A Case Study on Korea's R and D Tax Incentives : Principles, Practices, and Lessons for Developing Countries

R and D tax incentives (RDTIs) are among the most popular instruments that governments in both developing and developed economies employ to induce private investment in research and development (R and D). RDTIs can influence a host of development drivers: the quantity and quality of innovation, the mobility of innovation activity and of researchers across regions and countries, the dynamism of firms, the quality of firms and researchers, and the high-level direction of research efforts. However, in developing countries, settling on the right design features of RDTIs continues to be an important challenge. This case study aims to identify some principles for adapting good international practices for designing RDTIs to the specific features and conditions prevailing in developing countries. It explores the existing evidence on the functioning and impacts of RDTI schemes in Korea and in Asian and Latin American countries comparable to Indonesia, the Philippines, and Viet Nam. Practitioners from those countries can take a closer look at RDTI schemes to frame a discussion about the composition of design and implementation features considering the international experience