Knowledge that Transforms

Research joint ventures (RJV's) between private firms and government bureaus play a central position in the Clinton Administration's R&D strategy to promote productivity and of American firms. The government's role in the programs varies from subsidizing private projects to providing the expertise and facilities of the federal research laboratories. A substantial literature now exists that investigates the economic efficiency of private RJV's. The purpose of this paper is to expand the debate to consider the conditions under which the government will choose to subsidize RJV's and whether these conditions are likely to yield desirable economic results. It is useful to characterize the government as a consortium member who differs from the private venturers in several critical ways. First, these programs are based on the presumption that private firms are far better than government at choosing projects with commercial merit. Even in those programs where the government contributes scientists and facilities, industry partners usually have primary responsibility for initiating projects. Second, the objective function of the government differs from industry members. Indeed, it is in part because government actors have goals other than competitiveness that these programs are intended to keep government bureaucrats at arm's length from technical choices. Finally, the financial contribution of the government is usually a set share of the total bill. Introducing this form of subsidy changes the research investment strategies employed by a joint venture, and the incentives facing firms either to participate in a consortium or to oppose its establishment. The basic premise of this analysis is that a subsidized joint venture will persist only when all members, including the government, are satisfied. A viable policy depends on economic consequences to member firms, and to the extent that they have access to policy-making, to nonmember firms and consumers. Furthermore, some of the relevant consequences follow predictably from market and technology characteristics.

Historically, average reported levels of food intake in Eastern Europe have been considerably higher than in most middleincome countries. According to food balance-sheet data, average calories, proteins, and fats in terms of availability per capita rose continuously over the 1961-1988 period and generally exceeded the intake requirements established by the World Health Organization (WHO) (Food and Agriculture Organization, 1991). While it may rightly be argued that these data offer little information about the effective control over food by consumers in different income groups, in the case of pre-reform Eastern Europe, full employment, low income inequality, and low food prices generally ensured a minimal level of food intake even for those in the bottom deciles of the income distribution. While undernutrition did not generally represent a problem, considerable imbalances affected the diet of most people in the region. Particularly in urban areas and among low-income groups, food intake was characterized by a high consumption of cholesterol-rich products (such as eggs and animal fats), sugar, salt, bread, and alcohol and a low intake of good-quality meat, fruit and vegetables, and vegetable oils. The data in Table 1 clearly illustrate this situation for Russia and can be taken as representative of the entire region. Low-income families consumed less food per capita, while their diet was characterized by greater intake, both in relative and absolute terms, of bread and fats and a lower consumption of more nutritious and healthy foods. The dietary imbalances implicit in this consumption pattern caused an abnormally high incidence of nutritionally related health problems, including a high prevalence of overweight people, cardiovascular diseases, micronutrient deficiencies, and anemia. In addition, a fairly high prevalence of low birth weight (LBW) and low breastfeeding rates were common in the region. Inadequate breastfeeding represented a critical nutritional problem for young children, as milk substitutes and baby foods were generally in short supply.