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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. Esti- mating CDM-type econometric models on industry-level panel data, we find that past R&D sys- tematically feeds current R&D. The estimate of our proxy measure of input additionality during an R&DTC phase is generally close to 1, but rarely larger than 1. R&D intensity 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 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 0.36% increase in patenting intensity, which translates to a 0.16% increase in productivity. The main policy implication of our results is that R&DTC may help the EU reach its "R&D at 3% of GDP" objective, but should not be the only instrument implemented to spur innovation and productivity in the EU.
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Dates and versions

hal-03691981 , version 1 (09-06-2022)

Identifiers

  • HAL Id : hal-03691981 , version 1

Cite

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