...Macroeconomics project R&D Expenditures Macroeconomics analyze all of the markets in the world and the aim of the macroeconomics lecture generally is, to teach us how to think economy as a whole. For the macroeconomics homework we picked the news from the Guardian newspaper. We will show the effects of the decreasing UK government’s R&D expenditures with IS-LM and AS-AD models. First of all we will explain the effect of decreasing UK government’s R&D expenditures with IS-LM model. IS-LM curve is a macroeconomic model that graphically represents two intersecting curves. It focuses short run relationship between output and interest rate in the goods and financial markets. The IS curve is downward sloping and LM curve is upward sloping. If government decreases the spendings IS curve shifts left. Both output and interest rates decrease in the economy. LM curve doesn’t shift. If we look which way the investment change in the short run, it has different dimensions. Initially when government expenditures decreases cause decrease in output or income. So it can reduce the investment. In the second place decreasing government expenditures may lead to decrease in interest rates. Lower interest rates would make borrowing cheaper and should encourage firms or governments to invest. That’s why investment may increase. In our case we have seen that decreasing UK Government’s R&D expenditures cause both government and business investment fell. In summary according...
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...new and more attractive and cheaper products…There must be a stream of new scientific knowledge to turn the wheels of private and public enterprise. (Vannevar Bush, 1945)1 U.S. Basic Research: A Need for Serious National Attention U.S. industry and the Federal Government are the primary pillars of financial support for the U.S. research and development (R&D)2 enterprise. The National Science Board (Board) observes with concern the indicators of stagnation, and even decline in some discipline areas, in support for U.S. R&D, and especially basic research, by these two essential patrons and participants. A decline in publications by industry authors in peer reviewed journals suggests a de-emphasis by U.S. industry on expanding the foundations of basic scientific knowledge. More specifically, research contributions by U.S. industry authors in the physical and biomedical sciences through publications in peer reviewed journals have decreased substantially over the last decade. In addition, in this century the industry share of support for basic research in universities and colleges, the primary performers of U.S. basic research, has also been declining. Likewise, Federal Government support for academic R&D3 began falling in 2005 for the first time in a quarter century, while Federal and industry support for their own basic research has stagnated over the last several years. These trends are especially alarming in light...
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...Evaluation of R&D relief and Patent Box scheme in the UK and Belgium | Content 1. Introduction 1 2. UK’s Research and development relief 1 2.1 definition and schemes 1 2.1.1 Small or medium-sized enterprise (SME) scheme 1 2.1.2 Large company schemes 2 2.2 Qualifications 2 2.3 Consultation and appraisement 3 2.3.1 Equity 3 2.3.2 Externalities 3 2.3.3 Further evaluation 4 3. UK’s Patent Box scheme 4 3.1 Definition and Objective 4 3.2 When and how to claim 5 3.3 Qualification 5 3.3.1 Patent Box 6 3.3.2 Qualified Income 6 3.4 Consultation and appraisement 6 3.4.1 Equity 6 3.4.2 Efficiency 7 3.4.3 Further-Evaluation 7 4. Belgium’s Research and Development relief 8 4.1 Nature of incentives 8 4.1.1 Super deduction 8 4.1.2 Notional Interest Deduction (NID) 8 4.1.3 Income tax withholding incentives 8 4.1.4 Incentives for staff 9 4.2 Compare and contrast with UK R&D relief 9 4.2.1 Tax Deduction 9 4.2.2 Notional interest deduction 10 4.2.3 Wage Tax Exemption (WTE) 10 5. Belgium’s Patent Box scheme 11 5.1 Definition and Objective 11 5.2 Compare and Contrast with UK Patent Box scheme 11 5.2.1 Effective Tax Rate 13 5.2.2 Qualified IP rights 13 6. Conclusion 14 7. Bibliography 15 1. Introduction Under the impact of globalization and revolutions in knowledge and technology fields, innovation, which...
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...FORBES and E L I Z A B E T H A M E S HOW CAPITALISM WILL SAVE US HOW CAPITALISM WILL SAVE US W h y Free People and Free Markets A r e t h e Best A n s w e r i n Today's E c o n o m y Steve Forbes AND ELIZABETH AMES CROWN BUSINESS ALSO BY STEVE FORBES Power Ambition Glory (coauthored with John Prevas) Flat Tax Revolution A New Birth of Freedom To the millions of individuals whose energy, innovation, and resilience built the Real World economy. Their enterprise, when unleashed, is always the answer. Copyright © 2009 by Steve Forbes and Elizabeth Ames All rights reserved. Published in the United States by Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York. www.crownpublishing.com CROWN BUSINESS is a trademark and CROWN and the Rising Sun colophon are registered trademarks of Random House, Inc. Library of Congress Cataloging-in-Publication Data Forbes, Steve, 1947How capitalism will save us / Steve Forbes and Elizabeth Ames.—1st ed. p. cm. Includes index. 1. Capitalism—United States. 2. United States—Economic policy. 3. United States—Economic conditions. I. Ames, Elizabeth. II. Title. HB501.F646 2009 330.12'20973—dc22 2009032751 ISBN 978-0-307-46309-8 Printed in the United States of America DESIGN BY BARBARA S T U R M A N 1O 9 8 7 6 5 4 3 First Edition CONTENTS INTRODUCTION W h y Capitalism Is the Answer: The iPod Economy • i CHAPTER ONE "Is...
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...rule, or lobby the government to relax it. We analyze this choice, and its consequences, in a simple dynamic model. In equilibrium, when the level of development is low, firms are more inclined to bend the rule through bribery but they tend to switch to lobbying when the level of development is sufficiently high. Bribery, however, is associated with holdup problems, which discourage firms from investing. If the holdup problems are severe, firms will never invest enough to make lobbying worthwhile. The country may then be stuck in a poverty trap with bribery forever. The model can account for the common perception that bribery is relatively more common in poor countries, whereas lobbying is relatively more common in rich ones. In India, as elsewhere in the developing world, the old business of corruption is meeting a new rival: the Washington-style business of persuasion — –International Herald Tribune, May 31, 2006 ◦ W L obbying and corruption have been the subject of tremendous public interest and research. Surprisingly, these two means of influencing regulation have either been studied separately or viewed as basically being one and the same. The question of why firms choose to lobby or bribe, and of the consequences of this choice, remains largely unanswered. The common perception is that firms in developing countries are more likely to pay bribes to get around regulatory constraints, whereas firms in developed countries are more prone to lobby the government to change the rules...
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...The Importance of Research and Development (R&D) for U.S. Competitiveness and a Clean Energy Future Michael Greenstone June 2011 CEEPR WP 2011-010 A Joint Center of the Department of Economics, MIT Energy Initiative and MIT Sloan School of Management. The Importance of Research and Development (R&D) for U.S. Competitiveness and a Clean Energy Future Michael Greenstone 3M Professor of Economics, MIT Director, The Hamilton Project Senior Fellow, The Brookings Institution Thank you Chair Maloney, Ranking Member Brownback and members of the Committee for inviting me to testify today. I believe it is critically important that we give greater priority to new and better research and development (R&D) investments, to help ensure our country’s future competitiveness and to pave the wave for clean energy innovation. I am grateful for the opportunity to speak today about two interrelated challenges that our country faces. The first is the stagnation in economic opportunity for many families that dates back at least three decades. The second is the economic, national security, and environmental risks posed by our continued reliance on fossil fuels. The key purpose of my testimony is to discuss how R&D can enable us to begin confronting these dual challenges by creating new jobs for American workers, and fundamentally altering the way we produce and consume energy. I. CHALLENGE 1: UNITED STATES COMPETITIVENESS Even before the Great Recession’s arrival, there were legitimate concerns about...
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...Finland and Nokia Executive Summary Finland had transformed itself from a sleepy economy to a highly competitive one with maximum contribution from the telecommunications sector. Focused efforts in R&D and education helped Finland achieve this position with Nokia being a major player. While Finland maintained its ranking as a leading competitive nation in 2001, it was facing challenges. The overall growth rates were declining and the telecommunications cluster was experiencing a severe downturn. Nokia’s revenue and profits were falling and considering the fact that Nokia and the telecommunication sector played a large role in Finland’s economy, there were concerns about the level of exposure to a single cluster and company. Also, Finland was facing shortages of experienced engineers and scientists. Universities were offering programs tailored for foreign students in order to attract people to Finland. However, unemployment was increasing among the young and less skilled. Nokia was facing a challenge in evolution of standards and innovation. New standards were being developed in mobile internet services as well as software and hardware for phones and infrastructure. Smart mobile phones with multimedia messaging, internet connections and downloads from websites were being around the corner. We feel that Nokia has the options of outsourcing production to India and China to achieve reduced costs, higher production and improved benefits. They should consider development...
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...market. C) money market. D) goods market. Answer: D Diff: 1 Topic: Planned Investment and the Interest Rate Skill: Conceptual 2) The market in which the equilibrium level of the interest rate is determined is the A) money market. B) goods market. C) labor market. D) services market. Answer: A Diff: 1 Topic: Planned Investment and the Interest Rate Skill: Conceptual 3) The two links between the goods market and the money market are A) income and the inflation rate. B) the interest rate and the unemployment rate. C) income and the interest rate. D) the inflation rate and the unemployment rate. Answer: C Diff: 2 Topic: Planned Investment and the Interest Rate Skill: Conceptual AACSB: Reflective Thinking 4) Which of the following is determined in the goods market? A) the equilibrium interest rate B) money demand C) income D) money supply Answer: C Diff: 1 Topic: Planned Investment and the Interest Rate Skill: Conceptual AACSB: Reflective Thinking 5) Which of the following is determined in the money market? A) the equilibrium interest rate B) income C) employment D) the government budget Answer: A Diff:...
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...Technological * Government spending on research and development In the aftermath of the economic crisis that began in 2009, the governments in many countries averted this threat.6 The significant drop of private R&D in these countries was efficiently offset by government R&D investments in 2010 and 2011.7 Still, the stabilization or fall of government R&D budgets in advanced countries, the slowdown in emerging markets, and the decreased appetite of business investment have slowed the advance of innovation combined global private and public R&D expenditure followed a path of constant growth, Gross domestic expenditures on R&D (GERD) in the high-income economies of the Organisation for Economic Co-operation and Development (OECD) increased The worldwide recovery of business enterprise expenditure on R&D (BERD) was quick Two main policy strands form the core of present innovation policy. On the one hand, there is a need to improve the framework conditions for innovation; these include the business environment, access to finance, competition, and trade openness, as captured in the Innovation Input Sub-Index of the GII model. On the other hand, nations also need dedicated innovation policies targeting both innovation actors and the linkages among them; these include collaborative research projects, public-private partnerships, and clusters.13 Business executives in charge of innovation surveyed in Chapter 5 by Engel et al. stress the importance of...
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...Financial Terms Finance for Business FIN 370 Financial Terms •Finance (D) Finance refers to money management by individuals, companies, and government. (R) Finance’s role in the business world is to maximize profits, evaluate investments in order to raise funds with as little risk as possible, which is possible if information is adequately interpreted. • Efficient market (D) The standards to which stock prices reflect all available and relevant information. (R) To assist in explaining the accuracy of market prices, it is an attempt to decrease inefficiencies in the market pricing. • Primary market (D) The market in which new (never been issued) securities are bought and sold for the first time. (R) The main role of the primary market is to assist businesses in raising funds by selling new stock. The firm selling the securities (stock) collects the monies from the sells. • Secondary market (D) This market sells and trades the previously issued securities. (R) The secondary market provides the individual security holder the opportunity to sell or trade their own securities to earn money; the gain or loss from the transaction does not affect the business because the person who bought the stock and not the business owns the security. • Risk (D) The possibility that the expected return can be different from what was projected. (R) Risk is part of business and usually the higher the risk the better the return. There are several examples of risk they can be...
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...Case #1 - Filter Innovations Inc. Critical Issues 1.) How to comply with government regulations so that FII can sustain their corporate goals and vision of being an innovative leader within their industry. 2.) How to effectively brand FII with the MBR technology within the scope of their current market so that they can sustain their existing customer centric competitive advantage. 3.) FII is behind innovation due to managerial decision of only allocation 5% of EBIT towards R&D. Analysis The waste water management industry is experiencing significant growth around the world and expected to be worth $348 billion by 2010. The opportunities in North America are growing due to rising population, government regulations and the “Green” movement; therefore there will be a much higher demand for MBR technology. While the government regulations help drive demand, they can also hinder operations by making existing product lines obsolete. New government regulations are being implemented which is putting pressure on FII to invest in newer technology that is in compliance with these regulations. This is evident due to the fact that their income has reduced by $97,899. A new opportunity to invest in Membrane Biological Reactors (MBR) would allow FII to meet these government regulations. The new technology would be replacing some of their existing product lines. MBR would be able to treat biological wastewater in addition to ground and industrial process water, which...
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...curve. | 4.|A decrease in government spending reduces output more in the Keynesian-cross model than in the IS-LM model. Explain why this is true.| 5.|Use the IS/LM-AD/AS model to graphically analyze short-run & long-run effects of a negative IS Shock.| 6.|Assume that an economy is characterized by the following equations:C = 100 + (2/3)(Y – T)|T = 600|G = 500|I = 800 – (50/3)r|Ms/P = Md/P = 0.5Y – 50r|a.|Write the numerical IS curve for the economy, expressing Y as a numerical function of G, T, and r.|b.|Write the numerical LM curve for this economy, expressing r as a function of Y and M/P. |c.|Solve for the equilibrium values of Y and r, assuming P = 1.0 and M = 1,200. How do they change when P = 2.0? Check by computing C, I, and G.|d.|Write the numerical aggregate demand curve for this economy, expressing Y as a function of G, T, and M/P.|| 7.|Assume the following model of the economy, with the price level fixed at 1.0:C = 0.8(Y – T)|T = 1,000|I = 800 – 20r |G = 1,000|Y = C + I + G |Ms/P = Md/P = 0.4Y – 40r|Ms = 1,200||a.|Write a numerical formula for the IS curve, showing Y as a function of r alone. (Hint: Substitute out C, I, G, and T.)|b.|Write a numerical formula for the LM curve, showing Y as a function of r alone. (Hint: Substitute out M/P.)|c.|What are the short-run equilibrium values of Y, r, Y – T, C, I, private saving, public saving, and national saving? Check by ensuring that C + I + G = Y and national saving equals I.|d.|Assume that...
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...Departmental and implementing agency budgets for innovation policies 2 1 2.3 Future challenges for funding of innovation policy 22 3. Thematic report: Demand-side innovation policies 23 3.1 Trends in the use of demand-side innovation policies 24 3.2 Governance challenges 30 3.3 Recent demand-side innovation policy measures 3 1 3.3.1 Sectoral specificities 3 1 3.3.2 Good practice case 3 1 Appendix A : Plan to increase the efficiency and effectiveness of RDI expenditure (Summary of provisions) 32 Appendix B : Recommendations of World Bank’s Functional Review for the reform of the Romanian RDI system 34 Appendix C : Research and innovation policy measures for Romania 35 Appendix D : References 37 Mini Country Report/Romania i Preface The European TrendChart on innovation is the longest running policy benchmarking tool at European level. Since its launch in 1999 it has produced annual reports on national innovation policy and governance, created a...
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... Main determinants of FDI in China Obviously, cheaper labour costs were the major determinant for foreign investment in China. Then, in the early 1990s, the Chinese government started to place more emphasis on technology-intensive investment. Nearly 400 of the Fortune 500 firms have invested in over 2,000 projects in China in various industries such as: computers, electronics, telecommunications equipment, pharmaceuticals, petrochemicals, power-generating equipment etc. A recent bright spot for direct investment in China has been represented by the R&D activities, with over 100 R&D centres established by transnational corporations such Microsoft, Motorola, GM, GE, Samsung, Ericson, Nokia, Panasonic, Mitsubishi, Siemens, to name only a few. According to UNCTAD sources, Motorola, for example, has established R&D centres in the area of electronics, based on US$200 million in investment and 650 research personnel. Also, Microsoft invested US$80 million in a Chinese research institute and has announced the investment of a further US$50 million to create a Microsoft Asian Technology Centre in Shanghai. One can identify both pull and push factors determining foreign companies to invest in China’s R&D research sector. The pull factor is the need foreign companies perceive for locating R&D activities close to the customer base in order to better adapt their new technologies to the needs of the local market. The pull factors include: (a) the availability...
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...Innovation has been an important component for economic growth, national economic competitiveness and economic policy for many country. It can occur in any sector of the economy, including government services such as health or education. Supporting nowadays with the rapid growth of technology industries, many policymakers in many nations have increasingly come to see technological innovations as a key driver of economic growth. This is why so many nations have made the promotion of innovation and new technologies a central part of their economic policy. Before discussing further about innovation and see why innovation play an important role for economic policies, it is important first to define innovations and its policies. Some people don’t really know what’s exactly an innovation. They are confused between invention, progress, innovation and updates. So it’s relevant to point out wrong ideas that peoples usually have over it and its creation to be able to erase it. Many people think of innovations as only technological in nature, resulting in shiny new products like Samsung’s Smartphones, Apple’s iPad, Sony’s PlayStation or in enhance machines or devices, such as lasers, autonomous robotics machines etc. Others might be thinking that innovation pertains only to research and development (R&D) activity going on at universities, laboratories, and corporations. While that is true for those examples of innovation but it is much too limited. Innovation is much more than that. Based...
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