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Tax incentives for R&D

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Abstract

A long-standing concern surrounding the performance of the UK economy is its perceived failure to maintain the same technological pace as its competitors. Industrial research and development (R&D) expenditure as a proportion of GDP fell during the 1980s at a time when all other G7 countries increased the proportion of their output given over to R&D. This ratio is now lower in the UK than in most other G7 countries. If this world-wide trend toward more R&D indicates that industrial production is becoming increasingly science-based, then the UK may be in danger of becoming a relatively low-tech economy. One purpose of this article is to examine whether there is a rational basis for these fears.

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... Por ejemplo, los senderos de gasto en I&D como porcentaje del producto en los países del G7 han aumentado en las últimas décadas. Según datos de Griffith et al. (1995) Es importante anotar que el gasto global en I&D es mayor que el gasto industrial presentado como porcentaje del PIB en la tabla 1, y esta diferencia es más notoria en un país como Canadá, donde el sector servicios es preponderante. Algunos autores han estimado que el 60% de la inversión en I&D que hace Canadá se genera a partir del sector servicios (Griffith et al., 1995). ...
... Según datos de Griffith et al. (1995) Es importante anotar que el gasto global en I&D es mayor que el gasto industrial presentado como porcentaje del PIB en la tabla 1, y esta diferencia es más notoria en un país como Canadá, donde el sector servicios es preponderante. Algunos autores han estimado que el 60% de la inversión en I&D que hace Canadá se genera a partir del sector servicios (Griffith et al., 1995). Por otro lado, datos de la National Science Fundation (NSF) muestran un aumento en la participación de los gastos de I&D en el PIB durante los noventa. ...
... estimula la provisión privada. Los estudios a nivel agregado parecen mostrar mejor la hipótesis de que los esfuerzos que hace el gobierno en proveer subsidios e incentivos fiscales para aumentar los niveles de I&D en la economía, y de manera indirecta proveer inversión privada para alcanzar los mayores estándares de crecimiento son complementarios.Griffith et al., 1995). Bloom et al. (1996), por su parte, mostraron que para ocho países de la OCDE 10 las agendas impositivas se han vuelto más generosas en el tratamiento de I&D. Esto es compatible con un crecimiento de la participación de este bien de capital en el producto (ver tabla 2). Adicionalmente , existe una heterogeneidad en los efectos de las a ...
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I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.
... The optimal balance of these tools varies significantly from country to country, since each policy addresses different market failures and stimulates different types of investments. In most OECD countries direct government interventions have been the prevailing instrument used to foster private R&D; however, in the last two decades, a growing shift towards fiscal incentives (in particular tax credits) has been observed in several countries [6]. ...
... Then, these values have been used to compute the marginal tax rate for each company in the sample. 6 Due to the tax credit, a marginal increase in R&D expenditure implies a reduction in tax liabilities measured by MTCR, which is equal to the marginal increase in the tax credit, due to a marginal increase in R&D expenditure. ...
... 5 Financial law no. 244/2007 (article 1, section 66) increased this limit to 50 million euro.6 In order to compute the MTRs a microsimulation model has been developed. ...
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This paper analyses the determinants of business R&D choices. In particular, it provides new empirical evidence on the effectiveness of fiscal policies aimed at driving companies to invest in R&D activity. By computing two very accurate proxies for firm-specific tax savings achievable when investing in R&D, and by exploiting exogenous changes in fiscal legislation in Italy, this study investigates if fiscal considerations affect companies’ choice to invest in R&D and how much to spend in such activity. The empirical analysis is based on an unbalanced panel data set composed of 163 Italian companies, covering the years 2004-2010. A two-step approach has been implemented, by combining a probit and a tobit estimation model. The results deliver strong empirical evidence that fiscal incentives significantly affect business R&D choices, by one side, increasing companies’ likelihood to invest in R&D, and, by the other, fostering companies’ R&D expenditure.
... To stimulate private investment in general and R&D investment in particular, governments adopt a range of policies, including lowering the tax rate on corporate income and providing fiscal incentives for investment, e.g., tax credits and subsidies (Auerbach, 2018;Cummins et al., 1994;Griffith et al., 1995;Hassett & Hubbard, 2002;Klemm, 2010;Leyden & Link, 1993;Mansfield, 1982;Shah, 1995). However, fiscal policy is not the only factor affecting either tangible or intangible investment, as investment decisions also depend on such aspects of the investment climate as political stability and effective governance (Dawson, 1998;Edquist, 1997;R. ...
... E. Hall & Jones, 1999;Klemm & Van Parys, 2012;Van Parys & James, 2010). More importantly, R&D investment differs from other types of investment in two important respects: first, it is costlier to finance due to higher levels of uncertainty with regards to its returns, and second, its returns cannot be fully appropriated due to spillover effects (Arrow, 1962;Griffith et al., 1995;Griliches, 1992;B. H. Hall, 2002;B. ...
... Es importante anotar que el gasto global en I&D es mayor que el gasto industrial presentado como porcentaje del PIB en la tabla 1, y esta diferencia es más notoria en un país como Canadá, donde el sector servicios es preponderante. Algunos autores han estimado que el 60% de la inversión en I&D que hace Canadá se genera a partir del sector servicios (Griffith et al., 1995). Por otro lado, datos de la National Science Fundation (NSF) muestran un aumento en la participación de los gastos de I&D en el PIB durante los noventa. ...
... Las agendas impositivas se componen de distintas formas de estímulo como créditos fiscales, deducciones, tasas de depreciación y disminuciones de la tasa estatutaria. Los estudios muestran que para seis países de la OCDE 9 las inversiones en I&D durante las últimas décadas han tenido un tratamiento más favorable que otras formas de inversión -por ejemplo el capital físico-, y esto ha contribuido a aumentar sus senderos de gasto (Griffith et al., 1995). Bloom et al. (1996), por su parte, mostraron que para ocho países de la OCDE 10 las agendas impositivas se han vuelto más generosas en el tratamiento de I&D. ...
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Economists have shown that investments in science and technology (S&T) have an important impact on country's economic growth and productivity gains. Nowadays there is no doubt of the importance in providing public funding for S&T activities. Public policies have been oriented to provide incentives for private spending in S&T as a mechanism to enhance productive efficiency. In this regard, fiscal incentives play a crucial role to channel private efforts in research and development (R&D) projects. International experience based on the OECD case, shows that 10% decrease in the User Cost of Capital due to fiscal incentives will increase 1% R&D spending in the short run and might reach a 10% increase in the long run. ********************************************************************** Los economistas han mostrado que las inversiones en ciencia y tecnología tienen un impacto importante sobre las tasas de crecimiento económico y sobre la productividad de un país. Por tal razón hoy pocos países discuten sobre la importancia de destinar recursos públicos a dicha inversión. La agenda de política esta enfocada es a mantener un sistema de ciencia y tecnología e innovación tecnológica donde se estimule la inversión privada y se integre a las políticas públicas. Es en este punto donde los incentivos fiscales han sido cruciales en la generación de recursos privados para la ciencia y la tecnología y la mayoría de países desarrollados y algunos en desarrollo los han implementado como un mecanismo eficiente. La experiencia internacional muestra que en los países de la OCDE por una caída en un 10% del costo del capital en I&D, vía incentivos fiscales, se aumenta las inversiones en este bien en un 1% en el corto plazo y estas inversiones pueden llegar a ser del 10% en el largo plazo.
... The complexity of r&d expenditure projects and the difficulty in defining r&d expenditure provide enterprises with more tax avoidance opportunities, tax avoidance space and tax avoidance gains. Griffith et al. (1995) argue that a very important problem of tax incentive policies is that enterprises will include the costs of other activities into the r&d activities, and the ambiguity of the definition of r&d activities exacerbates this problem [3]. Tassey (1996) argues that the difficulty in defining the calculation basis of tax incentive policies will distort the classification of enterprises' r&d expenditure and increase the cost of tax administration [4]. ...
... The complexity of r&d expenditure projects and the difficulty in defining r&d expenditure provide enterprises with more tax avoidance opportunities, tax avoidance space and tax avoidance gains. Griffith et al. (1995) argue that a very important problem of tax incentive policies is that enterprises will include the costs of other activities into the r&d activities, and the ambiguity of the definition of r&d activities exacerbates this problem [3]. Tassey (1996) argues that the difficulty in defining the calculation basis of tax incentive policies will distort the classification of enterprises' r&d expenditure and increase the cost of tax administration [4]. ...
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This paper studies the impact of corporate tax burden on the next level of innovation input. Taking the listed companies in China’s GEM from 2009 to 2017 as the research object, this paper finds that the tax burden of enterprises has an incentive effect on the next innovation input level. Further research finds that, compared with state-owned enterprises, the tax burden of non-state-owned enterprises has a stronger incentive effect on the next innovation input level.
... Tables 2A and 2B summarize the tax treatment of R&D around the world. The contents of these tables are drawn from several sources: Asmussen and Berriot (1993), Australian Bureau of Industry Economics (1993), Bell (1995), Griffith, Sandler and Van Reenen (1995), Harhoff (1994), Hiramatsu (1995, Leyden and Link (1993). McFetridge and Warda (1983), Seyvet (1995), and Warda (1994). ...
... A successful subsidy has to overcome these problems. 65 Since human capital and R&D are also likely to be complements, subsidies to human capital formation (such as education) may a further indirect way to raise R&D spending. ...
... The tendency in the existing literature has been to apply a similar approach to intangible capital such as R&D. For example, Griffith, Sandler and Van Reenen (1995), and Gordon and Tchilinguirian (1998) compute the tax adjusted cost of capital or METR for R&D in several countries using a straightforward application of the standard Jorgenson-King-Fullerton (JKF) methodology. A similar approach is followed by Mackie (2002) in the calculation of the METR on intangible capital in the U.S. Empirical studies of the effectiveness of R&D tax incentives also tend to rely on the JKF cost of capital calculated in the standard way The contribution of this paper is to develop a methodology that explicitly accounts for the non-marketed, flow-input–flow-output nature of R&D in the measurement of the cost of capital and the METR. ...
Article
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A methodology for measuring the user cost of intangible R&D capital is developed. In contrast to the way in which the Hall–Jorgenson–King–Fullerton (HJKF) approach to measuring the user cost of capital, and the related notion of the effective marginal tax rate on capital, is typically applied to intangible R&D capital, the methodology takes explicit account of the microeconomic foundations of R&D in order to aggregate the user costs of the various inputs used in the production of R&D. Illustrative calculations are presented for Canadian provinces which show that relative to the methodology developed here, the standard approach substantially overstates the tax subsidy offered to intangible R&D capital.
... See, for example,Mans…eld (1986). Other sources of skepticism, such as relabelling other expenses as 'R&D', are discussed in Gri¢th,Sandler and Van Reenen (1995). See alsoGravelle (1999) for a discussion of the current policy debate in the US. ...
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This paper examines the impact of fiscal incentives on the level of R&D investment. An econometric model of R&D investment is estimated using a new panel of data on tax changes and R&D spending in nine OECD countries over a nineteen-year period (1979-1996). We find evidence that tax incentives are effective in increasing R&D intensity. This is true even after allowing for permanent country specific characteristics, world macro shocks and other policy influences. We estimate that a 10% fall in the cost of R&D stimulates a 1% rise in the level of R&D in the short-run; R&D increases by just under 10% in the long-run. Additionally there is some evidence that changes in R&D tax credits affect decisions over the international location of R&D as suggested by models of tax competition.
... They measure the tax wedge between the pre-and post-tax costs of capital using a method that was first formalised in King and Fullerton (1986). While the literature on METRs provides useful information on tax incentives for physical investment, it has for the most part neglected the portion of the capital stock that is amassed through intangible investment in human capital or innovation (for an exception in relation to R&D, see Griffith et al., 1995, Warda, 1996 and Bloom et al., 1996). This is a significant shortcoming because the accumulation of intangible capital is widely viewed as an important determinant of the growth of productivity and living standards and because the magnitude of such investment is quite high. ...
Article
This paper presents marginal effective tax rates (METRs) for a number of physical and intangible assets and for a number of funding sources. The assets include machinery, buildings, inventories, investments in short-lived R&D (that is, investments whose returns last only a few years) and in long-lived R&D (whose returns last many years). Two human capital assets are included -- firm-sponsored training and household-sponsored tertiary education. The calculations incorporate parameters from both the personal and corporate tax codes. They are performed for the “top-bracket” taxpayer and for the “average production worker” and cover between 15 and 22 countries, depending on data availability. The OECD has already used the King-Fullerton method to calculate METRs for physical capital (OECD, 1991) and this paper updates these calculations using established practices. As the method has not yet been applied to household-sponsored human capital, the paper describes the extension to this ... Cet article présente les taux d’imposition marginaux effectifs (TIME) pour un certain nombre d’actifs corporels et incorporels et selon leur mode de financement. Ces actifs comprennent les machines et biens d’équipement, les immeubles, les stocks, les investissements en recherche-développement à rentabilité courte, les investissements en recherche-développement à rentabilité longue, la formation financée par l’entreprise, la formation universitaire financée par les ménages. Les calculs font appel à des paramètres du code fiscal des personnes physiques et à celui des sociétés et sont réalisés pour le contribuable taxable à la tranche supérieure de l’impôt et pour l’ouvrier moyen. Ils concernent entre 15 et 22 pays selon la disponibilité des données. L’OCDE a déjà utilisé la méthode King-Fullerton pour calculer les TIME pour le capital physique (OCDE 1991) et cet article met à jour les calculs précédents en utilisant des pratiques bien établies. La méthode n’ayant pas encore été ...
... The literature on the response of R&D investments to tax credits has been surveyed by Griffith et al. (1995), Hall and Van Reenen (2000), and Ientile and Mairesse (2009). The literature on direct R&D grants is surveyed by David et al. (2000) who conclude that "the findings overall are ambivalent". ...
Article
Subsidies to the Norwegian high-tech industries have traditionally been given as "matching grants", i.e. the subsidies are targeted, and the firms have to contribute a 50 % own risk capital to the subsidized projects. Our results suggest that grants do not crowd out privately financed R&D, but that subsidized firms do not increase their privately financed R&D either. Hence, the own risk capital seems to be taken from ordinary R&D budgets. We also investigate possible long-run effects of R&D subsidies, and show that conventional R&D investment models predict negative dynamic effects of subsidies. Our data, however, do not support this claim. On the contrary, there are indications of a positive dynamic effects, i.e. temporary R&D subsidies seem to stimulate firms to increase their R&D investments even after the grants have expired. We propose learning-by-doing in R&D activities as a possible explanation for this, and present a theoretical analysis showing that such effects may alter the predictions of the conventional models. A structural, econometric model of R&D investments incorporating such learning effects is estimated with reasonable results.
... Typically, buildings or plant used by an R&D laboratory are not included in these schemes. 97 The contents of these tables are drawn from several sources: Asmussen and Berriot (1993), Australian Bureau of Industry Economics (1993), Bell (1995), Griffith, Sandler and Van Reenen (1995), Harhoff (1994), Hiramatsu (1995), Leyden and Link (1993). McFetridge and Warda (1983), Seyvet (1995), and Warda (1994). ...
... Consequently, any distortions caused by the taxation of R&D activities can impact productivity, growth or employment in Member States in the long run because of the impact of R&D on innovation (Hodžić, 2013). Furthermore, tax incentives are the only way the government can affect the amount of R&D undertaken and its economic impact (Griffith et al., 1995;Hall and Van Reenen 2000). Here, McKenzie (2008) shows that the tax treatment of R&D is often quite complex across jurisdictions. ...
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The significant contribution of R&D to economic development and sustainability has been shown by various studies. Therefore, governments offer different fiscal instruments to attract R&D, especially regarding multinational entities (MNEs). One of the fiscal instruments are tax incentives for R&D. Furthermore, the EU has been working on the switch from Separate Taxation (ST) to Common Consolidated Corporate Tax Base (CCCTB) for longer than a decade, which will lead to harmonized R&D tax allowances, however without harmonizing the tax rates. Hence, this study aims at analyzing how ST and CCCTB impact the location of MNEs' R&D activities, tax burden and countries' tax revenue through a case study. The results show that, under ST, tax jurisdictions can stimulate MNEs’ R&D activities by means of attractive tax allowances and lower tax rates. Especially for high-tax countries, the tax allowances represent an important tool for attracting R&D activities. However, under CCCTB, the location of R&D activities additionally depends on the Formula Apportionment (FA) factors of the tax base, where the countries cannot exert a direct influence. Hence, the reduction of tax rates remains the only tool left to Member States, which can lead to revenue loss on the whole. Furthermore, the FA of the tax base under CCCTB mitigates the impact of any dislocation of R&D to a low-tax country, which, under ST, leads to larger tax savings of MNEs and its impact on jurisdictions’ tax revenue is greater.
... Some of the most rigorous economic evaluation work has been applied to the evaluation of fiscal incentives for R&D (Griffith et al.,1995). Australia has been prominent in this field, with a series of evaluations from the Bureau of Industry Economics providing not only a detailed review but collectively a picture of the evolution of the effectiveness of the schemes. ...
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The efforts by policymakers to help firms become more innovative have created a strong desire to know which policies work. This has placed high expectations upon evaluation. The development of evaluation in this sphere has mirrored the evolution of policy, beginning with a focus on large-scale collaborative technology programmes and gradually moving towards an examination of measures seeking to enhance the environment for innovation. Evaluations in this field may be divided into those assessing direct and indirect financial support for research and design and those addressing opportunity-enhancing innovation policies such as technology transfer networks. Several tensions and challenges for evaluation are identified, including the lack of comparative and systemic innovation policy evaluations. Evaluation needs to follow the same adaptive learning approach as innovation policy itself.
... The findings also raise interesting questions for consideration in respect of the overall benefits of R&D subsidies via tax relief, which is a policy tool neglected by the Conservatives, although recently reviewed by the present Labour government (HM Treasury, 1998). The potential employment benefits of R&D subsidies appear not to have been considered by existing literature, which focuses mainly on whether such subsidies can be seen to have any impact on R&D spending without reference to employment (Hall, 1993;Griffith et al., 1995). As our observations and findings relate to large UK firms, many with subsidiaries which may be located abroad, we cannot predict unequivocally that any new jobs would be located in the UK. ...
Article
We investigate the relationship between technological activity, proxied by R&D, patents, and trade marks, and employment for a panel of British production firms from 1987 to 1994. We modify standard derived demand for labour to include technology variables. We find employment is fostered by R&D expenditure and UK patent publications, ceteris paribus on factor costs and current sales. The employment impact of R&D is bigger in high technology sectors, but employment increase from UK patenting activity is bigger in mature technology sectors. In further analysis of persistent differences (the estimated firm fixed effects) UK trade marks and US patents are also positively associated with employment. Copyright 2001 by Scottish Economic Society.
... most all countries except for the UK treat this kind of capital expenditure somewhat like ordinary investment , many have used complex speeded-up depreciation schemes at one time or another to give a boost to a R & D capital equipment investment; this can be often be justified by the simple fact that the economic life of this kind of specialized equipment is likely to be shorter than that for other types of capital. Frequently the depreciation involved is also 2 , Griffith et al. 1995 , Harhoff 1994 , Warda 1994 , and KPMG 1995 In addition to the features of the tax system targeted toward R&D equipment expenditures at the federal level in many countries , in many U.S. states there is a special sales tax provision which exempts firms from paying sales tax on purchases or repairs of this kind of equipment. This amounts to an additional tax credit of about 4–8% in the states that have this provision. ...
Article
This paper surveys the econometric evidence on the effectiveness of fiscal incentives for R&D. We describe the effects of tax systems in OECD countries on the user cost of R&D — the current position, changes over time and across different firms in different countries. We describe and criticize the methodologies used to evaluate the effect of the tax system on R&D behaviour and the results from different studies. In the current (imperfect) state of knowledge we conclude that a dollar in tax credit for R&D stimulates a dollar of additional R&D.
... Araştırma-geliştirme yatırımları için genel bir MERT, araştırmageliştirme sermayesi ve işgücü için MERT'nin ağırlandırılmış ortalaması şeklinde hesaplanır 22 (Clark,12). Griffith, Sandler ve Van Reenen (1996), Department of Finance Canada (2009) ile Gordon ve Tchilinguirian (1998) tarafından yapılan çalışmalar bu yönteme örnek olarak gösterilebilir. ...
Book
Bu çalışmanın temel amacı, araştırma – geliştirme faaliyetlerinde belli bir gelişme düzeyini yakalamış veya bu potansiyelde olan, bulunduğu bölgeyi temsil edebilecek nitelikte olan ve Türkiye’ye örnek olabilecek veya rekabet edebilecek potansiyele sahip ülkelerin araştırma – geliştirme faaliyetleri için kullandığı teşvik politikalarını mukayese ederek, ülkelerin eksikliklerini veya olumlu taraflarını önplana çıkarmak suretiyle daha anlamlı bir teşvik politikası çerçevesi ortaya koyabilmektir. Çalışma, üç ana bölümden oluşmaktadır. Birinci bölümde araştırma – geliştirme faaliyetinin tanımına ve genel özelliklerine değinilmektedir. İkinci bölümde, örnek olarak seçilen ülkelerdeki uygulamaları da kapsayacak şekilde, araştırma – geliştirme faaliyetleri için uygulanan teşvik politikası araçlarına değinilmektedir. Üçüncü ve son bölümde de yukarıda bahsettiğimiz kıstaslara göre seçilmiş ülkelerdeki araştırma – geliştirme faaliyetleri trendi ve bu faaliyet- ler için uyguladıkları teşvik politikalarının değerlendirilmesinden oluşmaktadır. Çalışmanın sonuç bölümü ise araştırma – geliştirme faaliyetlerinin gelişimi, bu faaliyetler için uygulanan teşvik politikalarına ilişkin eksiklikler ve önerilerden oluşmaktadır.
... Frequently the depreciation involved is also 2 Ž . Sources include Asmussen and Berriot 1993 , Griffith et al. 1995, Harhoff 1994 . Ž . ...
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Tax benefits, considering their consequences for the economy and the budget system, are the most controversial element of any tax. Therefore, policy decisions on the introduction of new, continued use or abolition of existing tax benefits should be based on reliable information about their expected or actual effectiveness and efficiency. The purpose of this article is to define methodological approaches to assessing the use of tax benefits as a prerequisite for improving the soundness of tax policy and effectiveness of public administration of the financial system. The article, based on the analysis of Western literature sources, considers methodological approaches to assessing the use of tax benefits in the context of their effectiveness (achievement of goals and fulfillment of the conditions for granting, impact on the behavior of economic agents and results of their activity), efficiency (comparison of benefits and costs) and relative efficiency (comparison of the effectiveness of tax benefits and other policy instruments), as well as evaluation methods and tools. The practical application of these methodological approaches is considered on the example of investment and innovation incentives for corporate income tax and VAT incentives (reduced tax rate on labor-intensive services). The author notes that the assessment of consequences of the introduction of tax benefits can be provided using methods of comparative analysis of the behavior of the beneficiary company before and after the introduction of the tax incentive; survey of the company's managers on how the tax benefit affected certain aspects of their behavior (investment decisions, implementation of R&D, employment and remuneration policies, etc.); and econometric analysis. According to the results of the study, it was is concluded that ultimately the choice of an the approach to assessing the application of tax benefits, as well as methods and tools of analysis is determined by the available information base in open sources and access to non-public information. In addition, the reliability of the results of evaluation of the application of tax benefits substantially depends on compliance with the requirements and procedures during their implementation, in particular, the definition of objectives and, if necessary, the conditions of their granting, as well as the quality and the completeness of accounting of the provided benefits. The latter, as well as the availability of the necessary information and its disclosure is one of the main problems in assessing the application of tax benefits in countries with transition economy.
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A large empirical literature has sought to estimate the rate of return to R&D at the firm and industry levels. In general, this literature finds the social rates of return to R&D to be substantially above private rates of return. These rates of return both inform us of how important R&D is for growth and provide one of the main justifications for government subsidies to R&D. Firms' decisions to undertake R&D are based on their private return to R&D. We believe that because this is lower than the social rate of return, there is underinvestment in R&D. In order to achieve the optimal level of R&D investment, government policy should aim to bring private incentives in line with the social rate of return. The first part of this note considers current estimates of the private and social rates of return to R&D. These estimates suggest that the gap between private and social rates of return is quite large. A comparison of the levels of R&D intensity in the business sector is then made across countries. The UK has the lowest R&D intensity of the G5 countries and, perhaps more worryingly, the trend has been flat while in other countries R&D intensity has been increasing over time. This is reflected in lower productivity levels in the UK (although there is much debate over the measurement of productivity and the size of this gap). What then can and should the government be doing to increase the amount of R&D done in the UK? There are a large range of policy instruments that could affect the share of GDP that is invested in R&D. Indirect policies such as competition policy and regulation may be important. Direct policies include direct funding of R&D, investment in human capital formation, extending patents protection and tax credits for R&D. R&D tax credits have become a popular policy tool, with many countries offering subsidies of this form. Recent empirical evidence suggests that R&D tax credits are an effective instrument, although there are many remaining questions about their desirability. Do they increase the total amount of R&D or is their main impact to reallocate R&D between countries, i.e. is the increasing use of R&D tax credits one form of tax competition between countries for a mobile activity? In a world with multinational firms, one issue that arises is whether it is R&D in the UK or R&D by UK firms that we are concerned with. Does an increase in R&D expenditure lead to increases in the knowledge stock, or does it simply lead to higher wages for R&D scientists, as has been suggested by recent work in the US? Is it possible to provide subsidies to the extent needed to raise R&D intensity in the UK to the level in other G5 countries, without creating other distortions to economic activity? It is difficult to design and implement an effective subsidy to R&D without taking a view on the answer to at least some of these questions.
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This paper examines the impact of fiscal incentives on the level of R&D investment. An econometric model of R&D investment is estimated using a new panel of data on tax changes and R&D spending in nine OECD countries over a 19-year period (1979–1997). We find evidence that tax incentives are effective in increasing R&D intensity. This is true even after allowing for permanent country-specific characteristics, world macro shocks and other policy influences. We estimate that a 10% fall in the cost of R&D stimulates just over a 1% rise in the level of R&D in the short-run, and just under a 10% rise in R&D in the long-run.
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Ideas from new growth economics are considered in the context of British economic policy. A distinction is drawn between "broad capital" and "endogenous innovation" growth models and the latter are seen as more helpful. Solow's insight that in the long run growth is independent of routine investment is regarded as still valid but the neoclassical assumption of convergence in technology is not. A key goal of policy should be to target the rate of total factor productivity growth and thus to address market failures inhibiting technology transfer. Policy initiatives should include institutional reforms as well as the appropriate design of taxes and subsidies. Copyright 1996 by Oxford University Press.
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In this paper we explain why the current UK corporation tax discourages investment, consider how large this effect is likely to be, and discuss how this tax bias against corporate investment can best be eliminated. The present corporation tax does not raise the cost of capital for all types of investment, but does raise it for investment financed by retained profits. We propose a new corporate to allowance for investment financed by equity (the Allowance for Corporate Equity). This approach not only eliminates the discouragement to investment, hut also reduces or eliminates most other distortions to company behavior that result from the current corporation tax. The new allowance can be partly financed by eliminating the present tax advantages of dividend income for tax-exempt investors, and this may have an additional benefit for investment by removing one source of pressure for high dividend pay-out ratios in the UK. Copyright 1996 by Oxford University Press.
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This paper investigates the economic impact of the government’s proposed new UK R&D tax credit. We measure the benefit of the credit by the effect on value added in the short and long runs. This is simulated from existing econometric estimates of the tax-price elasticity of research and development (R&D) and the effect of R&D on productivity. For the latter, we allow R&D to have an effect on technology transfer (catching up with the technological frontier) as well as innovation (pushing the frontier forward). We then compare the increase in value added to the likely exchequer costs of the programme under a number of scenarios. In the long run, the increase in GDP far outweighs the costs of the tax credit. The short-run effect is far smaller, with value added only exceeding cost if R&D grows at or below the rate of inflation.
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Cet article expose la variabilité du taux effectif de l'impôt pour la Recherche et le Développement (R&D) dans les dix provinces canadiennes. Nous montrons que, bien que toutes les provinces bénéficient d'une subvention fiscale assez substantielle, pour R&D, la variation d'une province à l'autre est considérable, allant d'un taux de subvention effectif d'environ 40% en Alberta à un taux supérieur à 200% au Québec. /// This paper documents the variation in effective tax rates for R&D in Canada's ten provinces. It is shown that while a sizable tax subsidy for R&D exists in every province, the variation across provinces is significant, ranging from an effective subsidy rate of about 40 percent in Alberta to over 200 percent in Quebec.
Article
This paper examines R&D investment in the major industrialised countries since 1974 using industry level panel data. Several hypotheses are examined concerning why Britain has had slower growth in R&D compared to other countries. Using decomposition techniques UK R&D intensity appears lower mainly because of lower R&D across a range of industries (‘within industry’) rather than a slower restructuring towards high tech sectors (‘between industry’). Estimation of an econometric model for R&D shows that the significantly lower UK is partially accounted for by lower demand growth and faster withdrawal of government funding for R&D in the 1980s. The bulk of the UK penalty in R&D growth remains, however, unexplained.
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The paper begins with a discussion of the nature and relationship of trade marks to patents. We ask whether trade marks should be classed as market improving intellectual property (IP) or as private intangible assets. Our empirical aims are to document the acquisition of these two kinds of IP by UK firms and to investigate the Schumpeterian relationship between firm size and IP. We use a newly constructed data set which traces firm ownership of IP both directly and via subsidiary companies. We begin by looking at trends in IP protection by all applicants of any nationality in Britain and Europe in comparison with known trends for the USA. There was considerable similarity across all the measures and across geographical areas in the rank order of IP by product class, although consumer product groups were more represented in trade marks, whereas production technology is more important in patents. These features suggest common global patterns of demand and technological activity. However very different time trends are observed for British patent publications, which fell while all other indicators rose; furthermore chemical products moved down the rank order, in contrast to remaining a principal group for patents in Europe. We then present the IP performance of selected panels of UK production and financial firms. A key finding is confirmation that the rate of British patenting by these UK production firms fell sharply in the period and this was not compensated by a rise in patenting via Europe, despite a rapid rise in the overall level of patents granted by this route. A small rise in US patents was not enough to outweigh the falls in UK and Europe. In contrast, for production firms trade mark applications rose, especially during the mid-90s; this feature was also observed for the financial firm sample. The size distribution of IP in comparison to that of either sales or employment supports other studies in finding the opposite of the Schumpeterian hypothesis that size promotes innovation. For these two samples smaller firms are more than proportionately active in acquiring IP assets. Acknowledgements This study began as part of an ESRC project 'The Economic Role and Value of Trade Marks' (grant number L325253036). We are grateful to the UK Patent Office for access to the archive of UK patent publications and to St. Peter's College for accommodation and administration for this project. Further work on this and related topics is now being financed by the Leverhulme Trust. An earlier version of this paper benefited from comments from seminar participants in the series 'Intellectual Property in the New Millennium' organised by the Oxford Intellectual Property Research Centre, of which all three authors are members.
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This chapter describes the evolution of the tax treatment of investment in R&D in Australia, Canada, France, Great Britain, Germany, Italy, Japan and the USA between 1979 and 1994. Estimates of the cost of R&D are provided and the methodology used is contrasted with other ones used in the literature. Four findings are highlighted. First, there appear to be substantial differences in the cost of R&D across countries at any given point in time. Second, there has been a general trend towards more generous tax treatment of R&D, although some countries have moved much more rapidly than others. Third, there is an increasing diversity in the cost of R&D between countries. Finally, in order to illustrate the substantial within-country heterogeneity that can arise from differences in design and implementation, several stylised tax systems are applied to a sample of firm level data and the resulting distribution of tax rates is presented.
Article
Most studies in China focuses on the effects of tax incentive policies in high-tech industry from a macro perspective. In contrast, this research adopts a micro-level perspective to empirically examine the current tax incentive policy and its impacts on the technology innovation performance of high-tech enterprises in Hangzou, China. Some useful insights are provided.
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The debate over the effectiveness of tax incentives to stimulate research and development (“R&D”) expenditure has been with us for several decades. The literature is extensive although far from conclusive on the desirability of fiscal incentives for R&D and the measurement of their incremental impact. New Zealand has lagged most members of the OECD in providing fiscal stimuli for R&D expenditure. It was only in the last few years that the tax treatment of R&D was brought largely into line with the financial accounting treatment, permitting further areas of “black hole” expenditure to be deductible for tax purposes. This article provides an overview of the R&D tax incentives for six OECD members that justify consideration by New Zealand, provides a summary of major research findings on the effectiveness of R&D incentives, subsidies and grants, and sets out by way of conclusion recommendations for future consideration, specifically for New Zealand policymakers.
Article
The purpose of this paper is to account for technological change in the Electronic Components and Communications Equipment (ECCE) industry. Taking the industry in the USA, Japan and the UK for a case study, government policies for the industry after 1981 are compared. Six types of policies are analysed that involve supply-push, demand-pull, institutional changes, technological trajectories and technological paradigms. It shows that to improve technological development in the industry, government industrial Research and Development (R&D) expenditure does not have to be large, but policies to affect the determinants of technological change to promote private R&D investments are needed.
Article
Today’s technological frontrunners are tomorrow’s economic champions. In order to triumph in the global innovation race, nations go to great lengths to boost domestic innovation. An increasingly popular instrument of such government support is known as the ‘R&D tax incentive’. Scholars have particularly noted its greater incentive impact on small- and medium-sized enterprises (SMEs). However, correct use of this fiscal tool remains clouded by legal and economic complexities, often leading to misallocation of tax money. This study draws on the rich experience of the UK as a seasoned lawmaker in this field, to derive internationally transferrable policy lessons and principles that may be used in assessing and optimizing the potency of research and development tax incentives for SMEs. Following a theoretical analysis of the historical legal developments, annual government statistics, literature, and policy papers, this study argues that policymakers must take into account appropriateness, cost-efficiency, and accessibility in the design.
Article
Innovation is critical in the knowledge-based economy. It is generally accepted that governments have an important role to play in promoting innovative activity and R&D. Both the federal and provincial governments in Canada provide tax subsidies, and other forms of support, for R&D. Changes to various programs offered by the federal government were introduced in Budget 2012, most particularly related to the Scientific Research and Experimental Development (SR&ED) tax credit program. This paper analyzes the state of tax subsidies for R&D both pre- and post-budget, and at both the federal and provincial level. It is shown that there is a patchwork of effective tax subsidy rates in Canada, which vary both between and within provinces, between small versus large firms, and across sectors and types of R&D activity. The result is a misallocation of R&D resources and a system of government support that is less effective than it could be. On some dimensions Budget 2012 was a move in the right direction, but on other dimensions matters were made worse, resulting in a reconfiguration of tax support across R&D activities that is more distortionary and less efficient. Most particularly, the post-budget tax system heavily favours small firms over large firms, and labour intensive R&D over capital intensive R&D. This paper offers a lucid examination of R&D tax support pre- and post-budget, and argues persuasively that Canadian governments should adopt a more uniform, less distortionary approach to tax subsidies for R&D if they are truly interested in setting innovation free.
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Because of the lack of long time series on R&D and patents, few studies have examined the causal link in the Granger sense between these two innovation indicators. The existing evidence gathered by Griliches (1981), Pakes (1985), Hall et al. (1986) and Griliches et al. (1991) points to an almost instantaneous relationship, and, to the extent that any lag effects can be established, causality seems to run from R&D to patents. The Dutch innovation surveys which contain questions on patent applications allow us to re-examine this issue using information of four-year lagged amounts of R&D expenditures and numbers of patent applications for a sample of 460 firms from the 1992 survey that also responded to the 1988 survey. Section 3.2 discusses the model which relates R&D expenditures and patent count mutually. Section 3.3 introduces the data, and the estimation results are presented in Section 3.4. Section 3.5 concludes.
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The paper provides empirical insights about the existing practice and the effects of using tax incentives for R&D in Croatia's large companies. In order to determine the current situation and analyze the effects from applying tax incentives for R&D, a survey was developed. The research methodology includes descriptive methods of statistical analysis of the data from the survey conducted in 85 Croatian large companies.
Article
Tax incentives for firms’ research and development (R&D) activities have been widely used to solve the “market failure” problem and to increase firms’ R&D investment. However, there is no consensus on whether the incentive effects of R&D tax policies are effective. This study empirically analyses the moderating effect of the adjustment costs of R&D on the incentive effects of R&D tax policies in China. The results show that tax incentives policies stimulate firms’ R&D investment. However, the incentive effect of tax incentives weakens as adjustment costs increase. When the adjustment cost is greater than a critical value (0.012), the tax incentive effect of R&D disappears. About 93% of Chinese firms have adjustment costs lower than this critical value, which suggests that China’s R&D tax incentives policy is generally effective. This study also finds that the incentive effect of tax policy on R&D investment is more significant for non-state-owned firms than for state-owned firms.
Article
In diesem Beitrag wird untersucht, inwieweit eine staatliche F&E-Förderung zu einer Erhöhung der privaten F&E-Tätigkeit führt. Zunächst wird eine Klassifizierung der staatlichen F&E-Förderung im weiteren Sinne unternommen. Daraufhin folgt eine genauere Betrachtung der F&E-Förderung im engeren Sinne, welche sich im Wesentlichen auf anreizbasierte Instrumente, wie direkte Subventionen oder Steueranreize, bezieht. Durch die Berücksichtigung der Marktrivalität und der technologischen Distanz von Unternehmen wird innerhalb eines Duopol-Modells das strategische F&E-Verhalten von Unternehmen analysiert. Die empirische Validierung des Modells zeigt, dass je nach Kontext (Marktrivalität vs. technologische Distanz der Unternehmen) ein substitutives bzw. ein komplementäres F&E-Verhalten identifiziert werden kann. Die Erweiterung der modeltheoretischen Überlegungen um staatliche Fördermaßnahmen legen nahe, dass hinsichtlich der staatlichen Förderung zwischen einer symmetrischen und einer asymmetrischen unterschieden werden sollte. Während Erstere eine Erhöhung der privaten F&E erwarten lässt, hängt bei einer asymmetrischen Förderung der Effekt von der relativen Marktrivalität bzw. Technologienähe ab.
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Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. We examine the impact of R&D on firm performance, both by the firm's own investments and through positive (and negative) spillovers from other firms. We analyse panel data on US firms over the last three decades, and allow for time‐varying spillovers in both technology space (knowledge spillover) and product market space (product market rivalry). We show that the magnitude of R&D spillovers remains as large in the second decade of the 21st century as it was in the mid 1980s. Since the ratio of the social return to the private return to R&D is about four to one, this implies that there remains a strong case for public support of R&D. Positive spillovers appeared to temporarily increase in the 1995–2004 digital technology boom. We also show how these micro estimates relate to estimates from the endogenous growth literature and give some suggestions for future work.
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R&D; tax policy in the United States during the 1980s is evaluated, with particular emphasis placed on quantifying the impact of the R&D; tax credit on the R&D; investment of manufacturing firms. Using publicly available data on R&D; spending at the firm level, I estimate an average tax price elasticity for R&D; spending which is in the neighborhood of unity in the short run. Although the effective credit rate is small (less than five percent until 1990), this relatively strong price response means that the amount of additional R&D; spending thus induced was greater than the cost in foregone tax revenue. The recent evolution of features of the U.S. corporate tax system which affect R&D; is also reviewed and my results are compared with those of previous researchers. The conclusion is that the R&D; tax credit seems to have had the intended effect, although it took several years for firms to fully adjust. I also argue that although the high correlation over time of R&D; spending at the firm level makes it difficult to estimate long-run effects precisely, the same high correlation makes it probable that these effects are large.
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The elasticity of investment and R&D investment with respect to cash flow is unambiguously positive in a large panel of U.S. manufacturing firms from 1973 to 1987. even with proper controls for permanent differences across firms and for simultaneity. I argue that the evidence favors liquidity constraints rather than just demand effects as the cause of this finding. Other results are that debt is not favored as a form of finance for R&D-intensive firms; leverage ratios and R&D investment are strongly negatively correlated across firms and this is not accounted for by differences in corporate taxation. Finally, the contemporaneous relationship between changes in debt levels and investment which I have previously documented (Hall 1990b and Hall 1991) is one of simultaneity, and apparently transitory, unlike the relationship between cash flow and investment.
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US patenting by 686 of the world's largest manufacturing firms shows that their share of the world's production of technology is less than their share of R&D activities, and varies greatly amongst sectors. In most cases, the technological activities of these large firms are concentrated in their home country, the characteristics of which influence the volume and trends in their technological activities much more strongly then the international component of these activities. At the same time, these large firms are major elements in the volume and the pattern of sectoral specializations in their home countries' technological activities.© 1991 JIBS. Journal of International Business Studies (1991) 22, 1–21
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The authors assume that firms invest in R&D not only to generate innovations, but also to learn from competitors and extraindustry knowledge sources (e.g., university and government labs). This argument suggests that the ease of learning within an industry will both affect R&D spending, and condition the influence of appropriability and technological opportunity conditions on R&D. For example, they show that, contrary to the traditional result, intraindustry spillovers may encourage equilibrium industry R&D investment. Regression results confirm that the impact of appropriability and technological opportunity conditions on R&D is influenced by the ease and character of learning. Copyright 1989 by Royal Economic Society.
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In this paper we investigate the sensitivity of investment to the availability of internal funds using the hierarchy of finance approach to corporate finance. We characterize the empirical implications of this approach for dynamic investment models and test these implications using firm-level data. The model we estimate is based on the Euler equation for optimal capital accumulation in the presence of convex adjustment costs. The theoretical model explicitly allows for debt finance and financial assets. The empirical investigation uses U.K. company panel data to estimate dynamic investment models using GMM and tests the derived implications.
Article
To have the incentive to undertake research and development, a firm must be able to appropriate returns sufficient to make the investment worthwhile. The benefits consumers derive from an innovation, however, are increased if competitors can imitate and improve on the innovation to ensure its availability on favorable terms. Patent law seeks to resolve this tension between incentives for innovation and widespread diffusion of benefits. A patent confers, in theory, perfect appropriability (monopoly of the invention) for a limited time in return for a public disclosure that ensures, again in theory, widespread diffusion of benefits when the patent expires.
Article
В статье производится анализ агрегированной производственной функции, вводится аппарат, позволяющий различать движение вдоль такой функции от ее сдвигов. На основании сделанных в статье предположений делаются выводы о характере технического прогресса и технологических изменений. Существенное внимание уделяется вариантам применения концепции агрегированной производственной функции.
Article
A model is presented based on recent theories of economic growth that treat commercially oriented innovation efforts as a major engine of technological progress. We study the extent to which a country's total factor productivity depends not only on domestic R&D capital but also on foreign R&D capital. Our estimates indicate that foreign R&D has beneficial effects on domestic productivity, and that these are stronger the more open an economy is to foreign trade. Moreover, the estimated rates of return on R&D are very high, both in terms of domestic output and international spillovers.
Article
The effectiveness of the tax credit for research and experimentation (R&E) expenditures is examined using a panel of firm data for the period 1975 through 1988. Using a structural model, the results generally indicate that the credit resulted in increased R&E spending. However, the effect of the credit was substantially mitigated by the impacts of net operating loss carryovers and low growth opportunities. Results also indicate some degree of decreased R&E spending as a result of debt restructuring activity. Tax policy implications are discussed.
Article
This paper surveys the current state of the art concerning the management and economic impact of geographically decentralized research and development (R&D) in multinational companies (MNCs). This line of research has recently begun to attract renewed interest, in reflection of not only critical new trends regarding the nature and conditions of technological change but also significant developments in the realm of economic and managerial theory.The aim of this paper is, first, to outline the empirical and theoretical background and perspective of this new research agenda. Second, it gives a summary and overview of prior research in the area. Third, it outlines the content and structure of a number of recent studies. Based on these studies the paper identifies a number of trends and implications in terms of policy issues and critical areas for future research.
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Capitalism, Socialism and Democracy remains one of the greatest works of social theory written in the twentieth Century. Schumpeter's contention that the seeds of capitalism's decline were internal, and his equal and opposite hostility to centralist socialism have perplexed, engaged and infuriated readers since the book's first publication in 1943. By refusing to become an advocate for either position, Schumpeter was able both to make his own great and original contribution and to clear the way for a more balanced consideration of the most important social movements of his and our time.
Article
Since Joseph Schumpeter, economists have argued that internal finance should be an important determinant of R&D expenditures. Yet almost without exception, previous empirical studies have not found evidence of such a relation. Using newly available data, the authors investigate this puzzle with a panel of 179 small firms in high-tech industries. Under each estimation strategy they employ, the authors find an economically large and statistically significant relationship between R&D investment and internal finance. Their results are consistent with the view that, because of capital market imperfections, the flow of internal finance is the principal determinant of the rate at which small, high-tech firms acquire technology through R&D. Copyright 1994 by MIT Press.
Article
This paper investigates the shift in demand away from unskilled and toward skilled labor in U. S. manufacturing over the 1980s. Production labor-saving technological change is the chief explanation for this shift. That conclusion is based on three facts: (1) the shift is due mostly to increased use of skilled workers within the 450 industries in U. S. manufacturing rather than to a reallocation of employment between industries, as would be implied by a shift in product demand due to trade or to a defense buildup; (2) trade- and defense-demand are associated with only small employment reallocation effects; (3) increased use of nonproduction workers is strongly correlated with investment in computers and in R&D.
Article
Numerous studies on production and cost, the sources of productivity, and endogenous growth have recognized the pivotal role played by physical and R&D capital stocks. Analysis of the contributions of these capitals often requires measures of the stocks of physical and R&D capital, which in turn requires measuring their depreciation rates. In this paper, the authors specify a model of factor demand that allows them to estimate the depreciation rates of both physical and R&D capital jointly with other model parameters. The model is estimated for the U.S. total manufacturing sector. Copyright 1996 by Oxford University Press.
Article
This paper analyzes the effects of the U.S. tax treatment of the R&D activities of American multinationals. Recent evidence indicates that the level of R&D spending is highly sensitive to its after-tax cost. The U.S. Tax Reform Act of 1986 reduced the tax deductions that many American firms can claim for their R&D expenses incurred in the U.S., and on this basis, observers predicted that American firms would react to the tax change by significantly increasing the fraction of their R&D that they perform abroad. Aggregate data indicate that this fraction instead stayed roughly constant, at around 10%. An important reason why U.S. firms did not move more of their total R&D activity offshore is that U.S. tax law provides quite generous treatment of R&D performed in the U.S. for use abroad by firms with excess foreign tax credits, and the Tax Reform Act of 1986 significantly increased the number of American firms with excess foreign tax credits. Hence, the 1986 tax change increased the cost of U.S.-based R&D for some American firms, and reduced it for others, with little impact on the overall fraction of R&D spending that U.S. firms do abroad. One consequence of the tax law changes of the late 1980s is that, by 1991, the tax treatment of foreign-source royalties received by American firms with excess foreign tax credits has five times the revenue impact of the Research and Experimentation Tax Credit.
Article
This paper investigates the shift in demand towards skilled labor in U.S. manufacturing. Between 1979 and 1989. employment of production workers in manufacturing dropped by 2.2 mil1ion or 15 percent while employment of non-production workers rose by 3 percent. A decomposition of changing employment patterns in each of 450 industries reveals that the defense buildup and trade deficits can account for only a small part of the shift in demand towards non-production workers. We conclude that production labor-saving technological change is the most likely explanation for the shift in demand towards non-production workers since the shift is mostly due to changes in labor demand within industries rather than reallocation of employment towards industries with higher shares of skilled labor. Strong correlations between within-industry skil1 upgrading and both increased investment in computers on the one hand and increased investment in R&D on the other provide further evidence for production labor saving technological change.
Article
This paper explores the effect of recent U.S. tax changes on the R&D activities of American multinational corporations. Prior to 1986, U.S. multinational firms could deduct all of their domestic R&D expenses against their U.S. income for tax purposes. After 1986, some firms could take only a partial deduction (while other multinationals continued to receive the benefits of 100% deductibility). By comparing the behavior of firms in these two situations (after 1986), it is possible to estimate the responsiveness of R&D to changes in after-tax prices. The results indicate that the price elasticity of demand for R&D lies between -1.2 and -1.6, thereby implying considerably more price sensitivity than is typically assumed to be true of R&D. Based on these results, the 1986 tax change appears to have been responsible for a reduction of between $1.4 billion and $2.2 billion in annual R&D in the United States, in return for $1.2 billion in additional annual tax revenue.
Article
This paper shows that increases in the minimum wage rate can have ambiguous effects on the working hours and welfare of employed workers in competitive labor markets. The reason is that employers may not comply with the minimum wage legislation and instead pay a lower subminimum wage rate. If workers are risk neutral, we prove that working hours and welfare are invariant to the minimum wage rate. If workers are risk averse and imprudent (which is the empirically likely case), then working hours decrease with the minimum wage rate, while their welfare may increase.
Article
In Canada, as in many other countries that have adopted R&D tax credits and allowances, there has been considerable controversy over their effectiveness in increasing company-financed research and development. This study seems to be one of the first systematic attempts to estimate the effects of Canada's R&D tax credits and allowances. The results present a very consistent picture. The survey results, the econometric results, and some simple calculations based on rough measures of the price elasticity of demand for R&D all suggest that the special research allowance increased R&D expenditures by about 1 percent and that the investment tax credit increased them by about 2 percent. These increases seem to be appreciably less than the revenue losses to the government.
Article
Beaucoup d'études empiriques montrent que la structure de la production et la croissance de la productivité d'un pays dépendent de sa recherche propre. Avec l'épanouissement du commerce international, des investissements directs à l'étranger et de la diffusion internationale de la technologie, on s'attend à ce que la structure productive et les performances de productivité d'un pays dépendent également de la recherche entreprise à l'étanger. Cette étude explore dans quelle mesure il existe des liens bilatéraux de R-D entre les États-Unis et le Japon, qui affectent les choix de production, les investissements en capital physique et en R-D, et les croissances de la productivité. Nous trouvons que la production devient moins intensive en travail avec l'accroissement des externalités de la R-D. Dans le court terme, il y a une complémentarité entre la recherche propre et les externalités de la recherche étrangère. Cette relation subsiste dans le long terme aux États-Unis. Au Japon, par contre, les externalités de la R-D américaine ont tendance à réduire la recherche propre. Le stock de R-D des États-Unis explique 60% de la croissance de la productivité totale ds facteurs japonaise tandis que celle des États-Unis est due pour 20% à la recherche nippone. Les externalités internationales de la R-D rendent le taux de rendement social de la R-D quatre fois plus grand que le taux de rendement privé. A great deal of empirical evidence shows that a contry's production structure and productivity growth depend on its own R&D capital formation. With the growing role of international trade, foreign investment and international knowledge diffurion, domestic production and productivity also depend on the R&D activities of other countries. The purpose of this paper is to empirically investigate the bilateral link between the U.S. and Japanese economies in terms of how R&D capital formation in one country affects the production structure, physical and R&D capital accumulation, and productivity growth in the other country. We find that production processes become less labor intensive as international R&D spillovers grow. In the short-run, R&D intensity is complementary to the international spillover. This relationship persists in the long-run for the U.S., but the Japanese decrease their own R&D intensity. In addition, U.S. R&D capital directly contributes to Japanese total factor productivity growth by three and a half times more than Japanese R&D capital directly contributes to U.S. productivity gains. International spillovers cause social rates of return to be around ten times the private returns.
Article
R&D spillovers are, potentially, a major source of endogenous growth in various recent "new growth theory" models. This paper reviews the basic model of R&D spillovers and then focuses on the empirical evidence for their existence and magnitude. It surveys the older empirical literature with special attention to the economic difficulties of actually coming up with convincing evidence on this topic. Taken individually, many of the studies are flawed and subject to a variety of reservations, but the overall impression remains that R&D spillovers are both prevalent and important. Copyright 1992 by The editors of the Scandinavian Journal of Economics.
Article
A lo largo de la historia econ�mica moderna, los salarios reales han sido un buen indicador del nivel de vida material de la clase trabajadora. Este documento presenta series de salarios reales para diferentes sectores y �pocas en Colombia. Apoy�ndonos en datos compilados por varios autores, nuestra principal conclusi�n es que a lo largo de los �ltimos 170 a�os, los salarios reales en Colombia han aumentado menos que el crecimiento de PIB per capita. Esto puede ser una causa parcial de la mala distribuci�n del ingreso en la actualidad en Colombia.
Canada’s R & D tax incentives: recent developments
  • W S Clark
  • G Goodchild
  • B Hamilton
  • B Toms
Clark, W. S., Goodchild, G., Hamilton, B. and Toms, B. (1993), ‘Canada’s R & D tax incentives: recent developments’, Report of the Proceedings of the Forty-Fourth Tax Conference, Toronto: Canadian Tax Foundation
International R&D spillovers between US and Japanese R&D intensive sectors Working PaperRates of return on physical and R&D capital and structure of production process: cross section and time series evidence
  • J Bernstein
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Bernstein, J. and Mohnen, P. (1994), ‘International R&D spillovers between US and Japanese R&D intensive sectors’, National Bureau of Economic Research, Working Paper, March. — and Nadiri, M. I. (1989), ‘Rates of return on physical and R&D capital and structure of production process: cross section and time series evidence’, in B. Raj (ed.), Advances in Econometrics and Modeling, Deventer: Kluwer
No place like home: tax incentives and the location of R&D by American multinationals Working Paper no. 4574On the sensitivity of R&D to delicate tax changes: the behaviour of US multinationals in the 1980s
  • J R Hines
Hines, J. R. (1993a), ‘No place like home: tax incentives and the location of R&D by American multinationals’, National Bureau of Economic Research, Working Paper no. 4574. — (1993b), ‘On the sensitivity of R&D to delicate tax changes: the behaviour of US multinationals in the 1980s’, Studies in International Taxation, National Bureau of Economic Research / University of Chicago Press
Information sharing, R&D spillovers and technology policy', mimeo
  • Y Katsoulacos
  • D Ulph
Katsoulacos, Y. and Ulph, D. (1993, 'Information sharing, R&D spillovers and technology policy', mimeo, University College London.
Surplus ACT a solution in sight The Research Tan Credit has Stimulated some Additional Research Spending
  • H Freeman
  • R Criffith
Tax Incentives f o r R&D Freeman, H. and Criffith, R. (1993), 'Surplus ACT a solution in sight?', FiscaE Studies, vol. 14, no. GAO (General Accounting Office of the United States Government) (1989), The Research Tan Credit has Stimulated some Additional Research Spending, Washington DC: US Government Accounting Office.
Research and development at the firm level: does the source of financing matter?', mimeoR&D tax policy during the 1980s: success or failure?', Tax Policy and the Economy
  • B Hall
Hall, B. (1990), 'Research and development at the firm level: does the source of financing matter?', mimeo, National Bureau of Economic Research. -(1993), 'R&D tax policy during the 1980s: success or failure?', Tax Policy and the Economy, pp. 1-35.
Directorate for Science, Technology and Industry's Structural Analysis
— (1994), Directorate for Science, Technology and Industry's Structural Analysis / Analytical Business Enterprise R&D (STAN/ANBERD) data set.
Realising Our Potential: A Strategy for Science, Engineering and Technology, Cm
HMSO (1993), Realising Our Potential: A Strategy for Science, Engineering and Technology, Cm. 2250, London: HMSO.
British industrial research and development after 1945: a re-interpretation
  • D Edgerton
Edgerton, D. (1993), 'British industrial research and development after 1945: a re-interpretation', Science and Technology Policy, April, pp. 10–16.
Estimation of the depreciation rate of physical and R&D capital in U.S. total manufacturing sector', paper presented at the workshop on the measurement of the depreciation rate of the capital stock, Federal Reserve Board of Governors
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