Why are tax incentives increasingly used to promote private R&D?

Resumo / Abstract: Although not new, tax incentives policies to promote business R&D have known major changes over recent years in many countries around the world, and it is becoming an increasingly important instrument in the policy mix to stimulate private R&D. According to the OECD reports, three changes are noticeable: i) The implementation of R&D tax incentives schemes by a growing number of OECD and non-OECD countries. The number of OECD countries with R&D tax schemes rose from 12 in 1995, to 18 in 2004, to 21 in 2008. ii) A steady substitution of direct funding schemes for tax incentives schemes to stimulate business R&D. iii) The many changes to tax incentives schemes most countries have done to increase the levels of generosity and attractiveness, which is raising concerns about the use of these policy instruments for competitive purposes. This picture portrays the increasing importance of R&D policy in a fast-changing international context and raises the question about the motives which might explain these trends. The Lisbon Strategy, the Action Plan for Europe for investing in research, and the consequent pressure put on the demand side of R&D resources, have had an important role in this change. This paper focus on the reasons behind the growing interest of many countries around the world in implementing and developing tax incentives mechanisms to promote business R&D. The reasons behind the growing preference for tax incentives goes much beyond some possible advantage over direct measures, and is also the consequence of a political change in the EU towards R&D, a change in the rationale of public support of private R&D and the growing competition between countries for international R&D investment. This preference for tax incentives policies might become a major feature of this era where the S&T policy of so many countries is designed to meet specific (business) R&D objectives, something never seen before.

Outros seminários / Other seminars: Programa completo / Full programme.