series: OCFEB Research Memoranda; RM 0011
Economic effects of stimulating business R&D
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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.
The authors are grateful to Thomas Grosfeld, Gert-Jan Hospers, Luuk Klomp, Ino Ostendorf, Theo Roelandt and Sander Wennekers for comments and suggestions.
- business r &d
- r &d expenditure
- r &d capital
- business sector
- r &d incentives