@techreport{ef718048233848f2bb98c6774d5c2d03,
title = "R\&D Grant and Tax Credit Support for Foreign-Owned Subsidiaries: Does it Pay Off?",
abstract = "Foreign-owned subsidiaries make significant contributions to national Research and Development (R\&D) in many host countries. Policymakers often support subsidiaries through R\&D grants and R\&D tax credits. A key objective of this funding is to leverage R\&D-driven firm performance benefits for the host economy. However, the subsidiary's parent firm may decide not to exploit the results from publicly-funded R\&D projects in the host country. Therefore, supporting subsidiaries{\textquoteright} R\&D presents a risk that significant amounts of public funding may translate into little, or no payoffs for the host economy. Our study provides the first evaluation of 1) whether public R\&D funding stimulates additional R\&D investment in subsidiaries, 2) whether policy-induced R\&D drives subsidiary performance, and 3) the differential effects of R\&D grants and R\&D tax credits. Drawing on a unique panel dataset for Ireland (2007-2016), we find that both R\&D supports drive subsidiary R\&D, resulting in substantial host country firm performance benefits.",
keywords = "Business, Subsidiary, Tax credit, Monetary economics, Financial system, Economics, Finance, Public economics, Multinational corporation",
author = "Helena Lenihan and Kevin Mulligan and Justin Doran and Christian Rammer and Olubunmi Ipinnaiye",
year = "2022",
month = feb,
day = "10",
doi = "10.2139/ssrn.4031896",
language = "English",
series = "SSRN Electronic Journal",
type = "WorkingPaper",
}