How Special Is the Special Relationship? Using the Impact of U.S. R&amp;D Spillovers on U.K. Firms as a Test of Technology Sourcing

Griffith, Rachel; Harrison, Rupert; Reenen, John Van

doi:10.1257/aer.96.5.1859

Cited by 286 publications

(225 citation statements)

References 31 publications

(12 reference statements)

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“…24 Unlike R&D tax incentives, IP Boxes do not support firms facing credit constraints at the research stage. also helps to ensure that a country can create new technologies as well as use and benefit from those that are created offshore (Griffith et al (2006)). …”

Section: Incentives To Increase Innovative Investmentsmentioning

confidence: 99%

Intellectual property box regimes: effective tax rates and tax policy considerations

Evers

Miller

Spengel³

2014

Int Tax Public Finance

120

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In 2014, 12 European countries are operating Intellectual Property (IP) Box regimes that provide substantially reduced rates of corporate tax for income derived from important forms of intellectual property. We describe the key features of the policies and incorporate them into forward-looking measures of the cost of capital and the effective average tax rate. We show that the treatment of expenses relating to IP income is particularly important in determining the effective tax burden. A key finding is that regimes that allow expenses to be deducted at the ordinary corporate income tax rate, as opposed to the lower IP Box tax rate, may result in negative effective average tax rates and can thereby provide a subsidy to unprofitable projects. We discuss the ways in which IP Boxes are likely to affect firms' decisions and relate this to possible policy aims. While some regimes attempt to link the tax benefit to real activities, others have designed a policy targeted at the income streams associated with intellectual property. A key concern is the role that IP Boxes may play in increased tax competition between European countries.

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Section: Incentives To Increase Innovative Investmentsmentioning

confidence: 99%

Intellectual property box regimes: effective tax rates and tax policy considerations

Evers

Miller

Spengel³

2014

Int Tax Public Finance

120

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“…We define labor productivity as log real value added per worker. Value added is calculated as the sum of gross profits before tax and staff expenses (see Griffith, Harrison and Van Reenen, 2006). We also consider a definition based on sales minus estimates of intermediate inputs.…”

Section: B1 the Datasets Used Firm Level Dataset -Fame (Financial Anmentioning

confidence: 99%

The evolution of inequality in productivity and wages: panel data evidence

Faggio¹,

Salvanes²,

Reenen

2010

Industrial and Corporate Change

152

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There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades. A significant part of this appears to be within observable groups (such as age-gender-skill cells). A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased. Since the relevant data do not exist in the US we utilize a UK longitudinal panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s. We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.

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“…Some studies find that only low-productivity firms engage in technology-sourcing FDI, which would imply that the knowledge spillover potential from this type of FDI is low (Kogut and Chang 1991;Hennart and Park 1993;Almeida 1996;Neven and Siotis 1996). Other studies show that high-productivity firms are more likely to undertake technology-sourcing FDI, which would imply that the potential for spillover is high (Cantwell and Janne 1999;Chung and Alcácer 2002;Berry 2006;Branstetter 2006;Griffith, Harrison, and van Reenen 2006).…”

Section: Notesmentioning

confidence: 99%

Collecting the Pieces of the FDI Knowledge Spillovers Puzzle

Smeets¹

2008

The World Bank Research Observer

235

145

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Recent surveys of the empirical literature have concluded that the evidence is mixed on the magnitude, direction, and even existence of knowledge spillovers from foreign direct investment (FDI). This article reviews the recent theoretical and empirical literature that responds to these inconclusive results and considers three main issues: spillover channels, mediating factors, and FDI heterogeneity. Studies that take into account individual spillover channels find robust evidence of knowledge spillovers from FDI. Studies on the importance of mediating factors and FDI heterogeneity are less conclusive and could benefit from greater convergence in methodologies and greater specificity in the spillover channels of interest. More generally, many studies do not properly distinguish between knowledge spillovers and knowledge transfers, and empirical studies seem to greatly outnumber theoretical studies. JEL codes: F23, O33In the face of difficulties associated with capturing spillover effects and the multitude of factors that can influence the extent of spillovers in each economy, we caution researchers about drawing generalized conclusions about the existence of externalities associated with [foreign direct investment] . . . . (Javorcik and Spatareanu 2005, 47) Over the past decade or so a large body of research has examined knowledge spillovers from foreign direct investment (FDI). At several points along the way scholars have paused to take stock of the evidence (Blomström and Kokko 1998;Saggi 2002;Görg and Greenaway 2004). The verdict has largely been inconclusive. Indeed, the empirical inconclusiveness has become so infamous that virtually every study reviewed here begins with this observation as its main motivation. Explanations for the lack of conclusive results have focused on methodological and measurement issues (Görg and Strobl 2001), but this sort of approach has recently been disputed (Lipsey and Sjöholm 2005 The literature has developed in several directions to account for the ambiguity in earlier work. This study reviews these contributions, both theoretical and empirical. To provide some structure in a rapidly expanding field and to identify which approach or combination of approaches is likely to yield the most promising results, the study is structured around three themes. 1 More insight into the conditions under which knowledge spillovers from FDI are most likely to arise is especially important for developing countries. The highly ambiguous evidence to date on the existence of knowledge spillovers from FDI does not seem to warrant the large sums of money spent by governments to attract FDI. 2 After setting the stage in the following section, the article is then structured around figure 1, a representation of the FDI knowledge spillover process and the pieces of the puzzle that may affect it. 3 The section on opening the black box of FDI knowledge spillovers discusses the research on vertical linkages, worker mobility, and demonstration effects. This is followed by a review of the evidence o...

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How Special Is the Special Relationship? Using the Impact of U.S. R&D Spillovers on U.K. Firms as a Test of Technology Sourcing

Cited by 286 publications

References 31 publications

Intellectual property box regimes: effective tax rates and tax policy considerations

Intellectual property box regimes: effective tax rates and tax policy considerations

The evolution of inequality in productivity and wages: panel data evidence

Collecting the Pieces of the FDI Knowledge Spillovers Puzzle

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