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Tax Policy and R&D Investment by Australian Firms

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  • RUSSELL THOMSON

Abstract

This paper examines the determinants of investment in R&D by Australian firms, with a focus on the role of tax policy. The analysis considers an unbalanced panel of financial data of approximately 500 large Australian firms between 1990 and 2005. The principal result is that no evidence can be found that the user cost of R&D is an important determinant of firm R&D investment decisions. A corollary is that there is no evidence that tax incentives are an effective policy tool. Growth in sales is found to be the primary determinant of R&D investment, which is interpreted as evidence of the central role of demand conditions. Copyright © 2010 The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal Economic Record.

Volume (Year): 86 (2010)
Issue (Month): 273 (06)
Pages: 260-280

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Handle: RePEc:bla:ecorec:v:86:y:2010:i:273:p:260-280

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Cited by:
  1. Russell Thomson & Elizabeth Webster, 2011. "The Design of R&D Support Schemes for Industry," Melbourne Institute Working Paper Series wp2011n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Russell Thomson, 2013. "The Effectiveness of R&D Tax Credits: Cross-Industry Evidence," Melbourne Institute Working Paper Series wp2013n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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