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Do Tax Incentives for Innovation Work? Evaluation of Effectiveness in Russia and in the World

Author

Listed:
  • Aleksandra L. Suslina

    (Economic Expert Group, Moscow 109012, Russia; Financial Research Institute, Moscow 127006, Russia)

  • Roman S. Leukhin

    (Economic Expert Group, Moscow 109012, Russia; Financial Research Institute, Moscow 127006, Russia)

Abstract

In this paper using an overview of existing literature the authors try to find out whether tax incentives are an effective way to boost innovation or there are other factors, which reduce their efficiency in Russia. There is a comparison of tax incentives with government direct support for R&D Ð the authors conclude that both methods have pros and cons. The article also discusses reasons for low usage of tax incentives in Russia. Moreover, there is a description of key characteristics of the ecosystem necessary for innovation. Based on the provided overview the authors conclude that there is no significant reason to refuse tax incentives usage in Russia. The article provides recommendations to improve tax incentives: research of tax incentives efficiency by the federal government, the Òpatent boxÓ introduction, creation of tax instruments for innovation stimulation, which can be used by individuals, reduction of barriers to benefits access, discussion of special economic zones efficiency and improvement of their tax regimes etc.

Suggested Citation

  • Aleksandra L. Suslina & Roman S. Leukhin, 2018. "Do Tax Incentives for Innovation Work? Evaluation of Effectiveness in Russia and in the World," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 58-69, October.
  • Handle: RePEc:fru:finjrn:180505:p:58-69
    DOI: 10.31107/2075-1990-2018-5-58-69
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    References listed on IDEAS

    as
    1. Leonid Gokhberg & Galina Kitova & Vitaliy Roud, 2014. "Tax Incentives for R&D and Innovation: Demand versus Effects," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 8(3), pages 18-41.
      • Leonid Gokhberg & Galina Kitova & Vitaliy Roud, 2014. "Tax incentives for r&d and innovation: demand versus effects," Foresight-Russia Форсайт, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 8(3 (eng)), pages 18-41.
    2. Simachev, Y. & Kuzyk, M. & Zudin, N., 2017. "The Impact of Public Funding and Tax Incentives on Russian Firms: Additionality Effects Evaluation," Journal of the New Economic Association, New Economic Association, vol. 34(2), pages 59-93.
    3. Castellacci, Fulvio & Lie, Christine Mee, 2015. "Do the effects of R&D tax credits vary across industries? A meta-regression analysis," Research Policy, Elsevier, vol. 44(4), pages 819-832.
    4. Dechezlepretre, Antoine & Einiö, Elias & Martin, Ralf & Nguyen, Kieu-Trang & Reenen, John Van, 2016. "Do tax incentives for research increase firm innovation? An RD design for R&D, patents and spillovers," LSE Research Online Documents on Economics 66428, London School of Economics and Political Science, LSE Library.
    5. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    6. Antoine Dechezleprêtre & Elias Einiö & Ralf Martin & Kieu-Trang Nguyen & John Van Reenen, 2016. "Do tax Incentives for Research Increase Firm Innovation? An RD Design for R&D," NBER Working Papers 22405, National Bureau of Economic Research, Inc.
    7. Dimos, Christos & Pugh, Geoff, 2016. "The effectiveness of R&D subsidies: A meta-regression analysis of the evaluation literature," Research Policy, Elsevier, vol. 45(4), pages 797-815.
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    More about this item

    Keywords

    tax; tax cuts; incentive for innovation; government support for innovation; tax incentive effectiveness;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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