Economic effects of stimulating business R&D

The main question dealt with in this paper is: what are the economic effects of these financial government incentives? The answer is of particular importance with a view to the question whether the government should intensify, or conversely, cut down on its R&D incentives policy. The economic effects of these R&D incentives are determined by a multitude of factors; factors which also tend to interact. In addition to the spillover effects referred to above, the main decisive factors are: the extent to which the government incentives really do lead to an increase in business R&D, and the direct effects of this extra R&D on business performance. A total of 12 mechanisms are distinguished, all of which have an effect on the economic effects of R&D incentives. These twelve mechanisms are placed in a total framework in this paper. All in all, this paper shows that the economic effects of the government?s stimulation of business R&D are particularly beneficial. The paper also sets out the mechanisms that lead to this result, and which mechanisms are of particular importance in this respect.