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Evaluation of the Norwegian R&D tax credit scheme

Author

Listed:
  • Ådne Cappelen
  • Erik Fjærli
  • Frank Foyn
  • Torbjørn Hægeland
  • Jarle Møen
  • Arvid Raknerud
  • Marina Rybalka

    (Statistics Norway)

Abstract

We find that the Norwegian R&D tax credit scheme introduced in 2002 mainly works as intended. The scheme is cost-effective and it is used by a large number of firms. It stimulates these firms to invest more in R&D, and, in particular, the effect is positive for small firms with little R&D experience. The returns on the R&D investments supported by the scheme are positive and generally not different from the returns to other R&D investments. We have found examples of what can be interpreted as tax motivated adjustments to the scheme, but to some extent this must be accepted as a cost to subsidy and support schemes intended for use by a large number of economic agents. This is particularly so when attempts are made to keep administrative expenditures and control routines at a low level.

Suggested Citation

  • Ådne Cappelen & Erik Fjærli & Frank Foyn & Torbjørn Hægeland & Jarle Møen & Arvid Raknerud & Marina Rybalka, 2010. "Evaluation of the Norwegian R&D tax credit scheme," Discussion Papers 640, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:640
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp640.pdf
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    References listed on IDEAS

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    1. José García‐Quevedo, 2004. "Do Public Subsidies Complement Business R&D? A Meta‐Analysis of the Econometric Evidence," Kyklos, Wiley Blackwell, vol. 57(1), pages 87-102, February.
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    Citations

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    Cited by:

    1. Klette, Tor Jakob & Møen, Jarle, 2011. "R&D investment responses to R&D subsidies: A theoretical analysis and a microeconometric study," Discussion Papers 2011/15, Norwegian School of Economics, Department of Business and Management Science.
    2. Cappelen, Ådne & Raknerud, Arvid & Rybalka, Marina, 2012. "The effects of R&D tax credits on patenting and innovations," Research Policy, Elsevier, vol. 41(2), pages 334-345.
    3. Øivind Anti Nilsen & Arvid Raknerud & Diana-Cristina Iancu, 2018. "Public R&D Support and Firms' Performance - A Panel Data Study," CESifo Working Paper Series 7131, CESifo.
    4. Marit E. Klemetsen, 2015. "The effects of innovation policies on firm level patenting," Discussion Papers 830, Statistics Norway, Research Department.
    5. Marit E. Klemetsen & Brita Bye & Arvid Raknerud, 2013. "Can non-market regulations spur innovations in environmental technologies? A study on firm level patenting," Discussion Papers 754, Statistics Norway, Research Department.
    6. Nilsen, Øivind A. & Raknerud, Arvid & Iancu, Diana-Cristina, 2020. "Public R&D support and firm performance: A multivariate dose-response analysis," Research Policy, Elsevier, vol. 49(7).
    7. Blandinieres, Florence & Steinbrenner, Daniela, 2021. "How does the evolution of R&D tax incentives schemes impact their effectiveness? Evidence from a meta-analysis," ZEW Discussion Papers 21-020, ZEW - Leibniz Centre for European Economic Research.
    8. Thomas von Brasch & Ådne Cappelen & Håvard Hungnes & Terje Skjerpen, 2020. "Modeling R&D spillovers to productivity. The effects of tax policy," Discussion Papers 927, Statistics Norway, Research Department.
    9. Brita Bye & Marit Klemetsen & Arvid Raknerud, 2019. "The impact of public R&D support on firms' patenting," Discussion Papers 911, Statistics Norway, Research Department.
    10. von Brasch, T. & Cappelen, Å. & Hungnes, H. & Skjerpen, T., 2021. "Modeling R&D spillovers to productivity: The effects of tax credits," Economic Modelling, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    R&D tax credit; R&D subsidies; Innovation policy; Norway;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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