Effectiveness of fiscal incentives (the Good Law) in the stimulus to R&D expenditures: a panel data analysis

Abstract

This paper produces a quantitative assessment of the direct impact on expenditures on research and development (R&D) of Brazilian tax incentive for R&D, called the Good Law. We evaluate this law estimating econometric models with microdata of the Brazilian industry for the period 2000-2009. We used propensity score matching procedure combined with models for panel data to correct for the presence of selection bias. We got results that tax incentives have a further effect on expenditure on R&D. The average estimated impact is an increase of 43% to 81% for expenditure on R&D and an increase of technical and scientific personnel on R & D between 9% and 10%.