New CBO Report Offers Insight on the Effects of Entrepreneurship Policies on the Advanced Manufacturing Sector

Jan 11, 2021

by ASME.org

A new report released by the Congressional Budget Office (CBO), a non-partisan government organization, seeks to examine how federal polices can impact declining American entrepreneurship. The report offers unique insight into how the high-tech sectors have fared and which policies have encouraged substantial growth. The report specifically examines the high-tech manufacturing sector and offers insight into how increased American entrepreneurship affects the sector.
 
The report offers this particular poignant point: “Entrepreneurship brings greater efficiency to the economy in several ways, one of which is by introducing new products and technologies that increase productivity. Although relatively few new businesses perform R&D, those that do are more R&D-intensive and more likely than older businesses to test new technologies. Indeed, most recently created manufacturing firms that have grown to become very large carried out R&D when they were new.”
 
R&D in the advanced manufacturing sector therefore is directly correlated to American entrepreneurship in the sector. Advancing policies that promote high-tech entrepreneurship may therefore provide increased manufacturing R&D output. The report calls attention to specific federal initiatives that achieve this goal, many of which are supported by ASME, such as the R&D tax credit. The report makes additional recommendations regarding the R&D tax credit, suggesting that “another way to reduce the after-tax cost of R&D for new firms would be to allow them to receive a refund for the R&D tax credit. Because of start-up costs, young businesses are more likely than older ones to post losses and may not have sufficient tax liability to apply the credit fully (if at all).”
 
To read the report in its entirety visit: https://www.cbo.gov/publication/56945
 

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