get financing, but often for a somewhat different 

 reason than at Academy and VUZy facilities. The con- 

 duct of fundamental research in the latter establish- 

 ments renders it difficult to relate research to prac- 

 tical results and link compensation accordingly. In- 

 dustrial research is generally applied, sometimes 

 narrowly so, creating the potential for direct com- 

 pensation based on results. The benefits of certain 

 R&D, however, may extend beyond the bounds of the 

 sponsoring and/or performing facility, and in princi- 

 ple this facility should consider such "external" 

 benefits in making its decision to undertake the pro- 

 ject. To consider the benefits when the facility is 

 evaluated on the basis of economic performance, a way 

 must be found for the facility to capture a portion 

 of the benefits. In the United States, a facility 

 might achieve this end through patents and subsequent 

 licensing agreements, but legally granted proprietary 

 rights of this type on a facility basis are severely 

 restricted in the USSR. In the Soviet system a State 

 Budget grant is used for this purpose. A case in 

 point is the large project to mechanize production 

 operations at the ZIL automobile plant: 



The program was accomplished at the initiative 

 of the ZIL Association, but taking into account 

 its important national economic value, the State 

 also took part in its financing. Fifty percent 

 of ZIL's expenditures were covered by the State 

 Budget, and fifty percent were covered by pro- 

 fits of the association. The resources of the 

 association which were intended for improvement 

 of current production were not touched (the fund 

 for the development of production) .33 



In general, State Budget grants to industrial facili- 

 ties are more likely to be tied to such specific pro- 

 jects of "important national economic value" than is 

 the case for Academy and university facilities. 



Both at the central and intermediate management 

 level, small but significant reserve funds are re- 

 tained to finance R&D. The significance of the funds 

 derives from their reserve status and their priority, 



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