Does Fiscal Policy Matter for Business R&D Investment? Panel Data Evidence from Central and Eastern Europe
Central European Business Review, 2022, vol. 2022, issue 3, 79-96
This paper examines the impact of fiscal policy on business investment in research and development (R&D). Panel regression models - with independent variables for the total tax and contribution rate, government appropriations and outlays for R&D, and the R&D tax subsidy rate - are set up to examine cross-country differences in business investment in R&D, with a set of control variables. The latter include, most notably, the number of full-time researchers, tertiary education attainment, the protection of intellectual property rights, governance, the long-term interest rate, and trade openness. The panel encompasses eleven countries of Central and Eastern Europe over ten years (2010-2019). The findings suggest that fiscal policy does not affect BERD, while trade openness, tertiary education attainment, and full-time researcher employment have a significant positive impact. These findings are consistent with some of the earlier studies on the effectiveness of fiscal policy in stimulating business investment, calling for greater allocation of public and private funds for R&D professional development and training programs.Implications for Central European audience: This paper used recent data for eleven Central and Eastern European countries. Therefore, the findings are directly applicable to these countries. As the paper used random-effects generalised least squares estimation for panel data, the findings can be generalised to other countries.
Keywords: corporate taxation; investment; research and development (R& D); panel data; subsidies; tax incentives (search for similar items in EconPapers)
JEL-codes: H25 O31 O34 O38 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
free of charge
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlcbr:v:2022:y:2022:i:3:id:297:p:79-96
Ordering information: This journal article can be ordered from
Faculty of Business Administration, University of Economics, Prague
Access Statistics for this article
Central European Business Review is currently edited by Jindřich Špička
More articles in Central European Business Review from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().