PUBLIC RESEARCH-AND-DEVELOPMENT POLICIES AND COST BEHAVIOR OF THE US MANUFACTURING-INDUSTRIES

This paper estimates and evaluates the contribution of R&D tax incenti ves and publicly financed R&D investment policies in promoting the gro wth of output and privately funded R&D investment in US manufacturing industries. Publicly financed R&D induces cost savings but crowds out privately financed R&D investment, while the incremental R&D tax credi t and immediate deductibility provision of R&D expenditures have a sig nificant impact on privately financed R&D investment. The optimal mix of both instruments is an important element for sustaining a balanced growth in output and productivity in the manufacturing sector.