Tax incentives and R&D activity: firm-level evidence from Taiwan
Article Type: Abstracts From: Strategic Direction, Volume 29, Issue 2
Yang C.-H., Huang C.-H. and Hou T.C.-T. Research Policy, November 2012, Vol. 41 Issue: 9, Start Page: 1578, No of pages: 11
Investigates the effect of tax incentives on R&D activities in Taiwanese manufacturing firms. Finds that the propensity score matching (PSM) estimates show that recipients of R&D tax credits appear on average to have 53.80 percent higher R&D expenditures than that they do without receiving tax credits, while there is no significantly higher growth rate of R&D expenditure. Employs the panel instrumental variable (IV) and generalized method of moment (GMM) techniques to control for endogeneity of R&D tax credits and firm heterogeneity in determining R&D expenditure. The R&D tax credit is witnessed to exhibit a significantly positive influence on R&D expenditure and its growth, especially for electronics firms. The marginal effect is moderate, ranging from 0.094 to 0.120. Specifically, the R&D elasticity concerning tax credits tends to increase gradually along with the approaching expiration of R&D tax credits measure, lending a supportive view on its efficacy. Article type: Research paper ISSN: 0048-7333 Reference: 41AX286
Keywords: Propensity score matching, R&D, Tax
