The impact of the research tax credit on firms’ economic performance

The research tax credit (CIR) is France’s main public policy for supporting innovation in firms. With over €6 billion in tax expenditure, this tax credit accounts for more than 60 per cent of public spending on supporting innovation. The National Commission for the Evaluation of Innovation Policies (CNEPI), led by France Stratégie, published an opinion in March 2019 on the impact of the CIR, based on several studies commissioned by France Stratégie from research laboratories. The CNEPI’s finding is that the studies are consistent in highlighting that the introduction of the CIR leads to an increase in R&D expenditure, but that the effectiveness of the scheme should also be assessed in light of the CIR’s impact on firms’ economic performance.
The CNEPI therefore launched a call for research proposals in May 2019, specifying evaluation criteria regarding the impact of the CIR on firms that were not participating in the scheme prior to the 2008 reform (broad scope), on the economic impacts of the CIR (on turnover, value added, exports, employment, etc.) and on France’s attractiveness for R&D activities. The Institut des politiques publiques (IPP) submitted a research proposal focusing on the first two questions (extensive coverage and economic performance measures), which was selected by the selection committee. This report presents the results of that work.