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Supporting Firm Innovation and R&D: What is the Optimal Policy Mix?

İrem Güçeri, Marko Köthenbürger and Martin Simmler
Authors registered in the RePEc Author Service: Marko Koethenbuerger

No 20, EconPol Policy Reports from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: This policy report provides an overview of firm R&D support policies used by European countries, reviews the empirical evidence on the effectiveness of these policies, and discusses implications for policy. Existing literature suggests that firm R&D support policies stimulate private R&D within a country and that in most cases, the positive impact of government support is stronger on smaller firms. Recent evidence also indicates that some of the policy instruments, such as patent box policies, are tools that multinationals use to lower their total tax bill through profit shifting. Despite the data issues that limit the ability to quantify the impact of tax incentives on global R&D, these recent findings together suggest that R&D support policies indeed promote national R&D activities. But governments also use some of these tax instruments to compete for R&D and mobile tax bases, which makes them less cost-effective in stimulating aggregate private sector R&D.

Date: 2020
New Economics Papers: this item is included in nep-ent, nep-ino, nep-sbm and nep-tid
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