Ievaluation of Research and Development Tax Incentives Scheme in Croatia

Abstract

According to the European Innovation Scoreboard metrics Croatia belongs to the group of moderate innovators, i.e. a country with below average innovation performance in comparison to the EU average in the period 2009-2010. Government subsidies are frequently introduced to improve countries' innovation performance. Whether existing R&D tax scheme in Croatia produces expected results is the key research question analyzed in the paper. Based on the microeconometric analysis of individual firms' data, we confirm positive effect of the subsidies on expenditures in research and development as well as on product innovation. However, the significant effect on process innovation is not found.

Economic analysis of innovation tax incentives in Brazil: essays on the impacts of law 11,196/05 on industrial innovation

“…Positive impact on R&D staff is in accordance with the conclusions of The results also indicate the Brazilian policy was successful in encouraging firms to begin investing in innovation. The same empirical finding was obtained by Aralica et al (2013) and Haegeland and Møen (2007), and it challenges the theoretical argument that tax incentives are not particularly suited for increasing the base of innovative companies (Bastos, 2004). …”

“…Contrary to Czarnitzki et al (2011), Aralica et al (2013) and Bérubé and Mohnen (2009), this study does not present evidence of impact of the policy on new products sales and exports, although the sign of the ATT is consistently positive and it achieves statistical significance in alternative matching algorithms (as part of the robustness checks). Moreover, no evidence of effect on firms' labor productivity was found.…”

“…The main variables used for these analyses are new products' sales, novelty of innovation and firm productivity. The few studies that investigated these matters found significant results (Aralica & Botrić, 2013;Czarnitzki, Hanel & Rosa, 2011;Bérubé & Mohnen, 2009), but their number is not sufficient to state this is a consensus. 4 This constitutes an important research agenda for the development of the literature and the understanding of innovation policies.…”

“…Aralica and Botrić (2013) found that only product innovation was benefited from innovation policies in Croatia, while New Zealand firms increased their results in both types in similar rates, according to Jaffe and Le (2015).…”

“…The empirical literature also distinguishes between product and process innovation (Saha, 1999;Beladi et al, 2011;Aralica & Botrić, 2013;and Cohen & Klepper, 1996). The main point is to understand whether firms' technological efforts focus on developing new or better-quality items for the market or improve production or productivity.…”