Should Finland Introduce And R&D Tax Credit? Reflections Based On Experience With Norwegian R&D Policy

Subsidies to commercial R&D can be given as R&D tax credits or through direct grants. Tax incentives have become an increasingly popular policy tool over the last decades. In this note the author discusses the pros and cons of the two forms of subsidies in light of Norway's experience with R&D policy. The author reviews an ongoing evaluation of the Norwegian R&D tax credit introduced in 2002 and reflects on whether it is desirable for Finland to introduce a similar scheme. He suggests that this is not desirable. If Finland introduces an R&D tax credit, He argues that it should be limited to small and medium sized companies.