally promoting exogenous innovation. Regarding the effects on the ability to innovate in product or process and the effects on productivity, results were found different according to the period of analysis and the economic sector.
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