R&d expenditures and tax incentives: Turkey's situation in the front of different countries

Abstract

The current economies have been faced with an intensive competition. This case is a result of not only the competition created by globalization, but also of the improvement in the knowledge and technology area. This new competition needs more attention paid to Research and Development (R&D) activities. R&D investments have a rather important effect on the level of development of a country.R&D activities are called to take place in public goods cathegory for the fact that they have such features as non-excludability of knowledge and technological inventions and non-rivalry in consumption. Therefore, the production of knowledge and technological inventions requires public intervention. This intervention occurs in two ways. The first way is that R&D activities can be provided by the government. The second is that the R&D activities in private sector can be supported by various incentive policies. In recent years, most OECD and European Union countries have preferred tax incentives rather than direct subsidies. And these countries revise their incentive policies and start effort towards increase the efficiency of their tax incentives. In Turkey some arrangements have been realized in order to promote the R&D field, which has been neglected for a long time. The sufficiency of these arrangements is investigated in this study.