Accelerating Innovation: National R&D Subsidies versus Foreign R&D Tax Credits
AbstractThis paper examines and compares the impact on growth of government’s funding national R&D or providing a tax rate reduction for foreign investment in R&D. In an innovationbased model we show the relation between the costs of these two policies. One meaningful policy implication of our results is that, to accelerate innovation, governments should adopt a tax rate deduction for foreign R&D, rather than subsidizing national R&D, because the former is more economical and effective than the latter.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ISCTE-IUL, Business Research Unit (BRU-IUL) in its series Working Papers Series 1 with number ercwp0108.
Length: 15 pages
Date of creation: 15 Jun 2007
Date of revision:
Endogenous Growth; Foreign Direct Investment; Taxes;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Georg Götz & Walter Elberfeld & Frank Stähler, 2002.
"Vertical foreign direct investment, welfare, and employment,"
Vienna Economics Papers
0213, University of Vienna, Department of Economics.
- Elberfeld Walter & Götz Georg & Stähler Frank, 2005. "Vertical Foreign Direct Investment, Welfare, and Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-30, February.
- V N Balasubramanyam & M Salisu & David Sapsford., .
"Foreign Direct Investment and Growth in EP and IS Countries,"
ec18/94, Department of Economics, University of Lancaster.
- Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
- Nicholas Bull, 1993. "When all the optimal dynamic taxes are zero," Working Paper Series / Economic Activity Section 137, Board of Governors of the Federal Reserve System (U.S.).
- Feenstra, R.C., 1990.
"Trade And Uneven Growth,"
353, California Davis - Institute of Governmental Affairs.
- Reis, Ana Balcao, 2006. "Welfare, taxes and foreign investment," Journal of Economic Dynamics and Control, Elsevier, vol. 30(6), pages 1045-1061, June.
- Balcao Reis, Ana, 2001. "On the welfare effects of foreign investment," Journal of International Economics, Elsevier, vol. 54(2), pages 411-427, August.
- Felipa de Mello-Sampayo & Sofia de Sousa-Vale & Francisco Camões & Orlando Gomes, 2012.
"Protectionism under R&D policy: innovation rate and welfare,"
Journal of Economic Studies,
Emerald Group Publishing, vol. 39(1), pages 106-124, January.
- Felipa de Mello-Sampayo & Sofia de Sousa-Vale & Francisco Camões & Orlando Gomes, 2010. "Proteccionism under R&D Policy: Innovation Rate and Welfare," Working Papers Series 1 ercwp0210, ISCTE-IUL, Business Research Unit (BRU-IUL).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Henrique Monteiro).
If references are entirely missing, you can add them using this form.