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The race for R&D subsidies: evaluating the effectiveness of tax credits in Italy

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  • Claudia Cantabene
  • Leopoldo Nascia

Abstract

In Italy, between 2007 and 2009, the public support to innovation was focused on tax credit for business R&D. However, one year after its introduction, the Italian government limited the diffusion of such benefit by setting an upper threshold to potentially forgone tax revenue and introducing an electronic selection procedure which made the access to tax credit by firms a random process. This gave us the chance of evaluating the economic impact of this subsidy by designing a quasi-experiment. Exploiting original evidence from administrative and statistical sources, it is possible to argue that the Italian tax credit 2007-2009 had been successful in stimulating private R&D expenditure and that a R&D cost elasticity of around 1.6 could be estimated.

Suggested Citation

  • Claudia Cantabene & Leopoldo Nascia, 2014. "The race for R&D subsidies: evaluating the effectiveness of tax credits in Italy," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2014(3), pages 133-158.
    • Handle: RePEc:fan:polipo:v:html10.3280/poli2014-003006
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    Citations

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    Cited by:

    1. Alessandro Sterlacchini, 2017. "The intensity of business R&D in Italy: why reducing the gap with the EU is possible and worthwhile," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(2), pages 245-257, June.
    2. Chiara Bocci & Annalisa Caloffi & Marco Mariani & Alessandro Sterlacchini, 2023. "Evaluating Public Support to the Investment Activities of Business Firms: A Multilevel Meta-Regression Analysis of Italian Studies," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(1), pages 1-34, March.
    3. Aristei, David & Sterlacchini, Alessandro & Venturini, Francesco, 2015. "The effects of public supports on business R&D: firm-level evidence across EU countries," MPRA Paper 64611, University Library of Munich, Germany.
    4. Leopoldo Nascia & Mario Pianta & Giovanni La Placa, 2016. "RIO Country Report 2015: Italy," JRC Research Reports JRC101197, Joint Research Centre.
    5. Alessandro Sterlacchini & Francesco Venturini, 2019. "R&D tax incentives in EU countries: does the impact vary with firm size?," Small Business Economics, Springer, vol. 53(3), pages 687-708, October.
    6. David Aristei & Alessandro Sterlacchini & Francesco Venturini, 2017. "Effectiveness of R&D subsidies during the crisis: firm-level evidence across EU countries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(6), pages 554-573, August.
    7. Blandinieres, Florence & Steinbrenner, Daniela, 2021. "How does the evolution of R&D tax incentives schemes impact their effectiveness? Evidence from a meta-analysis," ZEW Discussion Papers 21-020, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    Investimenti in R&S; credito d?imposta; addizionalit?;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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