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GTAP Resource #5858

"Achieving R&D intensity targets by different policy instruments: CGE analysis for Poland"
by Zawalinska, Katarzyna, Nhi Tran and Adam Ploszaj

Half a century of centrally planned policy in the Central and Eastern European countries resulted in out-dated technologies, inefficient allocation of resources and low productivity. Following the end of communismthere was a fifteen year process of transition which ended in 2004 with eight post-communist countries join-ing the European Union (EU) of which Poland was the largest. As part of the EU these countries now face thechallenge of the common EU strategy Europe 2020, which has set the target of achieving R&D expenditureto GDP ratio (called the R&D intensity) of 3% by 2020 for the Union as a whole in an effort to increasethe competitiveness of the region. Poland, like the other post-communist countries, faces a lower target ofR&D intensity, set at 1.7%. Nevertheless, the challenge is immense, since the country is still at only half thatlevel and has little experience in developing policies to help achieve it. In this paper we tested two possiblepolicy options to achieve the target: (1) to increase government expenditures on R&D and; (2) to provide taxrelief on R&D to businesses. The method applied to assess the options is a recursive dynamic computablegeneral equilibrium (CGE) model for Poland with an explicit link between productivity and R&D stock.The results show that achieving the R&D intensity target via the use of tax relief is 2.5 times more costlyto the government budget, but it has a greater impact on the economy in terms of a higher GDP growth.Tax relief proved efficient in the short run while in the long run the government expenditure policy providesbetter value for money.

Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Journal of Policy Modeling; Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Version: Journal of Policy Modeling 40 (2018) 37–59
Created: Zawalinska, K. (4/15/2019)
Updated: Zawalinska, K. (4/15/2019)
Visits: 2,157
- Economic development
- Economic growth
- Technological change
- Europe (Eastern)

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