Towards a new innovation policy in Cuba: Proposal for the introduction of a R&D fiscal incentive program

An increasing number of emerging economies ( among others China, India, Russia, South Africa, and Brazil) have recently introduced R&D tax credit schemes to support the innovative activities of their domestic firms. Drawing insights from these international experiences, this paper proposes a new R&D fiscal incentive system in Cuba. We argue that, to take the specific characteristics of a transition economy like that of Cuba into account, the new program should have a mixed character: it should be volume-based for large State-owned enterprises and incremental for the emerging group of smaller private companies. The fiscal incentive system should allow firms to receive relatively high super-deductions in order to provide an effective stimulus to their innovation and imitation activities. The new R&D policy would contribute to addressing the structural weaknesses which characterize the Cuban national innovation system, and thus enable firms to reap the opportunities provided by the changing international context.