The IPL newsletter: Volume 9, Issue 180

INTRODUCTION

This newsletter is published by The Innovation Policy Lab at the Munk School of Global Affairs, University of Toronto, and sponsored by the Ministry of Research and Innovation. The views and ideas expressed in this newsletter do not necessarily reflect the views and policies of the Ontario Government.

Momentum: A 2008 Report on University Research and Knowledge Mobilization

Association of Universities and Colleges of Canada
This report focuses on the importance of partnerships in university research and looks at the variety of forms collaboration takes – from university partnerships with private companies to research projects with governments, communities, the not-for-profit sector and international partners. It provides a comprehensive account of Canadian R&D, particularly the activities of the university sector and the resulting progress achieved. It also presents detailed research and analysis of national and international trends that will drive changes in university research and the Canadian R&D landscape in the future.

Timely, Targeted, Temporary and Transformative: Crafting an Innovation-Based Economic Stimulus Package

The Informationa Technology and Innovation Foundation, ITIF
As talk of a possible recession grows, so too does consideration of a second economic fiscal stimulus package.  Rather than craft a conventional spending-oriented stimulus package focused solely on tax cuts for individuals and spending increases, Congress should craft a stimulus package of which at least a portion not only gives a quick shot in the arm to the economy but at the same time also boosts investment that spurs productivity growth and innovation, especially in information technology, which has been the engine of U.S. economic growth for the past decade. In an economy which faces key challenges going forward in areas such as the need to increase international competitiveness, raise productivity, and reduce greenhouse gas emissions, any stimulus package should also at least in part help address these challenges. ITIF lays out eight specific proposals that would not only spur spending and economic activity in the short run, but would also help address these challenges going forward.

• Allow IT Investments to be Completely Expensed in 2009: IT investments produce outsized productivity gains, spurring higher company productivity and higher real wages.3 Companies in the United States invest around $400 billion per year in IT equipment and software, but these investments must be depreciated over a number of years. Allowing companies to write off all the costs for tax purposes in 2009 would raise the rate of return of new equipment and software, spurring companies
  to invest more and more rapidly turn over older, less productive equipment and software. As a result, companies would not only boost their productivity and international competitiveness, they would be installing equipment that would be both safer for workers using it and more energy efficient;
• Provide a Tax Credit for Investments in Health IT Made in 2009: Information technology promises to revolutionize health care by improving the quality and containing the costs of care. For the American health care system to benefit from advances in IT, it must adopt electronic health records (EHRs), electronic prescribing, telemedicine and other technology applications;
• Provide $2 Billion to Colleges and Universities That Invest in Needed Research Infrastructure in 2009: As part of the stimulus package Congress should appropriate $2 billion to the National Science Foundation (NSF) for grants to cover 90 percent of the costs of purchases made by universities in 2009 of research equipment;
• Provide a Tax Credit of 50 Percent for Investments in Energy Efficient Equipment in 2009: Current law provides modest tax incentives to businesses and homeowners to install energy saving equipment. However more generous, one-time incentives could spur significant investments in 2009, saving energy and creating jobs;
• Provide $1.6 billion for Computers and Broadband For Low-Income Families with Children at Home: This program could be administered by the Universal Service Administrative Company (USAC), which currently is charged with administrating the subsidy program to help low income individuals and families afford the price of telephone installation and monthly charges;
• Provide an $8 Billion One-Time Infusion into the Highway Trust Fund to Spur Ready-to-Go Surface Transportation Infrastructure Investments: The nation’s surface transportation infrastructure (roads, bridges and transit) is in disrepair and has not kept up with increased demand by consumers and businesses. Increased funding for transportation infrastructure
  would boost economic growth by raising productivity among businesses and mobility among consumers. While some infrastructure projects would take a relatively long time to build, according to the American Association of State Highway and Transportation Officials, there are approximately $17 billion in projects that could be initiated within 6 months of funding;
• Allow U.S. Companies to Bring Back Foreign Earnings in 2009 at a Lower Corporate Tax Rate: Bringing back this capital, regardless of how it is invested, creates a short term economic stimulus as the funds are infused into the economy. In fact, evidence suggests that encouraging domestic investment regardless of how the funds are used is associated with domestic job creation while investment in foreign affiliates reduces domestic employment, at least in manufacturing. But a not insignificant portion of any repatriated funds are also likely to be invested in innovationbased activities that also spur longer term growth;
• Provide Forgivable Loans to Make Up State Budget Shortfalls, Provided That States Shore Up “Rainy Day” Funds in Later Years: States need help in being fiscally responsible. To do this, any stimulus package should provide general aid to state governments, but in the form of forgivable loans. In order to not have to pay back the loan, a state would have to increase its rainy day fund to at least 5 percent of its budget within five years of the recession officially ending. States that fail to do this or that drew down their rainy day funds after this without Treasury approval would be required to pay back the loan to the federal government.

Any stimulus package should be timely, targeted and temporary, but there is no reason why at least a portion of it cannot also be transformative.