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Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms

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  • Czarnitzki, Dirk
  • Hanel, Petr
  • Rosa, Julio Miguel

Abstract

This study examines the effect of R&D tax credits on innovation activities of Canadian manufacturing firms. Over the 1997-1999 period the Federal and Provincial R&D tax credit programs were used by more than one third of all manufacturing firms and by close to two thirds of firms in high-technology sectors. We investigate the average effect of R&D tax credits on a series of innovation indicators such as: number of new products, sales with new products, originality of innovation, etc. using a non-parametric matching approach. Compared to a hypothetical situation in the absence of R&D tax credits, recipients of tax credits show significantly better scores on most but not all performance indicators. We therefore conclude that tax credits lead to additional innovation output.

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Bibliographic Info

Article provided by Elsevier in its journal Research Policy.

Volume (Year): 40 (2011)
Issue (Month): 2 (March)
Pages: 217-229

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Handle: RePEc:eee:respol:v:40:y:2011:i:2:p:217-229

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Web page: http://www.elsevier.com/locate/respol

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Keywords: R&D Innovation Public subsidies Tax credit Policy evaluation;

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References

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