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THEORY AND PRACTICE: DEVELOPING NEW FRAMEWORKS FOR ANALYZING SYSTEMS OF INNOVATION 41 organizations such as the United Nations and the Organization for Economic Cooperation and Development (OECD). Until better indicators are developed, the Joint Task Force believes that comparisons of R&D resources will be more useful if side-by-side reporting of MER and PPP figures becomes standard practice. Figure 5-1 U.S. vs. Japan R&D, purchasing power parity vs. market exchange rates. NOTE: Data are in current U.S. dollars. SOURCE: Organization for Economic Cooperation and Development, Main Science and Technology Indicators, 19 96. CORPORATE TECHNOLOGY STOCK MODEL One possible method of placing financial value on R&D activities is to treat R&D as an investment rather than an expense.8 One approach to this is the corporate technology stock model. It requires knowledge of depreciation times and quantified risk factors. If such a system could be developed and accepted by the accounting profession it might make business judgments about R&D investment more consistent with the economists' computation of private returns from R&D. However, it might also have a less desirable effect if taxation authorities used this method to require firms to capitalize R&D rather than expense it. At present, no companies in Japan or in the United States are known to be employing this method, except in the case of U.S. firms which, under special rules, are allowed to capitalize all or some of their software development efforts.