The impact of research and development promotion schemes in the Taiwanese electronic component industry

This paper explores the effect of government research and development (R&D) promotion schemes on R&D expenditures in the electronic component industry. We investigated the impact of three promotion tools: R&D tax credits, exemption from tariffs, and accelerated depreciation. A total of 124 firms was interviewed. A two‐limit model was used in the data analysis. Our empirical analysis indicates the scheme generated a rate of increase in industrial R&D investments of about 16%. Furthermore, on average, the impacts of R&D tax credits, exemption from tariffs, and accelerated depreciation, were about 10%, 4%, and 2%, respectively. In addition, we found that the larger the firm, the weaker the influence of the promotion scheme on R&D expenditures in the industry.