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¶ZRUNRULGHDWKDWKDVEHHQLQFOXGHGZLWKLQWKHUHSRUWKDV EHHQFOHDUO\UHIHUHQFHGZLWKGXHFUHGLWEHLQJJLYHQ 9LQHHW9LVKDO&KDQGUD 6 6WDWHPHQWE\6XSHUYLVRU 7KHUHVHDUFKLQWKLVWKHVLVZDVSHUIRUPHGXQGHUP\VXSHUYLVLRQDQGWRP\ NQRZOHGJHLVWKHVROHZRUNRI0U9LQHHW9LVKDO&KDQGUD 'U$QWRLQH'H5DPRQ1¶<HXUW 3ULQFLSDO6XSHUYLVRU $FNQRZOHGJHPHQWV )LUVWO\,ZRXOGOLNHWRWKDQNWKHDOPLJKW\*RGIRUJLYLQJPHWKHNQRZOHGJHSRZHU DQGSHUVHYHUDQFHWRVXFFHVVIXOO\ILQLVKWKLVUHVHDUFK,DOVRZRXOGOLNHWRWKDQNPDQ\ SHRSOHZKRKDYHEHHQLQYROYHGLQWKLVUHVHDUFKZRUNWRPDNHWKLVWKHVLVSRVVLEOH , VLQFHUHO\ WKDQN P\ VXSHUYLVRUV 'U $QWRLQH 'H 5DPRQ 1¶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¶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x Section One 7KLV VHFWLRQ FRQWDLQV WZR FKDSWHUV &KDSWHU GLVFXVVHV WKH EDFNJURXQGFRQWH[WRI VXJDUFDQH LQ )LML LQFOXGLQJ WKH IDUPLQJ DQG KDUYHVWLQJ SUDFWLFHVVXJDUSURGXFWLRQ SURFHVVHV FRQWH[WXDOLVHV WKH VXJDUFDQH ELRIXHO DQG HOHFWULFLW\ SRVVLELOLWLHV DQG SURYLGHV DQ RYHUYLHZ RI FOLPDWH FKDQJH DQG UHQHZDEOH HQHUJ\ )XUWKHUPRUH LW SURYLGHVWKHUHVHDUFKREMHFWLYHRIWKLVWKHVLV &KDSWHUWZRIRUPVSDUWRIOLWHUDWXUHUHYLHZDQGGLVFXVVHVWKHKLVWRU\RIVXJDUFDQHLQ )LMLDQGSURYLGHVDQRYHUYLHZRIJOREDOFRPPHUFLDODQGHQYLURQPHQWDOVLJQLILFDQFHRI VXJDUFDQHDVELRHQHUJ\FURS x Section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x Section 3 7KLVVHFWLRQFRQWDLQVFKDSWHUZKLFKVXPPDULVHVWKHPDLQSRLQWVRQDUJXPHQWVDQG VXJJHVWIRUIXUWKHUUHVHDUFK )LJXUHVDQGWDEOHVSUHVHQWHGLQWKLVWKHVLVDUHWKRVHRIWKHDXWKRUXQOHVVRWKHUZLVH VWDWHG LY 7DEOHRI&RQWHQWV $FNQRZOHGJHPHQWVL $EVWUDFW«««««««««««««««««««««««««««««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«« ,QWURGXFWLRQ 0DWHULDOVDQG0HWKRGV 6XEVWUDWH 6LPXODWLRQRIFRJHQHUDWLRQSURFHVVHVXVLQJ$VSHQ3OXV $QDO\VLVRIFDORULILFYDOXH *HQHUDO$VVXPSWLRQ 5HVXOWVDQG'LVFXVVLRQ 6XPPDU\ &KDSWHU &RQFOXVLRQ 5HFRPPHQGDWLRQVIRU)XUWKHU6WXG\ 3XEOLFDWLRQVDULVLQJIURPWKLVWKHVLV 5HIHUHQFHV««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