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Time Horizons and Technology Investments (1992)

Chapter: 5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons

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Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
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5
The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons

The United States is actually neither as innocent of nor as unskilled at industrial policy as many Americans seem to believe. In his "Report on Manufactures" of 1791, Alexander Hamilton gave classical expression to what is today a commonplace of industrial policy theory: the understanding that market prices are important and effective signals for adjusting supply and demand in the short run but that they are quite inadequate as guides for investment decisions about new technologies, choice of products, and scales of production ten to fifteen years hence. Hamilton wrote, "Capital is wayward and timid in lending itself to new undertakings, and the State ought to excite the confidence of capitalists, who are ever cautious and sagacious, by aiding them overcome the obstacles that lie in the way of all experiments."

—Chalmers Johnson, ''Introduction: The Idea of Industrial Policy," in C. Johnson, ed., The Industrial Policy Debate (San Francisco, ICS Press, 1984), p. 17.

Government policies and investments are a pervasive, important, and often positive influence on the business environment and economic development of any industrialized nation. The following are among the many government policies and actions affecting the business environment:

  • The structure of taxes (several aspects of which were discussed in chapter 4)

  • The design and implementation of workplace and environmental regulations

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
  • The amount and nature of government support for generic technology development, research, and programs too large for single firms or with payoffs too far in the future or too uncertain to attract private capital

  • The amount and nature of government investments in physical infrastructure and human capital

  • The legal environment of operating a business encompassing, among other issues, the protection of intellectual property rights and the handling of liability claims

Through these and other roles, government plays an important, varied, often obvious but sometimes subtle part in determining the time horizons of corporate investment decisions. The impact of government policies and actions on business investment in technology and operating practices is the subject of a vast and continually growing body of scholarly literature and policy studies (see, as recent examples, Carnegie Commission on Science, Technology and Government, 1991; Council on Competitiveness, 1991; Lee and Reid, 1991; and Porter, 1990). A comprehensive review of the literature and current debates in even one or two of these areas—environmental regulation or product liability, for example—could easily run to several hundred pages and would require expertise not represented on the current study committee; a comprehensive treatment of the influences of government on corporate time horizons is clearly beyond the scope of the committee's work. Therefore, recognizing the diversity, complexity, and importance of these issues, and aware of the limitations of time and expertise, the committee has chosen to focus on two types of government influence on corporate investment horizons, neither of which is widely understood. First is the role of government in providing a stable environment for investment, including the role the government plays in the creation of markets. Second is the role of government in investing in complementary public assets—national, regional, or local public assets, which work in tandem with private investment to allow and drive economic growth.

GOVERNMENT POLICIES AND A STABLE ENVIRONMENT FOR INVESTMENT

As discussed in Chapter 2, too much uncertainty is the natural enemy of long-term investment. Frequent upheavals in the marketplace or uncertainty about the terms and directions of competition add a significant element of risk to longer-term business decisions, which drives companies to seek recovery of their investments in the shorter period of time and dampens investment in activities that, by their very nature, will take substantial time to come to fruition. Federal, state, and local governments play a crucial role in the affairs of industry. The policies, routines, and practices of governments can

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

either improve or erode predictability (decrease or increase risk) in markets and technologies and thereby determine whether an environment is conducive or inimical to long-term investment.

The Mixed Impact of Regulation and the Legal Environment

On the one hand, stable and predictable regulation for worker and consumer safety and protection of the environment can drive important and innovative developments with positive long-term consequences. Waste and emissions standards establish fixed targets for improving processes and, as such, can encourage innovative approaches to problem solutions; for example, product innovation in the automobile industry to reduce pollution has resulted in major innovations. Providing incentives to minimize wastes in industrial processes not only may improve the environment but also may reduce production costs significantly. The result of these regulations can be to create a reliable "playing field" for competition, thereby improving the long-term health and capability of these industries, and to increase competitiveness in foreign markets. On the other hand, frequent changes in tax policy, regulatory structures, government licensing practices, and other forms of government interaction with industry can be quite damaging.

Various types of, and approaches to, regulatory and legal structures directly and indirectly affect the time horizons of organizations in different ways. Licensing procedures, patent lives, work place safety regulations, and environmental regulations can either extend or constrain the time horizons of organizations depending on the situation and the manner in which government laws and regulations are implemented.

Product liability concerns, for example, are often cited as a legal constraint that can indefinitely lengthen the payback time for new product development projects by creating significant uncertainty about a company's ability to recover investments. When this happens the increased risk to an investment increases a company's cost of capital. A legal system that inhibits longer-term investments because of its unpredictability, delays, and punitive treatment of product liability issues will hamper economic growth. It is impossible to foresee all circumstances in which a new product will be used; technological and economic advances must depend to some degree on "caveat emptor." On the other hand, an effective product-liability system can offer customers redress against genuinely fraudulent or unsafe products that make it to the marketplace—a safety net that will make customers more likely to trust producers' explicit or implicit claims and therefore more quickly create a predictable market for a product. In short, effective tort law is a balancing act, which, depending on its implementation, can lengthen or shorten corporate time horizons.

Time horizons are also strongly affected by the protection of intellec-

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

tual property rights, both domestically and across national boundaries. For example, if inventions are denied effective patent or trademark protection, investment is likely to flow toward nearer-term product (or service) modifications rather than toward R&D investment for new (unprotectable) innovations. The diligence and effectiveness of the government in the protection of intellectual property rights—both domestically through the U.S. legal system and internationally through trade negotiations and other international treaties—can have a significant impact on long-term planning and R&D investment on the part of corporations in a number of industries.

Among the government policies and actions that are the most consistently damaging to long time horizons are those which create disincentives for long-term planning and investment. Late or uncertain promulgation of environmental and workplace standards often unnecessarily diverts company investment capital from longer-term technology development. Similarly, the inability of companies to plan on predictable and rapid resolution of licensing, plant siting, or environmental or health and safety clearances creates greater uncertainty for companies, delays returns on investments, and decreases company's willingness to take longer-term investment risks. Slow or inefficient government regulatory processes discourage otherwise productive investments by the private sector.

The Government's Role in the Creation of Stable Markets

Among the ways in which governments promote long-term investment is the role they play in the creation of markets or marketplaces. First, the government's considerable buying power has created predictable markets for "public" goods, some of which have become private goods. Commercial passenger and freight aircraft, created in part by government investments in, and demand for, defense aircraft, are a classic example. Additionally, markets for private-sector weather prediction and monitoring, environmental monitoring and waste disposal, public health systems, or large-scale satellite, computer, or networking systems are based on, or were supported by, markets created by government purchases, often in combination with government R&D.

Second, the use of regulation to create or stabilize markets is an important public role in encouraging long-term investment. Government regulation plays an important role in creating safe and reliable financial and air transport markets, albeit the definition of safety in the two markets is quite different. Government's ability to create a monopoly (often regulated and designed to be temporary) during certain stages of an industry's development is another tool to promote long-term investment. This tool has been used with AT&T and the U.S. telephone system as well as with innumerable local activities such as electric power, gas, water, sewer, and taxicab services

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

(which are often regulated through commissions) or commercial real estate development (controlled through local zoning laws).

Third, the government plays a crucial role in the creation of stable markets through its role in setting formal or de facto standards. As new markets and technologies emerge and develop, standards are often unclear or in constant flux. At some point—when necessary standards and potential technologies become clear—government helps establish formal standards, or participates in setting de facto standards, by becoming a buyer and thereby promoting long-term investments in the developing industry. Such interventions must be carefully timed to avoid freezing the system too soon or too late, but they can be enormous successes.

In summary, the government-created regulatory and legal environment has a substantial impact on time horizons of companies, but the impact is complex and multidimensional; some regulations and legal procedures can lengthen corporate time horizons, while other regulations, or legal constraints that introduce substantial unpredictability, can shorten time horizons. Government procurement and regulatory policies have clearly provided initial and sometimes large markets for a host of products that we think of as "commercial" today. Early, persistent, and effective participation by government in many markets has given the United States a host of industries built on long-term investment that would have developed more slowly, if at all, without government participation. The importance of government policies with regard to the regulation and creation of markets needs to be acknowledged, and expertise in the use of such policies to support long-term investment should be cultivated.

The government should make sufficient investments in its own expertise and in evaluation and improvement of systems to reduce significantly the time spent in carrying out such fundamental governmental responsibilities as environmental approval of new facilities, obtaining licenses on government controlled or regulated technologies, obtaining patent approvals, getting product approvals through the Food and Drug Administration, and obtaining final determinations on technology-based court cases. The government should consider substantial investments in court or arbitration infrastructures specialized in these matters to shorten the time cycles for resolution of product and process liability, environmental impact, and other regulatory cases. The intent of such investments would be to encourage efficiency and timeliness in the prosecution of government regulatory and legal processes.

Finally, it is important to recognize the degree to which changes in policy that affect business are driven by events beyond the control of legislators or executive branch policymakers; the process of making government policy is, by its very nature, subject to many fits and starts, uncertainty, and changes in direction. Although there is no single or simple change that can (or

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

should) alter the nature of policymaking in democratic governments, stability in policies has considerable intrinsic value and the disturbance of a stable business environment should be regarded as a cost (sometimes small but often large) of any change in policy that directly affects business investment decisions.

GOVERNMENT INVESTMENTS, COMPLEMENTARY ASSETS, AND PRIVATE-SECTOR TIME HORIZONS FOR INNOVATION

David J. Teece, a professor of business administration at the University of California, Berkeley, has used the term complementary assets to describe the variety of capabilities or assets that support an innovation:

In almost all cases, the successful commercialization of an innovation [technical knowledge about how to do something better] requires that the know-how in question be used in conjunction with other capabilities or assets. Services such as marketing, competitive manufacturing, and after-sales support are almost always needed. These services are often obtained from complementary assets that are specialized. For example, the commercialization of a new drug is likely to require the dissemination of information over a specialized information channel. In some cases, as when the innovation is systemic, the complementary assets may be other parts of the system. For instance, computer hardware typically requires specialized software, both for the operating system and for applications. Even when an innovation is autonomous, as with plug-compatible components, certain complementary capabilities or assets will be needed for successful commercialization (Teece, 1987, pp. 70-71).

The concept of complementary assets is particularly useful in understanding the role of government investments in private-sector time horizons; complementary assets are the publicly provided infrastructures or services that permit, support, or work in conjunction with private investments in physical or human capital or R&D. Public infrastructure and publicly supported research and development are two important examples.

Infrastructure

Traditional, physical, public infrastructure systems are the most well recognized form of complementary assets. For example, government land grants, bond guarantees, and regulations designed to develop the nation's transportation infrastructures—starting with canals and roads and then railroads—created important, stable, complementary assets that allowed and supported the development of agricultural, manufacturing, and retail businesses. As the era of modern transportation and communications began, the government provided eminent domain for telegraph and telephone communications and helped coordinate standards for wireless radio, and later satellite communi-

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

cations. It subsidized and regulated the development of airports, air routes, and Federal Aviation Administration communications and control systems that make today's air linkages possible. Federal and state governments also made enormous investments in the land-grant university systems that became the core intellectual resources for the United States during its period of agricultural expansion and industrialization.

In more recent years, governments have been the principal investors in roads, dams, waterway maintenance, hospitals, schools, public health, outdoor recreation, space, and defense systems. The agricultural and massdistributed foods industries in the United States have been helped significantly by heavily supported government agricultural research, land use, water development and agricultural extension services, standards for foods and packaging, and enforced systems of standard weights and measures. The government's provision of infrastructures, implicit subsidies, and direct markets have provided the longer lead times, risk capital, and stable markets for a wide range of industries.

Projects like the Tennessee Valley Authority, the Rural Electrification Administration, and the Interstate Highway System not only created the original jobs and profits from these projects. Each opened up huge new markets that otherwise could not have been reached by product producers (such as radio, television, appliance, automobile, trucking, manufacturers). Relatively small initial investments (subsidized by government) opened up whole economic regions to be major markets and producers for modern business and home technologies, creating huge economic multiplier effects for the whole country. Such investments also led to U.S. primacy in the kinds of construction these projects represented, the products they allowed to be produced, and the services infrastructures they fostered. In macroeconomic terms it is well documented that the ratio of capital invested to gross national product is a key ingredient in both economic growth and competitiveness. Such generalizations extend to both the public and the private sector. In recent years, the ratio of the total federal government budget dedicated to investment has fallen steadily in relation to transfer payments and services entitlements. Specifically, the inflation-adjusted amount of government spending on physical infrastructure, about $26.2 billion in 1990, is about equal to its 1980 level (Congressional Budget Office, 1991b). It is important to note that level, inflation-adjusted expenditures over long periods do not describe a state of consistent levels of federal support; as GNP grows a constant level of spending will represent a smaller investment relative to the demands of the economy.

Research and Development

Government investments in risky or long-term research are the basis of another set of complementary assets that the government provides for busi-

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

nesses: access, at little or no cost, to scientific and engineering information and resources paid for by government. It is well documented that, in many cases, federal government research and development have established much longer time horizons for technological development than individual industries or companies might have been able to exhibit.7 Such public investments reduce the risk of related private investments and affect an enormous variety of industries, both directly and indirectly:

  • The pharmaceutical and medical products industries have been strongly supported by many years of basic research through the National Institutes of Health and other agencies (supported by a strong product patent system and the demands created by government-supported health care).

  • The extensive support the federal government has provided since the early 1960s in microbiological, genetic, plant, environmental, and human health research is now beginning to produce a biotechnology industry and the insights that will transform medical care, agriculture, and many industrial and waste-disposal processes.

  • Through its long-term research on materials and propulsion technologies, plus the provision of large-scale testing facilities, the government created assets of crucial value to the U.S. aircraft industry.

  • The government's early investment in large-scale computers and information networks for atomic and missile research provided the groundwork for today's computer infrastructure, which has given many educational institutions and research units a significant competitive advantage over their counterparts in most other countries.

  • By allowing AT&T Bell Laboratories (before the dismemberment decision) semimonopoly privileges and the right to collect a user fee from telephone customers and to use this fee in advanced communications research, the government helped create very long-term investment time horizons in communications, and for years those long time horizons gave the United States a world leadership position in this technology.

  • The Defense Department's continued drive to find the highest possible performance materials and systems for military purposes has pushed ahead the frontiers of today's microengineering, test equipment, fiber-polymer composites, and scanning tunneling microscopy imaging capabilities.

7  

The literature on the role of government R&D in economic development is vast and continues to grow. Much of the literature is empirical, describing the characteristics, success, and failures of different government R&D support activities. See, for example, Brooks, 1986; Ekelman, 1988; Ergas, 1987; Flamm, 1987; Gelijns and Halm, 1991; National Research Council, 1987; Nelson, 1982; and Rothwell and Zegveld, 1981. The record of government in funding the longer-term research and development that produce information or resources of value to private firms is well documented, though the analytical description offered usually relates to risk rather than time.

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
  • The Agriculture Department's long-term investments in agricultural research led to many of the hybrid seeds, plants, and agricultural techniques that individual or corporate farmers could never have developed themselves.

  • Government's coinvestments in satellite systems for weather predictions, communications, and navigation made such systems possible long before they would have been strictly ''economic" from a private investor's viewpoint.

Long-term investments in basic research and large-scale systems—and the government's tax and patent encouragement for such investments in the private sector—have proved to have long-term payoffs. The government can also lengthen technology investment horizons by such actions as coinvesting in consortium arrangements for post-basic, but precompetitive, generic technologies (such as materials research, micro- or nano-manufacturing, as well as special engineering and manufacturing equipment that cannot provide an attractive commercial return on investment), developing data bases on medical care outcomes, or supporting experimental mass processes for waste treatment and disposal.8 Private industry often will not tolerate the combination of low probability, long time to payoff, and high risk or ambiguity of commercial success that these investments require. This is, in part, because the sponsoring company cannot capture the full benefits of a successful result even if it is achieved, since it can, at best, only share the market. However, since society as a whole does capture such full benefits, it is often rational for governments to support such activities when private enterprise could not.

Performing research and development in universities creates further complementary assets beyond the research benefits themselves. These assets stem from the upgrading of university faculty, the advanced training of students, and the diffusion of knowledge that results from publication and from students later building on their personal knowledge base from the projects.

In summary, the government has the scale and stability of revenues to support the development of a wide variety of complementary assets, assets that allow private companies to adopt longer time horizons for their investment decisions, and without which many important industries would not have developed to their current degree. Successful investments in certain technological areas can open multiple secondary and tertiary industries and markets (as government investment has done in such areas as rural electrification, communications systems, semiconductors, and hybrid crops). Other

8  

Generic technologies are also known as leverage technologies, the primary characteristic being their applicability in the production of several, or many, different end products or services.

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

investments, particularly those in infrastructures such as roads, transportation systems, or water systems, create relatively predictable long-term returns for the society by lowering specific costs or increasing productivity and flexibility in forecasted forms.

Time Horizons and the Public-Sector Investment Portfolio

Although it is not typically regarded in such a manner, it is possible to conceive of substantial portions of the federal budget as a national public goods capital budget or an investment portfolio. Although transfer payments and expenditures for current consumption (personnel expenses for the military, for example) make up a the majority of the federal budget, a substantial portion of the budget is devoted to investments in long-lived public assets, such as physical infrastructure or research and development. In some cases, such investments create important public goods that have few direct uses for citizens and companies beyond their stated purpose (e.g., building a military base creates "national security" with only spin-off economic effects). Other types of public investments, however, can be regarded as creating public goods that are also substantial complementary assets for private enterprises.

History shows that the federal government's investment portfolio has allowed or driven the development of important new technologies and, with the support of state and local governments, has funded physical infrastructures that could not have been justified on a return-on-investment basis by any single company or industry. Additionally, the federal government and, to a lesser extent, state and local governments, have provided funding and management for projects that were too large and had completion times too long for any single corporation or consortium of private enterprise. By investments in these and future technological areas, the government can influence the time horizons, development, and competitiveness of U.S. industries in the future by assuming some of the risk of developing new technologies and providing risk capital.

Another crucial long-term opportunity for government investment is education—an investment that upgrades the intellectual capacity of the society and the flexibility of its human resources. The payoffs from investments in education accrue over long periods; they are captured by the individual or society over at least the full lifetimes of those who receive the education. Such investments have a significant impact on overall U.S. productivity, competitiveness, and quality of life.

As mentioned earlier, current federal spending for physical infrastructures is about equal to its 1980 level. Federal outlays in 1990 for education, training, and employment and social services are about 20 percent below an all-time high level of $52 billion in 1979. Research and development spending,

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

$67 billion in 1990, has considerably increased since 1980, with relatively steady increases in nondefense spending over that time period. Although it is extremely difficult to get a clear picture of federal government spending for long-lived assets, a very rough estimate is that about 20 percent of the federal budget represents investments in education and training, R&D, construction, or other long-lived assets.9

These investment portfolio decisions are active subjects of debate by a large, diverse, and knowledgeable set of interested parties. However, the debate and decision-making process could be improved by ongoing evaluation by the legislative and executive branches of the degree to which federal budgets, as proposed and approved, include investments that truly provide physical or human capital, or a knowledge base, for the future. In addition to the intrinsic value of such investments, they are a crucial government contribution to lengthening the time horizons of private-sector investment decisions.

SUMMARY AND RECOMMENDATIONS

Government policies and investments are a pervasive, important, and often positive influence on the business environment and economic development of the United States. The focus of this chapter is the role that government investments and regulatory policies play in determining private company investment time horizons.

With regard to regulation and the legal framework for business, government policies can play a crucial role in creating a stable environment for investment. Frequent upheavals in the marketplace or uncertainty about the terms and directions of competition add a significant element of risk to longer-term business decisions, a condition that drives companies to seek recovery of their investments in the shorter period of time and dampens investment in activities that, by their very nature, will take substantial time to come to fruition. Federal, state, and local governments play a crucial role in the affairs of industry, and the policies, routines, and practices of governments can either improve or erode predictability in markets and thereby determine whether an environment is conducive or inimical to long-term investment and business growth.

The government-created regulatory and legal environment has a substantial impact on time horizons of companies, but the impact is complex

9  

All data in this discussion are from How Federal Spending for Infrastructure and Other Public Investments Affects the Economy, Congressional Budget Office, Congress of the United States, July 1991. The estimate of the portion of the federal budget that goes toward long-lived assets is based on an effort at totaling the budget accounts in which at least 50 percent of the budget appears to be dedicated to developing or purchasing long-lived assets.

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×

and multidimensional; some regulations and legal procedures lengthen corporate time horizons, while other regulations, or legal constraints that introduce substantial unpredictability, can shorten time horizons. Government regulation and procurement policies have clearly provided initial and sometimes large markets for a host of products that we think of as ''commercial" today. The importance of government policies with regard to the regulation and creation of markets needs to be acknowledged, and expertise in the use of such policies to support long-term investment should be cultivated.

The committee recommends that the federal government invest in improving the efficiency and timeliness of its regulatory, patent, and licensing procedures.

The government should consider substantial investments in court or arbitration infrastructures specialized in these matters to shorten the time cycles for resolution of product and process liability, environmental impact, and other regulatory cases. The intent of such investments would be to encourage efficiency and timeliness in the prosecution of government regulatory and legal processes.

With regard to government investments, the government creates complementary assets—publicly provided infrastructures or services that permit, support, or work in conjunction with private investments in physical or human capital or R&D. Such assets can reduce the risk of related private investments and allow private companies to adopt longer time horizons for their investment decisions. Publicly supported research and development and public infrastructure are two primary examples.

The federal government's investment portfolio has allowed or driven the development of important new technologies and, with the support of state and local governments, has funded physical infrastructures that could not have been justified on a return-on-investment basis by any single company or industry. In addition to the intrinsic value of such investments, they are a crucial government contribution to lengthening the time horizons of private-sector investment decisions.

The committee recommends that the budgetary process for the federal government include more explicit consideration of the degree to which federal expenditures support the creation of long-lived physical and human capital or a knowledge base. Preference should be given to those expenditures that will generate returns for long periods of time and contribute to lengthening the time horizons of private-sector investments in the development and deployment of technology.

Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
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Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
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Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
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Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
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Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 63
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 64
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 65
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 66
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 67
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 68
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
Page 69
Suggested Citation:"5 The Influences of Government Investments and Regulatory Policies on Corporate Time Horizons." National Academy of Engineering. 1992. Time Horizons and Technology Investments. Washington, DC: The National Academies Press. doi: 10.17226/1943.
×
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It is frequently argued that U.S. corporations have shorter time horizons for planning and investment than their Japanese and German competitors. This argument, though widely accepted in studies of U.S. competitiveness, has rarely been examined in depth.

Time Horizons and Technology Investments explores the evidence that some U.S. corporations consistently select projects biased toward short-term return and addresses factors influencing the time-related preferences of U.S. corporate managers in selecting projects for investment. It makes recommendations to policymakers and managers about policies to mitigate negative external influences and about strategies to remove internal biases toward noncompetitive decisions.

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