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How R&D and tax incentives influence economic growth: Econometric study for the period between 1995 and 2008 of EU-15

Author

Listed:
  • Paula Faria

    (Faculdade de Economia, Universidade do Porto)

  • Francisco Vitorino da Silva Martins

    (Faculdade de Economia, Universidade do Porto)

  • Elísio Fernando Moreira Brandão

    (Faculdade de Economia, Universidade do Porto)

Abstract

Setting targets to increase the levels of R&D, a component that is present in the political and economic agendas of the European Member States with the promotion of active tax policies, suggests that it is possible for R&D to cause an impact on economic growth. This research work aims at understanding the influence of the evolution of R&D expenditures, as well as the influence of tax incentives on economic growth. For that, a panel data of 15 European countries, during the period between 1995 and 2008, was used. The econometric study confirms the foreseen importance, both in this study and in the literature, of the countries’ R&D efforts and their impact on economic growth. The positive effect of tax incentives on economic growth, combined with R&D levels, is highlighted and demonstrated, thus confirming a strategic orientation towards tax policies followed by the national institutions.

Suggested Citation

  • Paula Faria & Francisco Vitorino da Silva Martins & Elísio Fernando Moreira Brandão, 2011. "How R&D and tax incentives influence economic growth: Econometric study for the period between 1995 and 2008 of EU-15," FEP Working Papers 442, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:442
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    References listed on IDEAS

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    Cited by:

    1. Tiago Soares & Samuel Pereira & Elísio Brandão, 2014. "The effects of R&D intensity and tax incentives on firms’ growth - empirical evidence from world's top R&D spending firms between 2003 and 2012," FEP Working Papers 540, Universidade do Porto, Faculdade de Economia do Porto.

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    More about this item

    Keywords

    R&D; tax incentives; economic growth; econometric analysis in panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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