Tax incentives for innovation: time to restructure the R&;E tax credit

The R&E tax credit has never been effective and subsequent attempts to restructure it have not addressed the major deficiencies. Moreover, in the 25 years since the R&E tax credit was enacted, a steadily increasing number of countries have implemented or expanded competing tax incentives, which in many cases are better structured and larger in size. As a result, the relative impact of the US credit is now negative in terms of incentives to conduct R&D within the domestic economy. The inadequacy of the credit stems largely from its small size and its incremental format. The impact of an R&D tax incentive is affected by its scope of coverage, the ability of industry to take advantage of it over the entire R&D cycle, the magnitude of the incentive relative to other nations’ tax policies, and its ease of implementation. In the end, a tax incentive must sufficiently lower the user’s cost of R&D to overcome barriers to allocation of private-sector resources commensurate with the potential rates of return on such investments. As a policy instrument, a tax incentive for R&D should be most effective if its form is a flat rate applied to all R&D.

Creative internationalization: widening the perspectives on analysis and policy regarding international R&D activities

Internationalization in R&D is further growing; it is changing its geographical balance, as it is shifting somewhat to the Far East, and its nature, increasing the global quest for talent and good research conditions as well as for low cost R&D. This paper focuses on the European perspective, i.e. it discusses current challenges Europe faces vis-à-vis trends in industrial R&D, but the findings and arguments are more general ones. It argues that our perspective on internationalization is still shaped too much by a zero sum-rationale, whereby one location wins R&D capacity that another location loses. It develops a cost–benefit matrix in order to capture the overall costs and benefits of international R&D activities more broadly. The paper argues that more creativity is needed, that our perspective needs to be broadened to tackle all variables conditioning international activities in R&D (including local conditions of demand and discourse) and to stress the importance of the absorption of global knowledge by as many actors within an innovation system as possible. On the basis of recent survey data the paper furthermore concludes that public research should be thought of as a trans-national transmission belt of knowledge and as the prime factor that shapes the attractiveness and effectiveness of a location for business R&D. Finally, it is argued that policy schemes geared towards international R&D need to accept and tackle the issue of co-ordination of governance and to take advantage of the flexible possibilities offered at the European level, beyond the logic of the European Framework Programme.

“We really don’t want to move,but...”: identity and strategy in the internationalisation of industrial R&;D

In Norway, as in many other high-cost OECD countries in a geographical and cultural periphery, policy-makers seem to have given up attempts at attracting large numbers of foreign R&D investments. Instead, a major focus of innovation policies is to help companies internationalise yet with an aim to maintain or even increase their level of R&D and other innovation activities nationally. Based on case studies of eight Norwegian companies and their motives for and experiences with internationalisation of R&D, this article questions this policy. From the perspective of the companies, many factors explain how, why and where they carry out their R&D activities.      

Expanding the R&;E tax credit to drive innovation,competitiveness and prosperity

The research and experimentation (R&E) tax credit has long been the subject of criticism. Some argue that if the goal is more research and innovation, it’s better to increase direct federal funding of research. Others argue that the credit is not effective, that companies would do the research in any case. Some object the very notion of using tax policy to influence private sector behavior, preferring instead a more “neutral” tax code. Still others, including Tassey in this volume, point to what they see are a host of design flaws in the current credit, including that its incremental nature reduces its effectiveness. I will argue here that most of these arguments are mistaken. To promote innovation in a global economy both direct funding and indirect tax incentives are needed. The credit, while it can be improved, has been shown to be effective in stimulating research. Moreover, far from distorting the market, the credit corrects for a market failure where firms are unable to capture all of the benefits of corporate research, leading them to under invest in research. Finally, while reform and expansion are needed, it would be a mistake to shift to a completely flat credit. However, several important changes should be made including doubling the current value of the credit, modifying the Alternative Simplified Credit to become incremental, and expanding the flat credit for collaborative R&D.

Foreign investment innovation: a review of selected policies

Whereas foreign investment innovation (FII) has become increasingly common, after decades of debate it is still unclear whether it is desirable for the home country or for the company’s host country. This paper reviews articles from three complementary economic and business traditions which investigate this phenomenon and propose policies based on facts: the economics of technological change tradition, the international business (IB) tradition, and the line of research on international technology transfers. Articles in line with these strands of theory complement each other because they approach different aspects of complex events while explaining FII and its effects on host and home countries. Host countries obtain maximum benefits from FII when affiliates import foreign technology, purchase their inputs in the host country and enjoy product and technological autonomy vis-à-vis the parent. Different types of MNEs, affiliates and foreign R&D units have different potentials for transferring technology to host countries and provide different scope for policies. The authors recommend that governments encourage direct vertical linkages between MNEs and domestic suppliers who could reap the benefits from foreign knowledge. However, some important success factors remain exogenous to governments. As for indigenous MNEs, it is a matter of controversy whether governments should always stimulate them to conduct research in foreign locations or, alternatively, incentive them to stay at home. The need for additional evidence is still considerable in many respects.

Technological diversity,scientific excellence and the location of inventive activities abroad: the case of nanotechnology

Our contribution to the expanding literature on the globalization of research and innovation is to investigate the extent to which sector-specific developments in an emerging technology (such as increasing interdisciplinarity and complexity) affect inventive activities developed abroad. We look at how technological diversity and scientific excellence of host countries in the field of nanotechnology affect the development of inventive activities by US multinational companies (MNCs). We identify the most active US-based MNCs in nanotechnology-related patenting and examine location decisions of these companies and their international subsidiaries. Econometric results confirm our hypothesis that the technological breadth of host countries positively influences the expected number of inventions developed abroad by US MNCs. Science capabilities of countries also have a positive impact on the decision to invent abroad, while the influence of market specific factors is less clear. We interpret these results as suggesting that host country science capabilities are important to attract innovative activities by MNCs, but as the interdisciplinary and convergent nature of nanotechnology evolves, access to a broadly diversified knowledge base becomes important in increasing the relative attractiveness of host locations.

Organisational change and innovation system dynamics: the reform of the UK government defence research establishments

Since the end of the Cold War, ministries of defence in Europe and the United States have sought new models for the management of government defence research laboratories. The United Kingdom’s reform and subsequent privatisation of its government defence research establishments (GDREs) represents one of the most radical policy responses. This paper considers the UK case through the lens of innovation systems theory and uses defence labs reform to examine the impact of organisational change on the dynamics of an innovation system. The potential policy implications for the management of government defence research laboratories are also considered.

Internationalisation of R&D and embeddedness: the case of Austria

Internationalisation of corporate R&D—driven mainly by multinational enterprises (MNEs)—has received increasing interest recently. As a small open economy, Austria faces special challenges with regard to this on-going process. The share of Austrian R&D financed from abroad is outstanding in international comparison. Indeed, a significant portion of R&D activities in Austria is defined by strategic decisions of international corporations, which are re-assessing their spatial division of labour continuously. In our paper, we analyse the characteristics of these foreign-owned corporations in Austria and demonstrate that they form the more ‘modern’ part of Austrian industry. At the same time, we show that these companies and R&D facilities are embedded in the Austrian national innovation system (NIS) to a large extent. This embeddedness is also explicitly and implicitly supported by the Austrian technology policy. We conclude that this high degree of embeddedness in the NIS may be crucial for the sustainability of foreign-owned R&D facilities.

Online protection of the child within Europe

This article discusses the online protection available to children and young people within Europe. Children and young people are significant users of information technology and they must be able and comfortable to safely use this technology. The European Union and the Council of Europe have been at the vanguard of attempts to regulate the information society in order to protect young netizens.     

Geographic and technological R&;D spillovers within the triad: micro evidence from US patents

This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance.

The Council of Europe Data Protection Convention reform: Analysis of the new text and critical comment on its global ambition

The year 2010 set an important milestone in the development of data protection law in Europe: both Europe's basic regulatory texts, the EU Data Protection Directive and the Council's Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data (Convention 108), were placed at an amendment process, having served individual data protection for many years and witnessed in the meantime technological developments that threatened to make their provisions obsolete. After briefly presenting Convention 108, the analysis that follows will highlight the Council's data protection system currently in effect as well as developments relating to the Convention's amendment so far with the aim of identifying improvements and shortcomings. While doing this two separate points of view shall be adopted: at first a micro point of view will attempt to identify improvements and shortcomings through an ‘insider’ perspective, that is, judging only the merits and difficulties of the draft text at hand. Afterwards a macroscopic view will be adopted, whereby strategic issues will be discussed pertaining to the important issue of the relationship of the suggested draft with the EU data protection system, as well as, the same draft's potential to constitute the next global information privacy standard.     

Technology Competitiveness in Emerging Markets: The Case of the Brazilian Polymer Industry

The Brazilian polymer industry (plastics, rubbers, fibers, adhesives, paints, and varnishes) is the fastest growing segment of the Petrochemical Chain. Since the polymer industry is characterized as science based, the capacity to create technology is vital for its long-range survival in the market. This paper analyzes how Brazilian polymer firms maintain their technological competitiveness, explains the main modes of technology transfer, and evaluates the degree of technological dependence of this industry. The methodology consisted of a database built with data from the Brazilian Patent Office. To confirm the findings, interviews were conducted with staff members from seven Brazilian polymer firms. The data base analysis and the interviews reveal that, in spite of the fact that Research and Development (R&D) and technological innovation have a fundamental role in their competitiveness, the firms are technologically dependent upon foreign suppliers.     

Advancing measures of innovation in the United States

This paper introduces major themes addressed in this special issue, which is based on NSF's Division of Science Resources Statistics (SRS) workshop Advancing Measures of Innovation—Knowledge Flows, Business Metrics, and Measurement Strategies, held on June 6-7, 2006 near Washington, D.C. The first two sections describe the workshop and provide a brief background on R & D and innovation metrics. The last section introduces the papers. They are based on selected workshop presentations along with additional invited papers.

Globalization of technology-based growth: the policy imperative

The United States became the dominant technology-based economy after World War II and held that position for decades by accumulating a huge base of superior technical, physical, organizational, and marketing assets. However, the world is witnessing the rapid globalization of technology-based competition, which is the result of major commitments by many nations to investment in technology and its effective utilization. The changing dynamics of such competition requires revisions to the centuries’ old law of comparative advantage and the Schumpeterian process of creative destruction. However, U.S. technology-based growth policies have at best stood still for most of this period. The R&D intensity of the U.S. economy is below its peak in the 1960s and its vaunted “high-tech sector” is too small and increasingly challenged to carry the remaining sectors, as was the case before globalization began in earnest. A major reason for inadequate adaptation is the “installed base effect,” which results from the accumulation of the above types of economic assets and in turn creates both complacency and resistance to the need for adaptation. Weak recoveries from the most recent recessions and the sluggish growth in real incomes are major indicators of structural problems that are not being addressed. Catch-up will require adoption of more comprehensive growth policies, implemented with considerably more resources and based on substantive policy analysis capabilities.

论违宪审查在东欧国家转型中的作用

东欧转型在法制方面的一项重要内容是普遍建立以宪法法院为审判机构的集中违宪审查制度。宪法法院通过对宪法文本中法治原则的阐释以实现国家转型的法治目标。宪法法院阐释的法治原则内容具体包括法的安定原则、分权原则、合比例原则、司法独立原则和基本权利司法救济保障原则等五项原则。     

《欧盟宪法条约》框架下的欧盟机构改革

2004年 10月,欧盟各成员国在罗马签署了《欧盟宪法条约》,这标志着欧盟政治一体化进入了一个崭新的阶段。该条约涉及欧盟政治与经济生活的方方面面,其中最令人关注的莫过于其对欧盟机构体系所进行的改革。《欧盟宪法条约》对欧盟机构体系改革规定了诸多内容,但改革中仍存不足。     

Tackling Ill-Treatment in Places of Detention: The Work of the Council of Europe’s “Torture Committee”

The article examines the working methods and effectiveness of the Council of Europe’s Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (the CPT) which, since 1990, has been carrying out visits to places of detention. It also examines the impact the Committee has had upon European standards and expectations, and, in particular, upon the jurisprudence of the European Court of Human Rights, and raises certain issues in respect of the establishment of the United Nation’s Subcommittee on Prevention of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment of the Committee against Torture. This article draws upon material to be published in The Treatment of Prisoners: European Standards (Council of Europe Press: 2006).     

论欧洲理事会的人权保护制度对建立和完善国际人权保护制度的影响

欧洲理事会采取集体办法促进和保护人权的理论和实践对建立和完善国际人权保护制度产生了深远的影响 :区域性人权保护办法是在区域层面上施行《世界人权宣言》的有效途径 ;国际人权机构应通过改革不断提高人权的可司法性 ;主权国家应在采取集体办法保护区域人权方面积极行使主权权利 ;人权国际保护内在地要求增强个人的权利主体意识 ;国际人权保护机构应不断提高其工作效率。随着欧洲理事会的人权保护制度的不断完善 ,它在人权国际保护中的“领跑者”的形象和影响将得以继续显现。     

The peculiar case of age discrimination: Americanising the European social model?

The Lisbon Strategy commits the EU to making labour market regulation more employment friendly with commentators anticipating some resulting convergence on the US model. Surprisingly, part of this post-Lisbon convergence has taken the form of a major extension of EU Social Policy with the expansion of anti-discrimination policies to address the case of age discrimination. We argue that unlike the US experience, it is the current preoccupation with raising European employment rates that has led to this expansion of ‘hard law’ Social Europe. We are unable to provide an efficiency rationale for this extension and assess alternative explanations. We also provide arguments suggesting that its impact is likely to differ from those experienced in the US.