Is a higher rate of R&D tax credit a panacea for low levels of R&D in disadvantaged regions?Richard Ian Harris, Qian Cher Li () and Mary Trainor Research Policy, 2009, vol. 38, issue 1, pages 192-205 Abstract: This paper studies the impact of R&D spending on output as well as forecasting the impact of a regionally enhanced R&D tax credit on the 'user cost' (or price) of R&D expenditure and subsequently the demand for R&D. The example we use of a 'disadvantaged' region is Northern Ireland (partly because it has the lowest levels of R&D spending in the UK, and partly because the necessary data is available for this region). We find that in the long run, R&D spending has a mostly positive impact on output across various manufacturing industries. In addition, plants with a zero R&D stock experience significant one-off negative productivity effects. As to the adjustment of R&D in response to changes in the 'user cost', our results suggest a rather slow adjustment over time, and a long-run own-price elasticity of around -1.4 for Northern Ireland. We also find that to have a major impact on R&D spending in the Province, the R&D tax credit would need to be increased substantially; this would be expensive in terms of the net exchequer cost. Keywords: R&; D; tax; credit; Northern; Ireland; Productivity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:eee:respol:v:38:y:2009:i:1:p:192-205 Access Statistics for this article Research Policy is edited by M. Callon, M. Bell, F. Kodama, B. Martin, F. Meyer-Krahmer, W. W. Powell, S. Thomke and N. Von Tunzelmann More articles in Research Policy from Elsevier |
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