Internal and External Impacts of Research and Development (R&D) Financial Stimuli: Spatial Dynamic Panel Models Approach

R&D financial stimuli include tax incentives, subsidies and other incentives applied by the government to support R&D activities. Economic performance can be affected by other countries. In this study, tax incentives are considered as indirect support and subsidies as direct support. The goal is identifying the most appropriate spatial model and comparing these stimuli with the spatial dynamic panel model approach for the period (2005-2016) and for the selection of the OECD, Southeast Asia and Central Asia countries.In order to consider the spatial approach, the geographic and economic proximity (bilateral trade and bilateral technology relationship) has been used. According to the results of the Moroccan test, spatial correlation was confirmed for selected European countries Organization for Economic Co-Operation and Development (OECD) and South-East Asia by bilateral trade and bilateral relations and for the Central Asian countries in bilateral technology. With approval of model (SDM), financial stimuli have total impacts (direct and indirect effects). For OECD and South-East countries, positive and significant effects of tax incentives and subsidies have been confirmed. The indirect supports have negative domestic but positive international impacts on Asian southest countries. In Central Asian countries where Iran is also a member of these countries, direct support has positive, but negative external impacts. Also positive impacts of tax incentives for these countries were not approved.