How Has Tax Affected the Changing Cost of R&D? Evidence from Eight Countries

  • Nicholas Bloom
  • Lucy Chennells
  • Rachel Griffith
  • John Van Reenen
Part of the Studies in Regulation book series (STUDREG)


This chapter describes the evolution of the tax treatment of investment in R&D in Australia, Canada, France, Great Britain, Germany, Italy, Japan and the USA between 1979 and 1994. Estimates of the cost of R&D are provided and the methodology used is contrasted with other ones used in the literature. Four findings are highlighted. First, there appear to be substantial differences in the cost of R&D across countries at any given point in time. Second, there has been a general trend towards more generous tax treatment of R&D, although some countries have moved much more rapidly than others. Third, there is an increasing diversity in the cost of R&D between countries. Finally, in order to illustrate the substantial within-country heterogeneity that can arise from differences in design and implementation, several stylised tax systems are applied to a sample of firm level data and the resulting distribution of tax rates is presented.


Credit Rate Depreciation Allowance Statutory Rate Incremental Expenditure Cent Credit 
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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 2002

Authors and Affiliations

  • Nicholas Bloom
  • Lucy Chennells
  • Rachel Griffith
  • John Van Reenen

There are no affiliations available

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