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Public support to business research and development in Belgium: fourth evaluation

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  • Dumont, Michel

Abstract

Belgium met its Europe 2020 target that Research and Development (R&D) expenditures should equal 3% of Gross Domestic Product. This report presents the results of an evaluation of the extent to which public support to business R&D has been instrumental in reaching this target, by stimulat-ing additional R&D expenditures of firms. Regional direct support (subsidies), and the federal par-tial exemption from payment of the withholding tax on the wages of R&D personnel, appear to en-courage firms to increase their investment in R&D activities, in addition to the amount of public support that they receive. By contrast, some incentives provided through corporate income taxation (CIT) seem to have no additionality effect or even result in the crowding out of firms’ own R&D ex-penditures. As the CIT incentives claim the lion’s share of the rapidly rising budgetary cost of public support to business R&D, the efficiency of tax incentives for R&D activities could be increased by introducing a cap on the total amount of public support that companies can receive, as suggested by the findings of a cross-country OECD study.

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  • Dumont, Michel, 2022. "Public support to business research and development in Belgium: fourth evaluation," MPRA Paper 115418, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115418
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    More about this item

    Keywords

    business R&D; tax incentives; subsidies; policy mix; evaluation; spillovers;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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