The Impact of R&D tax incentives in Portugal

Rita Bessone Basto (), Ana Martins () and Guida Nogueira ()
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Rita Bessone Basto: Research Office of the Portuguese Ministry of the Economy and Digital Transition
Ana Martins: Research Office of the Portuguese Ministry of the Economy and Digital Transition
Guida Nogueira: Research Office of the Portuguese Ministry of the Economy and Digital Transition

No 158, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: The competitiveness of an economy increasingly depends on its ability to innovate. Theory suggests that innovation makes an important contribution to growth both at the firm level and at the national level. Innovative economies that deliver new differentiated products and services and/or develop more efficient production processes are often more productive, more resilient and adaptable in the face of adversity and change, and better able to support higher living standards and thus greater well-being. However, because knowledge is a public good, without government support, private agents are likely to underinvest in R&D, as it usually leads to higher social returns than private ones. In this context, it is strategically important to use public funds to promote innovative activity in firms to achieve the optimal level of R&D investment. Since 2000, indirect public support through tax credits has become more prominent and is currently the main form of public R&D support for most OECD countries. This paper evaluates the impact of SIFIDE, the Portuguese system of tax incentives to corporate R&D investment, on firms’ behaviour. The results show the effectiveness of SIFIDE in promoting investment in R&D, both through the impact of the program on intangible investment and on R&D staff.

Keywords: R&D tax credits; Innovation; BERD; SIFIDE; Propensity score matching; Differences-in-Differences. (search for similar items in EconPapers)
JEL-codes: C31 H25 H32 O31 O32 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2021-01, Revised 2021-01
New Economics Papers: this item is included in nep-acc, nep-cse, nep-ino, nep-pbe, nep-pub and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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