The Effects of Subsidizing R&D Projects

7. Think back to Chapter 1 and the discussion about the ways governments foster entrepreneurship. What impact could the high tax rates found in socialist countries have on entrepreneurship?

It is intended both to provide thumbnail descriptions of the various intellectual property regimes to economists working in this area and to indicate where additional economic research might be useful. The other papers in this symposium provide important examples of ongoing research on the economics of intellectual property. Suzanne Scotchmer analyzes the complex effects of patent protection when innovation is cumulative. Rather than analyzing situations in which several firms vie to develop the same innovation-the approach of the "patent race" literature-her analysis examines circumstances in which only one firm can develop an initial innovation but others can also build upon it. She focuses on how the incentive to develop both the initial and subsequent inventions may be affected by the scope of patent protection. Janusz Ordover considers ways of adjusting the patent system that may help to both provide returns to the inventor, and encourage the diffusion of the innovation in the economy. His paper is part of a line of work that explores the place of the intellectual property system among the large number of institutions that affect the amount and nature of research and development that takes place. In the final paper, David

Although Canada currently ranks within the top 5 countries for the number of start-up businesses, there are a number different actions Canadian policymakers can take in order to stimulate entrepreneurial activity and productivity. Canada’s global rank in terms of entrepreneurial does not take into account the lifespan of each venture. As of 2006, only 51% of new business ventures make it past five years (Parsley & Djukic, 2010). With this in mind, it is important that any new policies and incentive programs must address not only the short-term needs of entrepreneurs, but their long-term needs as well. In order to improve these two factors simultaneously, Canada must implement more effective financing and grant funding programs, a strategic tax deferral system for small businesses, and a focus on entrepreneurial educational programs at the secondary and post secondary levels.

     The belief and implementation of free markets and pro-business policies have allowed the American nation to become the strongest country in the world. The entrepreneur is a special type of business person that is hurt by the livable wage. Our nation’s economy is diverse and adaptable because entrepreneurs are always willing to take risks to make money and stay competitive. Entrepreneurs act as the catalysts for the American economy. They take the capital risks to create new products,

Most people believe the boom of the technological revolution was led by Apple and the creation of Macintosh. In The Entrepreneurial State, Mazzucato rebukes the myth of innovation between the public and private sector. The private sector is viewed as an innovative force while the State acts as a facilitator. Mazzucato argues that the public sector plays a significant role in stimulating innovation than people are aware of. The author observes that venture capital firms are much more risk-averse than their reputation suggests and that their short- and medium-term projects are not suited for transformative innovation for the future.

While the United States touts free market policies as main guiding principles, U.S. policy makers have actively used research and development (R&D) industrial policies to maintain and grow the U.S. economy. There are two types of R&D, also known as research and experimentation (R&E), funding models; one is direct federal research dollars given to industry, typically for basic research, and the other in the use of tax credits for R&D activities. Tax credit policies began in 1981 as part of the Economic Recovery Tax Act (Talley, 2011). The U.S. has long funded R&D, however this funding has steadily decreased with the total in 1976 of just over 1.2% of GDP with dropping below .8% of GDP in 2014 (AAAS, 2014a). As of 2013, South Korea, Finland, Japan, Taiwan, and Germany all outspend the U.S. on direct R&D funding relative to GDP (AAAS, 2014b). The IMF and OECD indicate that R&D tax credits are a main growth strategy for the G-20 nations (IMF, 2014). This research topics explores how the United States domestic industrial policies supporting research and development influence business and entrepreneurial behaviors within the U.S., which industries has this benefited the most, overall societal impacts of advancements in technology and automation, and finally how this supports comparative advantage for the United States as well as implications for developing nations.

The desire to attract foreign direct investment causes countries to engage in competition with each other. Many regions, counties, and states have enacted policies to incentives and established agencies to promote investment so as to encourage FDI. The incentives are of financial and fiscal nature. Fiscal incentives are designed in such a way that they reduce the tax burden of companies and includes tax concessions that are usually in the form of tax holidays, reduced income tax rates, exemptions from import duties, accelerated depreciation allowances on capital taxes and duty drawbacks on exports. Financial incentives, on the other hand, consist of direct contributions to companies from the government. Financial incentives include subsidized loans, grants, loan guarantees, government insurance at preferential rates and publicly funded venture capital participation in investments that involve high commercial risks (Dadush, 2013).

R&D creates externalities and is a public good, its sale or use does not preclude others using it and can be consumed by many without lessening its value (indeed we will argue that the greater the use of it, in many cases the higher its value). It is difficult to price ideas to sell since this requires revealing them and avoid the need to pay. Firms with innovations to sell are therefore unable to do so.

Professor Mariana Mazzucato describes Europe’s desire to foster places like the US’s Silicon Valley and create empires similar to Amazon and Google. She explains their belief that withdrawing from the state and encouraging things like venture capital will promote growth- but she challenges that assumption. For her, a myth exists that there are two parts to innovation: on the one hand there exists a dynamic, innovative, creative, fast and interesting private sector, and on the other a slow, inertial, bureaucratic, state sector which is believed to at best contain the business cycle and create infrastructure for projects. She names three characteristics of innovation: it is collective, uncertain, and cumulative, and believes that the “entrepreneurial state” has a greater capacity than the private sector to foster innovation not because the it provides fiscal stimulus, builds important infrastructure, or

The role of entrepreneurship in the economy of a country is to inspire new business ventures that support wealth

The thought and problem solving process identified by Saras Saravathy is not the process advocated for technology start-ups. Therefore, a case can be made that a major contributor to the poor record of ecosystems to foster real economic growth is rooted in the fact that the vast majority of the ecosystems have a one-size-fits all mentoring model. They fail to recognize that there are different founder reasoning skills required for different types of businesses. Rather than nurturing all burgeoning businesses, most ecosystems only focus on technology start-ups. These systems smother all start-ups with non-differentiated business advice designed for technology start-ups. Instead, they should tailor the advice to the start-ups that are still generating their business and economic models.

At this point, the research would usually discuss the repercussions of the RIS policies with regards to firm involvement and actions. However, Catalonia has historically been severely lacking in resources and, as a result, levels of innovation are quite low. This lack of resources is what is usually attributed to the reason for why the Catalan government is so willing to pursue action on developing a strong supporting network for science and technology. However, even today the capacity for production in those areas are still weak. R&D expenditures for Catalonia are at 1.35% in 2005 are much lower than the OECD average of 2.25% (Segarra-Blasco et al 2008). This is directly related to the low levels of R&D for firms. As a result, the

The aim of this research project is to find out how unsuccessful entrepreneurship of a region affects the economic growth of Polish provinces. In Polish language the word province is used interchangeably with the word region. In this proposal the word region refers to administrative unit, an entity of governance within a state (Van Langenhove, 2013). Poland is divided to 16 regions, some of which, for example the regions forming the Eastern wall are not as

The major reason to support the initiation of new companies is the believe in the economic benefit they create exceeding the opportunity costs of any external support, in the form of governmental action (Wennekers & Thurik, 1999). Although it is questionable weather a undifferentiated and widespread support program meets the targeted objective. The low survival rate as seen in Figure 1 combined with the research findings that many new enterprises have low or no growth rate, resulting in low or none economic contribution exceeding the

A vast amount of study has focused on the factors that influence growth via innovation in emerging economies. Most of these studies use R&D and patient as a measure of innovation in determining the influence of innovation on growth. Gould and Gruben (1996) investigated economic growth rates across many countries to a simple index of patient strength and other variables. They found a significant positive impact when patent was interacted with a measure of openness to trade. That is, growth increases by .66% on average due to the impact of stronger patents in open economies, suggesting that market liberalization in recipe with stronger IPRS increases growth. Ginarte and Park (1997) arrived at similar finding in