L’efficacité du soutien public pour la
R&D et l’innovation
Michel Dumont (Bureau fédéral du Plan)
Congrès des économistes belges de langue française, ULg, 26 novembre 2015
plan.be
Outline
•
RATIONALE FOR PUBLIC SUPPORT
•
TRENDS IN R&D EXPENDITURES AND PUBLIC SUPPORT
•
TAX INCENTIVES FOR R&D IN BELGIUM
•
THE IMPACT OF PUBLIC SUPPORT ON R&D OF PRIVATE COMPANIES
•
CONCLUSIONS
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RATIONALE FOR PUBLIC SUPPORT
• Market failures in knowledge creation result in underinvestment
in R&D by private firms:

Spillovers: Private firms cannot fully appropriate all the benefits of
own investment (social welfare > private benefits)

Information asymmetry (capital markets): R&D implies high risk and
uncertainty  credit constraints
• BUT also possible overinvestment (patent race, rent transfer)
• General view that public support is warranted  patents,
subsidies and tax benefits
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TRENDS IN R&D EXPENDITURES AND PUBLIC SUPPORT
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Evolution of Gross Expenditures on R&D as a
percentage of GDP (2000-2012)
4
3.5
3
2.5
2
1.5
2000
2001
Belgium
2002
2003
Finland
Source: OECD STI 2013
2004
France
2005
2006
Germany
2007
2008
Netherlands
2009
2010
Sweden
2011
2012
UK
US
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Direct and indirect support for R&D and BERD (% GDP)
0.45
3.500
0.4
3.000
0.35
2.500
0.3
2.000
0.25
0.2
1.500
0.15
1.000
0.1
0.500
0.05
0.000
MEX
CHL
CHE
SVK
POL
LUX
ZAF
FIN
ITA
NZL
TUR
DEU
CHN
DNK
EST
JPN
SWE
ESP
BRA
NOR
PRT
AUS
GBR
CZE
CAN
NLD
IRL
HUN
AUT
USA
BEL
SVN
FRA
KOR
RUS
0
Direct support
Source: OECD STI 2013
Tax support
BERD
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TAX INCENTIVES FOR R&D IN BELGIUM
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• Partial exemption from advance payment of the withholding tax
on the wages of (some) R&D employees:

R&D personnel in companies that cooperate in research with a
university, a higher education institution in the European Economic
Area or a scientific institution registered by the Council of Ministers
(as of 1 October 2005)

R&D personnel employed by Young Innovative Companies (YIC)
of 1 July 2006)

Researchers with a PhD degree in exact or applied sciences, doctor
degree in (veterinary) medicine or a civil engineering degree (as of 1
January 2006)

Researchers with a master's degree, with the exception of masters
in social and human sciences (as of 1 January 2007)
(as
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• Since tax year 2007, Belgian companies can opt for a tax credit
rather than the already existing tax deduction for investment in
R&D
• Starting in tax year 2008, the federal government grants a
deduction, from the taxable basis, of 80% of qualifying gross
patent income (e.g. income from licensing to third parties).
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Budgetary cost of partial exemption from advance
payment of withholding tax (2008-2013)
250
200
150
100
50
0
2008
2009
Cooperation
2010
YIC
2011
PhDs & civil engineers
2012
2013
Masters
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Budgetary cost of tax credit for R&D investment and
tax deduction 80% patent income (2008-2012)
400
350
300
250
200
150
100
50
0
2008
2009
Tax Credit
2010
2011
2012
Patent Income deduction
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THE IMPACT OF PUBLIC SUPPORT ON R&D OF PRIVATE
COMPANIES
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Selection bias vs. treatment effect
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Bang for the buck
Fixed effects
Selection
Instrumental
variables
ECM
(long term)
Regional subsidy
0.59
0.45
(without lag R&D)
3.94
0.43
Research cooperation
2.02-2.28
-
-
-
Young Innovative
Company
-
-
-
-
PhDs and civil
engineers
0.50 -0.60
-
-
0.32
Master
1.37-1.51
1.03
(without lag R&D)
1.94
0.74
Tax credit R&D
-
0.23
(with lag R&D)
-
-
Tax deduction 80%
patent income
-
-
-
-
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Composition R&D expenditures in Belgium (1993-2011)
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Basic research
Applied Research
Experimental development
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CONCLUSIONS
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• Robust evidence of additionality for regional
subsidies and Master, somewhat less for
PhDs
and Cooperation.
• Few indications of impact for YIC and tax credit
R&D.
• No indications impact tax deduction of patent
income.
 specific characteristics of support matter
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• Combination
of
different
schemes
reduces
additionality (cf. first evaluation).
• Indications
of
non-linear
effects
of
support,
generally decrease in additionality for higher rates
of support.
• Subsidies, YIC scheme and tax deduction 80%
patent income appear to shift R&D from D to R.
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