Fund for the Introduction of new Technology

Fund for the Introduction of new Technology

 

in the USSR, a sectoral centralized financial fund designed to cover the additional expenditures incurred in introducing new technology, production techniques, and products and in improving product quality. The fund is an important lever for accelerating scientific and technological progress.

Funds for the introduction of new technology are set up by ministries (departments) and industrial associations. The funds are financed by deductions incorporated into the prime costs of the products manufactured by enterprises in a given sector. The size of each fund depends on the volume of expenditures projected for developing and introducing new types of products and production techniques; it is fixed as a percentage of the planned production costs of the market output. Machine-building and metalworking enterprises, for example, contribute between 1.5 and 3 percent of their planned prime cost of production; ferrous-metallurgy enterprises contribute 0.3 percent, and petrochemical and oil-refining enterprises, 1 percent. Funds for the introduction of new technology are also set up in capital-construction enterprises. Contributions from construction and installation trusts range from 0.2 percent to 0.3 percent of the estimated value of the work performed by their own personnel; they are included in the overhead of construction organizations.

The State Planning Committee (Gosplan of the USSR), the Ministry of Finance, and the State Committee for Science and Technology jointly determine the size of the contributions to the fund in each sector, and their decision is ratified by the Council of Ministers of the USSR. Special features relating to the development and importance of each sector are taken into account in the process. Contributions made to the fund for the introduction of new technology by enterprises and organizations are stipulated in the plans governing the prime cost of production. Ministries (departments) ratify the standard and total contributions for each enterprise (association), and when funds are set aside for an enterprise, the ministry determines the size of the allocation.

The fund for the introduction of new technology finances expenditures incurred in planning and introducing new, technically more sophisticated products, developing new production techniques and equipment, and preparing and testing prototypes. The fund also pays for the bonuses given to workers who contribute to the creation and application of new technology, bonuses intended as an incentive to increase the technical quality of output. In addition, the fund is used for the nonrecurring expenditures associated with improvements in the quality, service life, and reliability of products and for the higher costs of the first year and, in some cases, the second year of mass production of new types of items. Appropriations from the fund can be used only for the intended purposes. The level of financing for each new product or production technique depends on the estimates ratified by higher-level organizations. The enterprise is not compensated for cost overruns, and unused amounts must be returned to the centralized fund; with the consent of a higher-level organizations, however, the unused amount may be used for introducing new products.

Incentives for introducing new technology and production techniques and for raising product quality are continuously being improved. Some branches of industry use profits to set up a single fund for the development of science and technology. The fund is used to finance research and development, improve product quality, and introduce new products.

In other socialist countries, expenditures arising from the introduction of new technology and the improvement of product quality are financed from special funds for technological development. These funds, which are set up at enterprises, are also used to finance scientific research. They are formed from extra charges on the prime cost of production or, as is the case in some countries (Czechoslovak Socialist Republic) from profits. The bulk of the funds is usually concentrated in the associations and combines responsible for technological development.

REFERENCES

Garetovskii, N. V. Finansovye metody stimulirovaniia intensifikatsii proizvodstva. Moscow, 1972.
Litunovskaia, M. K. Finansovo-kreditnye istochniki nauchno-tekhnicheskogo Prọtsessa. Moscow, 1973.
Butakov, D. D. Finansovye problemy khoziaistvennykh reform v stranakhchlenakh SEV. Moscow, 1973.
Margulis, Iu. Ia. Finansirovanie izobretatel’stva i ratsionalizatsii. Moscow, 1975.

B. E. PEN’KOV

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