Campus Units

Finance

Document Type

Article

Publication Version

Accepted Manuscript

Publication Date

3-1-2017

Journal or Book Title

Research Policy

Volume

46

Issue

2

First Page

447

Last Page

462

DOI

10.1016/j.respol.2016.11.010

Abstract

R&D drives innovation and productivity growth, but appropriability problems and financing difficulties likely keep R&D investment well below the socially optimal level, particularly in high- technology industries. Though countries around the world are increasingly interested in using tax incentives and other policy initiatives to address this underinvestment problem, there is little empirical evidence comparing the effectiveness of alternative domestic policies and institutions at spurring R&D. Using data from a broad sample of OECD economies, we find that financial market rules that improve accounting standards and strengthen contract enforcement share a significant positive relation with R&D in more innovative industries, as do stronger legal protections for intellectual property. In contrast, stronger creditor rights and more generous R&D tax credits have a negative differential relation with R&D in more innovative industries. These results suggest that domestic policies directly dealing with appropriability and financing problems may be more effective than traditional tax subsides at promoting the innovative investments that drive economic growth.

Comments

This is an accepted manuscript of an article from Research Policy, 2017, 46(2); 447-462. DOI: 10.1016/j.respol.2016.11.010. Posted with permission.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Copyright Owner

Elsevier B.V.

Language

en

File Format

application/pdf

Published Version

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