The race for R&D subsidies: evaluating the effectiveness of tax credits in Italy

Journal title ECONOMIA E POLITICA INDUSTRIALE
Author/s Claudia Cantabene, Leopoldo Nascia
Publishing Year 2014 Issue 2014/3
Language Italian Pages 26 P. 133-158 File size 122 KB
DOI 10.3280/POLI2014-003006
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In Italy, between 2007 and 2009, the public support to innovation was focused on tax credit for business R&D. However, one year after its introduction, the Italian government limited the diffusion of such benefit by setting an upper threshold to potentially forgone tax revenue and introducing an electronic selection procedure which made the access to tax credit by firms a random process. This gave us the chance of evaluating the economic impact of this subsidy by designing a quasi-experiment. Exploiting original evidence from administrative and statistical sources, it is possible to argue that the Italian tax credit 2007-2009 had been successful in stimulating private R&D expenditure and that a R&D cost elasticity of around 1.6 could be estimated.

Keywords: R&D investment, tax credit, additionality

Jel codes: C14, H32, O32

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Claudia Cantabene, Leopoldo Nascia, The race for R&D subsidies: evaluating the effectiveness of tax credits in Italy in "ECONOMIA E POLITICA INDUSTRIALE " 3/2014, pp 133-158, DOI: 10.3280/POLI2014-003006