Fiscal incentives for research and development activities in the European Union countries and Turkey: A comparative analysis

In the process of globalization, countries are faced with intense competition. The rapid advances in the technological field are a major cause of this situation. Research and Development (R&D) activities are the main source of technological advances. Both economic theory and empirical analysis underline the key role of R&D in economic growth. R&D leads to innovation and innovation leads to productivity growth. R&D activities can not be realized at an adequate level, because of market failures. The economic justification for government intervention into private sector R&D activities rests on market failures.Many governments offer various incentives to encourage private sector R&D investments. Fiscal incentives are one of them. This thesis examines the fiscal incentives for private sector R&D investments. These incentives are divided into two categories: (i) R&D tax incentives and (ii) R&D financial incentives.This thesis first examines the fiscal incentives for private sector R&D in theory. And then it examines practices of these incentives in the countries. Selected countries are some members of European Union and Turkey. In the last part of this thesis both indicators of R&D and fiscal incentives for private R&D activities in EU countries and Turkey are analyzed.