Capital incentive policies in the age of cloud computing
An empirical case study
This paper assesses whether current policy environments are appropriate for the emergence
of cloud computing technology. In particular, this research uses firm level data for
Germany and the United Kingdom to examine the impact of capital incentive programmes
(a common policy present in most OECD countries) on cloud adoption. The design for
many of these policies target investments in physical capital while excluding digital
services like the cloud. Firms view digital investments and digital services as substitutes,
therefore narrowly defined incentive programmes may actually discourage the use of
emerging tools like cloud computing, which are found to enable the growth and performance
of young entrants. Overall, the results find that while capital incentive policies
encourage firm investments in ICT and other forms of capital, they actually reduce
the probability of cloud adoption. Policy makers may therefore need to reconsider
the design of capital incentive programmes within their jurisdictions.
Published on August 13, 2020
In series:OECD Science, Technology and Industry Working Papersview more titles