Thread by @gregfalconer

Toolkit of policies to promote #innovation from Nick Bloom, @johnvanreenen, Heidi Williams is excellent attempt to collate and compare #innovation policies. But endorsement of #taxcredits is too strong: @AEAjournals @CEP_LSE (1/5)
pubs.aeaweb.org/doi/pdfplus/10…

1. Policy dead end. Once in place, R&D tax incentives are hard to reduce / remove - can restrict future policy choices. See reaction when @IPPR suggested rowing back in UK in 2017. @HMRCgovuk increased R&D tax relief to 12%. (2/5)
bbc.co.uk/news/business-…

2. Deadweight. Hard to conclude from this screenshot that UK tax credit system is incentivising new R&D vs encouraging re-badging. UK brought in cap at 2018 Budget; Australia has also had issues @ISA_Board @ScienceGovAu (3/5) industry.gov.au/data-and-publi…
gov.uk/government/pub…

@ISA_Board @ScienceGovAu 3. Narrow impact. Tax credits primarily help companies that can easily badge expenditure as R&D. More difficult for e.g. creative industries (need better stats here) - but service sector needs most persuasion / help @hasanbakhshi (4/5) nesta.org.uk/blog/rd-in-the…

So R&D tax credits should be considered part of the policy mix but care should be taken so that they
- do not restrict govt ability to enact other #innovation policies
- effectively promote additional activity
- reach all parts of the economy (5/5)