Governments turning to tax breaks to stimulate innovation

More and more governments are providing businesses with tax breaks in order to stimulate innovation, according to the latest science, technology and industry scoreboard from the Organisation
for Economic Cooperation and Development (OECD).

The survey finds that two-thirds of the 30 OECD countries surveyed provided tax subsidies to businesses in 2006, up from 12 in 1995. There has also been a trend towards making the subsidies
more generous.

Spain and Portugal provide the largest subsidies from Europe, making little distinction between those on offer for small firms and for larger companies. The Netherlands tends to offer more
generous subsidies to small companies than to their larger counterparts.

Investment in research and development (R&D) has continued to rise, with investment in education and R&D being higher than that for software in most OECD economies. However, R&D
spending growth has slowed since the second half of the 1990s. Total gross expenditure on R&D grew by 4.6% annually in real terms between 1995 and 2001, but by less than 2.2% per year
between 2001 and 2005.

There were 3.9 million researchers in OECD countries in 2005, of which two-thirds were employed by the business sector. The percentage of researchers working in the private sector varies widely
from country to country. In the US, four out of five researchers work in the business sector. The figure for Japan is two-thirds. In the EU, only one in two researchers work in the private
sector.

The number of private sector researchers has grown most rapidly in the smaller OECD countries, such as Spain, Portugal, Greece, Iceland and New Zealand.

The scoreboard records a sharp rise in the globalisation of innovation. International co-authorship of scientific publications tripled between 1995 and 2005, while cross-boarder cooperation on
inventions nearly doubled as a share of total inventions worldwide between 1991-93 and 2001-03.