H25 - Business Taxes and Subsidies including sales and value-added (VAT)Return

This paper examines the impact of fiscal policy on business investment in research and development (R&D). Panel regression models – with independent variables for the total tax and contribution rate, government appropriations and outlays for R&D, and the R&D tax subsidy rate – are set up to examine cross-country differences in business investment in R&D, with a set of control variables. The latter include, most notably, the number of full-time researchers, tertiary education attainment, the protection of intellectual property rights, governance, the long-term interest rate, and trade openness. The panel encompasses eleven countries of Central and Eastern Europe over ten years (2010–2019). The findings suggest that fiscal policy does not affect BERD, while trade openness, tertiary education attainment, and full-time researcher employment have a significant positive impact. These findings are consistent with some of the earlier studies on the effectiveness of fiscal policy in stimulating business investment, calling for greater allocation of public and private funds for R&D professional development and training programs.
Implications for Central European audience: This paper used recent data for eleven Central and Eastern European countries. Therefore, the findings are directly applicable to these countries. As the paper used random-effects generalised least squares estimation for panel data, the findings can be generalised to other countries.

The purpose of this study is to investigate the expectations of the management of different industries in the Czech Republic related to governmental support for their implementation of Industry 4.0 and their preparedness for the challenges associated with these technological changes. Mixed research, specifically exploratory sequential design, was used. The findings of qualitative data analyses from in-depth semi-structured interviews (n=41) with representatives of different industry sectors formed subsequent quantitative data collection (N=146, the board of management members representing various industries) through survey items corresponding with formalized research questions. The findings revealed a strong group of companies already implementing Industry 4.0 elements (85% of respondents) driven by companies with 250+ employees. As perceived by the management, the critical threat related to the workforce is a lack of skilled labour. Managers tend to prefer a transparent business environment without state interventions or interventions targeted to strategic state industries, preferably to the spheres of education, research & development, energy sector, sustainable agriculture, and healthcare. The results indicate that the easier administration and education reform are among the companies' boldest expectations from the government, among general conditions for current business.
Implications for the Central European audience: Central European companies face challenges related to implementing the Industry 4.0 elements. Therefore, the findings that aim to contribute to the debate addressing administration simplification, business environment transparency, and reform of the education system are considered relevant for the CE audience.