Trends in UK BERD after the Introduction

of R&D Tax Credits

Stephen R. Bond and Irem Guceri

Abstract

This paper documents the increase in R&D intensity in the UK manufac-
turing sector in the period following the introduction of R&D tax credits in
2000-02. This increase is broadly in line with that predicted by econometric
studies of the impact of R&D tax credits, notably Bloom, Griffith and Van
Reenen (2002). If anything, UK manufacturing R&D intensity has risen
faster than their model predicts. The timing of this increase is not simply
explained by trends in neighbouring economies, although one puzzle is that
the increase is largely confined to high tech sub-sectors of manufacturing.