34. DPR reports on federal R&D and small business; CTAB. 35. DPR reports on federal procurement and small business. 36. DPR reports on federal R&D and federal procurement; CED

37. DPR report on federal R&D.

38. DPR report on small business.

39. DPR report on federal R&D.

40. CED; DPR reports on federal R&D, federal procurement, and small business, CTAB.

41. DPR reports on regulation, industry structure, and small business, NAE report on regulation, CED; CTAB.

42. DPR reports on regulation, industry structure, and small business.

43. CED; NAE report on regulation.

44. DPR reports on regulation and industry structure.

45. DPR report on patent policy; CED.

46. DPR report on patent policy.

47. DPR report on patent policy.

48. DPR report on industrial structure.

49. NAE report on antitrust.

50. NAE report on antitrust; DPR report on industrial

structure.

51. Hill and Utterback.

52. NAE report on antitrust; DPR report on industrial

structure.

53. Botkin, Dimancescu, and Stata; Hill and Utterback; National Science Board Commission on Precollege Education in Mathematics, Science, and Technology, "Today's Problems/Tomorrow's Crises," (Washington, D.C., November 1982), Education Commission of the States, "Education for a High Technology Economy," (Denver, August 1982.)

54. See for example: Business-Higher Education forum, “Engineering Manpower and Education: Foundation for Future Competitiveness," (Washington, D.C., October 1982). National Engineering Action Conference, (New York, April 1982); Pat Hill Hubbard, "A Plan for Action to Reduce Engi neering Shortage," (Palo Alto, 1981), H.R. 5254, "National Engineering and Science Manpower Act of 1982."

55. Hill and Utterback; Reich; DPR report on labor. 56. DPR reports on information policy and patent policy; William O. Baker, "Innovation Potentials for University. Industry Relations," Testimony before the House Subcommittee on Science, Research, and Technology, July 31, 1979.

The following list of 205 policy recommendations was compiled from 42 major studies of innovation and related subjects conducted between 1962-1978. The number in parentheses after each recommendation refers to the report(s) that made the recommendation. The reports are listed, beginning on page 44. A list of more recent recommendations begins on page 46.

TAXATION

1. Allow small firms to carry forward losses against profits of succeeding 10 years (change Internal Revenue Code (IRC), Sec.172) (1, 9, 31, 41)

2. Liberalize qualified stock option rules for small firms by (i) extending option period to 10 years (9, 41), (ii) reducing holding period required to receive capital gains treatment to 6 months.(9, 31, 41)

3. Relax criteria for deducting research and development (R&D) expenses for the amateur inventor.(41)

4. Allow successful inventor to write off earlier development costs over a period of 5 years.(41)

5. Give professional inventor the same capital gains break as amateur inventor on grants of patent rights limited to a specific field of use (change IRC, sec. 1235).(41)

6. Allow R&D expenditures to be written off even if unrelated to the taxpayer's current products or processes.(41) 7. Increase writeoffs for taxable purchases of technological assets.(23, 41)

8. Increase tax investment credit for R&D plant to 25 percent.(9, 32)

9. Increase tax depreciation allowance for R&D plant.(32) 10. Trade present tax credit for R&D plant for credit or cash payments for all expenditures on industrial R&D.(32)

11. Provide new special tax credits or equivalent cash payments to industrial R&D performers.(32)

12. Provide new tax credit or equivalent cash payments for incremental R&D.(3, 5, 32)

13. Provide new tax credics or equivalent cash payments for incremental R&D in chemicals and capital goods industries.(32)

14. Provide a graduated income tax rate structure to benefit new, technology-based firms.(32)

15. Apply small business tax rate (22 percent) to first $1 million of income rather than to first $25,000.(31)

*Excerpted from Mary Ellen Mogee and Richard Kremer, "Two Decades of Research on Innovation: Selected Studies of Current Relevance," in U.S. Congress, Joint Economic Committee. Research and Innovation: Developing a Dynamic Nation. Special Study on Economic Change, Volume 3, Studies, 96th Congress, 2nd session. Washington, U.S. Government Printing Office, 1980.

16. Eliminate or reduce corporate tax on dividends paid out.(32)

17. Allow tax credits of up to 50 percent of costs of issuing common and preferred stock or nonconvertible debt issues.(9) 18. Exclude from taxable income decreasing percentages of revenues attributable to the sale of innovative products or licenses.(9)

19. Defer from taxation for 3 years revenues attributable to the sale of innovative products or licenses.(9)

20. Permit acquisition costs of technological innovation to be expensed rather than capitalized (change IRC, sec. 174).(9) 21. Permit multinationals to expense domestic costs of development of new products and processes in the place incurred (change IRC, secs. 861-864).(9)

22. Treat corporate cash dividends as deductible expenses for small firms.(9)

23. Create a variable investment tax credit with the rate and duration of credit linked to investment in technological innovation.(9)

24. Increase maximum asset value of "1244 stock" to $1 million, and increase loss allowance to $50,000 on individual and to $100,000 on joint returns (change IRC, sec. 1244).(9) 25. Employ tax incentives to promote intra-industry joint ventures for R&D.(9)

26. Simplify tax reporting requirements for small firms.(31) 27. Increase efforts to inform firms of existing incentives for R&D and innovation.(41)

28. The Experimental Technology Incentives Program (ETIP) should conduct studies and experiments to examine the impact of tax incentives on innovation.(32)

29. Acquaint the appropriate employees of the Internal Revenue Service (IRS), the Small Business Administration (SBA), and Department of Commerce with the unique tax problems of small, technology-based firms.(41)

30. Explore the feasibility of industry sector-specific fiscal incentives for innovation, targeting start-up costs.(1)

31. Provide more generous capital gains tax treatment for new, technology-based firms.(32)

32. Provide special tax credit for private investment in all R&D leading to successful innovation.(3)

33. Reduce capital gains tax rates for direct investment in small, technology-based firms.(1, 31)

36. Allow corporations, estates, and trusts to invest in subchapter S corporations and to receive benefits of 1244 stock.(31, 32)

37. Make investments in new, technology-based firms by individuals, institutions, or corporations tax deductible until the investments are sold.(31, 32)

38. Increase ceiling on regulation A offerings to $1 million.(9, 31)

39. Allow original investors in specified equity securities to deduct from ordinary income up to one-third the cost of the issue.(9)

40. Decrease bank reserve requirements in proportion to the amount of funds they lend to innovative firms.(9)

41. Create in each Federal Reserve District a capital bank to provide venture capital to new, growing innovative firms.(20) 42. Increase Federal Reserve bank loan reserves for loans to finance innovation.(9)

43. Guarantee some portion (up to 50 percent) of loans granted by Small Business Investment Corporations (SBICs) or other financial institutions to new technology-based firms.(32)

44. Reduce cost of compliance with disclosure requirements for small firms (change SEC rule 146).(9)

45. Guarantee (up to 80 percent) loans to cover costs of registration of stock offerings intended to finance innovation.(9)

46. Establish an indemnity or insurance fund to reimburse qualifying technology-based firms for legal expenses incurred in actions related to antifraud provisions of securities acts.(9) 47. Form a National Venture Development Program (NVDP) to coordinate public policies to encourage formation of venture capital.(1)

48. Provide federal financing of additional seed capital through quasi-public agencies.(1, 5)

49. Allow "good will" to be written off in merger accounting before tax rather than after tax.(32)

50. Transfer administration of funds for entrepreneurs from the National Science Foundation's Research Applied to National Needs program (NSF/RANN) to the National Technical Information Service (NTIS) in the Department of Commerce.(32)

51. Departments of Commerce and Treasury and the SEC should conduct forums for major investment institutions to discuss potential and problems of venture capital formation.(32)

52. Develop mechanisms to furnish information on venture capital to new, small firms at regional levels.(5, 41)

53. Mandate the Department of Commerce to serve as federal spokesman and representative for new, technologybased firms, and to work especially with problems of venture capital availability.(41)

54. The Department of Commerce should broaden its studies of the innovative and entrepreneurial processes and their relation to venture capital.(41)

55. Establish a Federal Innovation Insurance Corporation (FIIC) to insure approved innovation investments against losses.(5, 9)

56. Provide government insurance for innovative firms with a technologically successful project against financial failure due to unforeseen market problems.(9)

57. Revive the SBA innovation loan program that was operative from 1967 to 1970.(5, 9)

58. Provide federal subsidies for interest on long-term loans to small firms for innovation.(9)

59. Allow government institutions to issue long-term unsecured loans to small firms unable to receive bank loans, guaranteed up to 80 percent of the outstanding principal (9) 60. Provide an innovating firm a guaranteed return on specified innovations through deficiency payments in the event the market price is lower than expected; such payments would be treated as loans repayable by the firm in 3-5 years.(9)

61. Guarantee loans used to finance acquisition of one company by another for purposes of innovation.(9)

62. Provide federal credit insurance to private venture capitalists, financed by premiums and fees.(39)

63. Issue government-funded interest-free or low-interest loans directly to qualified innovating firms.(3, 5)

64. Guarantee loans for the acquisition of productivityimproving technology, i.e., stimulate process rather than product innovation.(5)

65. Amend Investment Company Act of 1940 to enhance climate for venture capital firms.(5)

66. Review the SBIC program in innovation to determine why it failed.(5)

67. Develop curricula in venture capital management in universities and professional schools.(5)

FOREIGN TRADE

68. Establish a board within the executive branch to develop policies for control of exports of U.S. technology.(32)

69. Develop an international trade strategy that exports technology embedded in products rather than "naked" technolog ical knowledge in the form of licenses and blueprints.(3, 32) 70. Negotiate a shortened International Control Coordinating Committee List, and an efficient means of keeping it updated.(32)

71. Assist firms specializing in military products to shift to civilian products and thereby to achieve expanded export levels, using improved market identification, better federal promotional activities, and exposure of foreign protective practices.(32)

72. Simplify licensing procedures of the Departments of State, Commerce, Energy, and the Nuclear Regulatory Commission (NRC) to lessen delays encountered by exporters.(32)

73. Strengthen the financial policies of the Export-Import Bank.(32)

74. Require the Export-Import Bank to give preferential treatment to qualifying innovation industries to promote exports.(9)

75. Require the Department of Defense to identify areas of commercial technology to exclude from export to adversary nations.(32)

76. Establish within the Department of Commerce a capacity to analyze technological developments in non-Communist nations to assess what exported technologies (especially military) should be controlled.(32)

77. Remove all controls on export of U.S. commercial technology.(18, 22)

78. Develop a federal policy and a "code of behavior" for multinationals to contribute to the technological development of less-developed countries (LDCs).(18, 32)

79. Aid LDCs in developing regional institutions for R&D.(18)

80. Develop a coordinated program in the Organization for Economic Cooperation and Development (OECD) for the selective transfer of technologies owned by OECD members to LDCs.(18)

81. Develop unified OECD policy governing technology transfer to the USSR.(18)

82. Develop increased R&D cooperation among OECD nations in specific areas (computers, urban development, marine resources, environmental protection).(23)

83. Study technology transfer among OECD members.(18) 84. Develop and maintain inventories of inventions owned by the federal government that could be transferred to LDCs.(18)

85. Study U.S. deficiencies in international standards, and prepare policies to alleviate them.(32)

86. Support title II (international standards) of the Voluntary Standards and Accreditation Act of 1977 (H.R.8184, S.825).(32)

87. Reduce nontariff barriers to trade, e.g., safety requirements, verification procedures, quality standards.(23)

FEDERAL R&D

88. Repeal the "Mansfield Amendment" if study by Office of Science and Technology Policy (OSTP) indicates that increased mission oriented research has detracted from basic research.(32)

89. Fund engineering and applied science education, but not commercial R&D.(18)

90. Increase university R&D by government contracts or tax credits for private firms contracting work with universities.(4) 91. Encourage universities to engage in more applied research.(17, 20)

92. Create a publicly funded, profit-oriented National R&D Corporation to buy research or patents, demonstrate their commercial feasibility, and then sell them back to private firms for commercialization.(4)

93. Create a National Institute of Technology (NIT) to provide grants to private firms for research falling between basic and product research, and to demonstrate the feasibility of advanced designs.(21)

94. Encourage large federal research institutions to market their new technologies to other federal agencies and to insti tutions in the private sector.(34)

95. Categorize all federal R&D expenditures into three functional areas: basic research, mission-oriented research, and massive mobilization research.(30)

96. Ignore potential "spinoffs" and economic multipliers in allocating R&D expenditures.(30)

97. Continue public R&D funding for longer time periods in nonmilitary and nonmedical areas to bring the technology to greater development before expecting private firms to take over.(30)

98. Allow for "institutional constraints" and bureaucratic exigencies while designing public R&D programs.(30)

99. Develop clearer guidelines for determining how long public funds should be used in commercializing new technologies.(30)

100. Develop more effective channels to enable Congress to review Department of Defense R&D expenditures.(30) 101. Employ a continuous, systematic audit of all federal R&D to determine its impact on various sectors of the economy and to propose changes to make it more effective.(17, 30)

102. Consolidate all existing field demonstration programs of various federal agencies under Department of Commerce control.(32)

103. Use the following criteria to guide deployment of public R&D funds in the private sector:

(a) Encourage industrial research in areas with small short-term economic rewards, yet potentially large social rewards.(32)

(b) Encourage cost reduction R&D rather than new product R&D.(30)

(c) Encourage small, flexible projects, not large-scale efforts, in only the earliest stages of development.(7, 8, 30)

(d) Encourage industries lacking strong internal R&D capacity, where institutional barriers hinder R&D, or where rapid technological progress would be likely.(5, 21) (e) Encourage civilian R&D rather than military or space R&D.(8)

(f) Couple R&D with market demand rather than with technology push.(8)

(g) Encourage high levels of nonmission-oriented research.(10)

(h) Encourage mission-oriented research in specific sectors with demonstration projects.(20)

(i) Include as objectives aesthetic, work satisfaction, environmental, and other social factors.(7)

104. Expand federally funded R&D by establishing more federally owned and operated research centers.(4, 8) 105. Expand federally funded R&D by supporting nonprofit, private research organizations.(4)

106. Expand federally funded R&D by contracting or cost sharing with small innovative firms or entrepreneurs.(4)

107. Expand federally funded R&D by contracting with firms having excess R&D facilities due to cut-backs in defense or space R&D.(4)

108. Expand federally funded R&D by contracting with manufacturers of capital goods.(4)

ECONOMIC REGULATION

109. Rationalize local, state and federal regulatory standards.(1, 5)

110. Expand prelegislative and preregulatory cost/benefit analyses to determine impact of proposed regulatory measures on industrial risk-taking ability and innovative performance.(1, 18, 22, 32, 39)

111. Establish a permanent group in the Department of Commerce to assess the impact of economic regulation on technological innovation.(32)

112. Establish a corps of technology advisers responsible to an external technology office to work in regulatory agencies.(39)

113. Establish a group in the Executive Office to promote the President's policies regarding innovation in the regulatory agencies.(39)

114. Require all regulatory agencies to analyze in annual "technology impact reports" how they affect innovation.(39) 115. Establish advisory panels in the National Academy of Sciences (NAS) or National Academy of Engineering (NAE) to advise regulatory agencies on technological matters.(39) 116. Revamp or eliminate obsolete regulatory agencies established in response to problems that are no longer of primary importance.(29)

117. Conduct forums to exchange industry and government views on regulatory impacts on innovation.(1)

118. Upgrade professional staffs or regulatory agencies to improve their ability to set and monitor standards.(1)

ENVIRONMENTAL, HEALTH, SAFETY AND
CONSUMER REGULATION

119. Establish a "science court" to provide for direct adver sary argumentation in front of impartial experts on scientific issues relating to regulation.(32)

120. Utilize existing institutions to sensitize and train scientists to maintain integrity and objectivity as "expert witnesses" on controversial issues.(32)

121. Simplify the documentation and reporting required by regulatory agencies.(18)

122. Employ performance rather than design objectives for environmental and safety regulations.(18)

123. Place customs duties on foreign goods not subject to the same burden of environmental and safety standards to account for the full "social costs" of the use of the goods. (1, 18)

124. Provide federal subsidies for interest on loans for the additional cost of compliance with environmental and safety regulations in innovation.(9)

125. Allow expense carry-back of legal, accounting or administrative costs in innovation in complying with environmental or safety regulations.(9)

126. Establish a permanent group in the Department of Commerce to assess the impact of environmental, health, safety and consumer regulation on technological innovation.(5, 32)

127. Develop publicly funded technological institutes to define political and economic trade-offs for government-imposed environmental, health, safety and consumer standards.(25) 128. Support Title I (national standards) of the Voluntary Standards and Accreditation Act of 1977 (H.R.8184, S.825), but modify the rigorous regulatory framework set by the bill so that future product standards needs are identified jointly with the private sector.(32)

ANTITRUST POLICY

129. Repeal antitrust exemptions of the railroad and trucking rate bureaus.(9)

130. Relax antitrust laws to permit firms within an industry to create joint ventures in certain basic researches, the results of which would be shared among the firms.(9, 18)

131. Relax antitrust restrictions on R&D cooperation among small firms (but not large firms).(32)

132. Antitrust and regulatory agencies should provide guidelines clarifying the legality of business conduct regarding competition and innovation.(5, 41)

133. Study the effect of antitrust relaxation on cooperative R&D to determine whether relaxation would produce socially desired innovation.(1, 32)

134. Balance the stimulation of competition and innovation in the interpretation and administration of antitrust and regulatory laws.(41)

135. Strengthen the staffs of antitrust and regulatory agencies by increasing the number of employees who understand problems of R&D and innovation.(41)

136. Develop advisory boards from the private sector or the federal government to advise antitrust and regulatory agencies on the past and expected impact of antitrust policy on innovation and invention.(1, 41)

137. Consider the interaction of technological change and competition in antitrust legislation.(41)

PATENT POLICY

138. Speed passage of the patent reform bill (1973) through Congress.(1)

139. Decrease cost of patent applications for amateur inventors and small firms.(1)