The growth in per capita income depends to a large extent on technological progress. It is stimulated by innovative activity, which is also achieved through public and private Research and Development (R&D) and the birth of firms that bring new ideas, new products and new processes. This paper provides a cross-country comparative analysis of innovative activity and public instruments supporting it, with a focus on R&D and innovative firms.
In Italy, direct public spending on R&D as a ratio of GDP was still below the EU average in 2022. The R&D tax credit is also lower than in other advanced economies; the tax support is equivalent only for patents and some other intangibles. It is estimated that aligning the tax credit rate with the OECD average would increase private R&D expenditure by 15 per cent. For innovative start-ups and SMEs, Italian incentives are comparable to those of other advanced countries.
