Research and Development (R&D) Exploration
In a recent report published by Professor Hasan Bakhshi MBE, the focus on Research and Development (R&D) has shifted beyond traditional sectors like science, health, and heavy industry. The report, titled "The Art of R&D", argues for the inclusion of innovation in the arts, humanities, and social sciences (AHSS) in the definition of R&D, making them eligible for tax relief.
The report highlights the practices of countries such as Austria, Germany, Korea, and Norway, which incentivize innovation in AHSS through tax relief on R&D. These countries implement various tax relief mechanisms, including deductible expenses, tax credits on R&D wages and expenses, and grants coupled with minimum tax legislation frameworks, to encourage private and public investment in R&D across AHSS.
In Austria, legislation supporting R&D tax relief was enacted as part of its broader innovation and minimum tax law framework, effective around 2023-2024. Germany invests heavily in R&D, with a particular focus on technology, cleantech, and industrial innovations. However, German tax relief programs for R&D extend to various fields including social sciences.
Korea has extensive tax incentives for R&D activities backed by government programs that encourage innovation broadly, including in humanities and social sciences. Norway uses a combination of tax credits and direct funding measures to stimulate R&D investments in various sectors, including arts and humanities.
The UK's departure from the EU has impacted the way British firms trade and work with European countries, but the report does not provide specific facts about the impact of this change on the trade in creative goods and services. The report does not discuss the role of R&D funding in the creative industries, its current allocation, or the potential for updating the definition of R&D.
Despite the historical overlook of AHSS in terms of R&D funding, recent research challenges the image of R&D as exclusive to scientists or engineers in laboratories or workshops. The report recommends that policymakers, businesses, and data collectors work together to better incentivize R&D in creative industries organizations.
The survey results from the employers commissioned by the Creative Industries Council are detailed in the report, providing insights into the migrant and skills needs of creative businesses. The report was published as part of the PEC's Spotlight on R&D Week.
Evidence suggests that the creative industries are highly innovative and productive, with worldwide exports of creative goods exceeding 500 billion USD in 2015, representing a 150% increase since 2000. The government has committed to increasing public funding for R&D, and this update towards including AHSS in the definition of R&D is similar to practices in countries like Austria, Germany, Korea, and Norway.
References: - Bakhshi, H. (2022) The Art of R&D. Creative Industries Policy and Evidence Centre. Available from: https://www.our website/research-reports/the-art-of-r-and-d
[1] [2] [4] [5] - Information sourced from the report.
- The report, titled "The Art of R&D", advocates for including innovation in arts, humanities, and social sciences (AHSS) within the definition of Research and Development (R&D), enabling them to receive tax relief.
- Austria, Germany, Korea, and Norway have tax relief mechanisms that incentivize private and public investment in R&D across AHSS sectors, such as deductible expenses and tax credits on R&D wages and expenses.
- Germany focuses on technology, cleantech, and industrial innovations in its R&D investments, but also extends tax relief to social sciences.
- Korea has substantial tax incentives for R&D activities in various fields, including humanities and social sciences, backed by government programs that encourage broad innovation.
- Norway uses a mix of tax credits and direct funding measures to stimulate R&D investments in sectors like arts and humanities.
- The report recommends collaboration among policymakers, businesses, and data collectors to better incentivize R&D in creative industries organizations.
- Employer survey results from the Creative Industries Council, detailed in the report, offer insights into the migrant and skills needs of creative businesses.
- Creative industries are highly innovative and productive, with worldwide exports of creative goods exceeding 500 billion USD in 2015, representing a 150% increase since 2000.
- The report's publication during the PEC's Spotlight on R&D Week provides evidence of the government's commitment to increasing public funding for R&D, including AHSS sectors, in a similar manner to practices in countries like Austria, Germany, Korea, and Norway.
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