R&D tax credits – Why they mostly do not work and how they perhaps could be designed to work

Systems for R&D tax credits have become popular in many countries as a supply side measure to stimulate corporate investments in in-house R&D. Yet the empirical evidence is weak at best that such tax credits have any significant impact, and some countries (like Sweden) have abandoned it. The paper reviews the systems in Sweden and the USA and the empirical studies of them.