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R&D Tax Credits across the European Union : Divergences and convergence

Abstract : We examine the R&D, innovation and productivity effects of R&D tax credits (R&DTC) in 8 EU countries, in the context of a proposed EU-wide "super deduction" on R&D expenditures. Our econometric analysis, performed on industry-level panel data, shows that past R&D feeds current R&D, whether it is conducted under an R&DTC or not. Our estimate of additionality during an R&DTC phase is generally close to 1. R&D intensity also affects patenting intensity positively in Belgium, Czech Republic, France, Spain and the UK, but this relationship is R&DTC-related only in Belgium, France and Spain. Only in France and the UK do we observe a full (yet fragile) R&D – innovation – productivity relationship. In the UK, this relationship is not affected by the R&DTC scheme. In France, a 1% increase in R&D conducted under the second to fourth phases of R&DTC (1999-2017) entails a cumulated 0.37% increase in patenting intensity, which translates to a 0.16% increase in productivity. The main policy implication of these results is that a "super-deduction" on R&D is likely to help the EU reach its "R&D at 3% of GDP" objective, but only time will tell how generous it must be to really spur innovation and productivity.
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Contributor : Stéphane ROBIN Connect in order to contact the contributor
Submitted on : Thursday, June 9, 2022 - 2:52:50 PM
Last modification on : Wednesday, September 28, 2022 - 4:18:45 PM


  • HAL Id : hal-03691981, version 1


Laurence Jacquet, Stéphane Robin. R&D Tax Credits across the European Union : Divergences and convergence. 2022. ⟨hal-03691981⟩



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