Staring in 2022, a provision in the 2017 Tax Cuts and Jobs Act will require companies to start amortizing their R&D investments over five years instead of expensing them in the same year they incur the costs. Congress should repeal the rule before it takes effect. Otherwise, companies will do less research in the United States, jobs will be lost, and U.S. competitiveness will suffer.
Science and R&D
April 1, 2019
Fact of the Week: EU Initiative That Co-Finances Loans for Risky R&D Projects Induced 14 Times the Initiative's Investments Between 2007 and 2016
The European Union in 2007 established the Risk Sharing Finance Facility (RSFF) to improve access to debt financing for high-risk R&D projects by co-financing loans with private banks. A new study has analyzed the impact of the €18.2 billion that the RSFF invested from its inception through 2016.
March 25, 2019
Fact of the Week: Firms that Significantly Reduce Executive Stock Options Have 66 Percent Lower R&D Investment Two Years Later
Aligning executive incentives such as stock options with firms’ long-term growth objectives is crucial for promoting innovation. A new study examined the magnitude of this effect, focusing on a 2005 change in tax regulations that made providing stock options more expensive.
March 11, 2019
In the decades since 1980, there has been a global trend in which income inequality between countries has decreased while income inequality within countries has increased, and many have attributed the latter to technological innovation.
January 22, 2019
Fact of the Week: Tariffs Would Reduce R&D Investment Returns in High-Tech Manufacturing by Up to 50 Percent
That tariffs put a damper on R&D investments is straightforward: Firms absorb some of the increased input costs, reducing profits and thus the funds available to invest. But tariffs also undercut R&D at a much deeper level. By reducing the exposure firms face to foreign markets, tariffs limit the potential gains from innovation, thereby lowering the returns from investing in R&D.
January 15, 2019
In a review for the New York Journal of Books, Rob Atkinson writes that anyone involved in managing any organization, large or small, is likely to find much to appreciate in “Creative Construction: The DNA of Sustained Innovation” by Gary P. Pisano.
January 14, 2019
Fact of the Week: Between 2013 and 2015, 10 Percent of U.S. Firms Introduced a New or Significantly Improved Product
One of the simplest measures of innovation is the rate at which firms change the goods or services they offer in response to market demands or to take advantage of new technologies, but this phenomenon differs drastically by industry. From 2013 to 2015, 10.4 percent of all U.S. firms introduced new or significantly improved projects—but the figure was 24.3 percent for manufacturing firms versus 9.2 percent of nonmanufacturing firms.
January 7, 2019
Fact of the Week: Japanese Firms Increased Their Productivity in Robot Technology R&D After Cooperative Research with Government
In 1983, the Japanese government began a series of robot technology R&D projects, which partnered with Japanese firms. New analysis of 25 years of these projects, from 1993 to 2008, found that not only did these projects create valuable results, they also caused participating firms to be more efficient in their future research.
December 14, 2018
The federal government invests approximately $121 billion per year funding research and development (R&D) in everything from agriculture to health, defense, energy, and a host of other areas.
December 13, 2018
The reduced tax generosity toward R&D will cost the U.S. economy, because R&D is an important component of national competitiveness and higher living standards.
November 13, 2018
Fact of the Week: Firms With Highest R&D Spending Contribute to More Than 27 Scientific Publications Per Year
A new study has found that the 2,500 firms with the largest R&D expenditures contributed more than 300,000 scientific publications from 2011 to 2015, which is comparable to the academic output of France.