NDE-news: May 16 - 20, 2005

A Tale of Two Models: Investing in Innovation in Europe and the US

You can’t accuse the European Union (EU) of being bashful in their efforts to promote innovation and entrepreneurship among its member states. Late last month, the Commission of the European Communities agreed to invest 4.2 billion Euros (roughly $5.4 billion) in a new seven-year Competitiveness and Innovation Framework Program (CIP). The funds will support three broad sets of programs focused on information technology innovation, renewable and efficient energy, and entrepreneurship. The latter program will help small and medium-sized enterprises overcome regulatory barriers, gain access to finance, and more effectively market to all of the EU member states.

Closer to home, government budgets for research and innovation face another year of belt-tightening. The latest review from the American Association for the Advancement of Science (AAAS Review XXX: Research and Development, FY 2006) examines current FY 2006 budget plans for federal research and development programs. Overall, Federal R&D budgets are expected to grow by 0.1% (growing by $84 million) next year, lagging behind the rate of inflation. While the NASA R&D budget will rise by more than $508 million next year, nearly all other federal R&D programs will face frozen budgets or reductions. AAAS researchers are concerned about these trends, but they do note that the US still ranks high in terms of overall R&D expenditure. In 2003, R&D spending represented 2.6% of US gross domestic product (GDP) while the overall level for EU members remains lower (1.9% of GDP). As part of its current innovation programs, the EU has set a goal of achieving an EU-wide R&D/GDP ratio of 3% by 2010.

To learn more about the European Commission’s Competitiveness and Innovation Framework Program,
visit http://europa.eu.int/comm/enterprise/enterprise_policy/cip/index_en.htm

To review the latest reports from the AAAS’ R&D Budget and Policy Program, visit http://www.aaas.org/spp/rd/new.htm

Understanding the Intangible Economy

Entrepreneurs often note that their most valuable resource “walks out the door every day.” This talent, knowledge and intellectual property are the real keys to innovation and prosperity in the 21st century. Yet, our current financial and accounting systems do a poor job of assessing and tracking the value of these intangible assets. If it’s true that “you value what you measure,” these shortcomings may soon come to be a major issue. A new study from the Athena Alliance, a Washington-based think tank, offers a useful introduction to the issues of measuring the intangible economy. According to the paper, the value of US gross investments in intangibles could be as high as one trillion dollars each year. Yet, because these assets are poorly valued in current corporate reporting and accounting rules, investors and policymakers lack a complete picture of the economic scene. The report concludes with a series of suggestions for improving disclosure and for identifying new and cost-effective approaches to tracking the value of these important intangible assets.

To view the April 2005 Athena Alliance study, Reporting Intangibles: A Hard Look at Improving Business Information in the U.S., by Kenan Patrick Jarboe, visit www.athenaalliance.org

Week of May 16 - May 20, 2005