Competitiveness

Innovation, including the diffusion of information technology throughout the economy, is key to boosting productivity, which in turn is at the heart of increasing living standards.

Immigrant STEM Workers Increase Everyone’s Wages

October 17, 2014
| Blogs & Op-eds

A new paper examines the impact of H1-B-sponsored STEM workers on local economies, finding that they raise wages all around while having no effect on employment. Overall, foreign-born workers have contributed significantly to productivity increases in the United States, and it is important that our immigration policy reflect these economic realities and not fall for simplistic ideas about how immigrants affect the economy.

Tech Companies Say NSA Spying Harms Competitiveness

USA Today
European and Canadian companies are using the PRISM revelations to gain a competitive advantage against American firms.

U.S. is Blowing Opportunity Sky High

October 6, 2014
| Blogs & Op-eds

The U.S. commercial drone industry could create 100,000 jobs and generate $82 billion in revenue in the next 10 years, but only if domestic rules are finalized. The time to act is now. To keep these investments, jobs, and innovations in the United States, the FAA should both permit more companies to test their drone services and allow them to test private technologies on private land where safety concerns are minimal.

Understanding and Maximizing America’s Evolutionary Economy

Understanding and Maximizing America's Evolutionary Economy

October 2, 2014
| Books

Read online.

Understanding and Maximizing America's Evolutionary Economy

In the conventional view, the U.S. economy is a static entity, changing principally only in size (growing in normal times and contracting during recessions). But in reality, our economy is a constantly evolving complex ecosystem. The U.S. economy of 2014 is different, not just larger, than the economy of 2013. Understanding that we are dealing with an evolutionary rather than static economy has significant implications for the conceptualization of both economics and economic policy.

Unfortunately, the two major economic doctrines that guide U.S. policymakers’ thinking—neoclassical economics and neo-Keynesian economics—are rooted in overly simplistic models of how the economy works and therefore generate flawed policy solutions. Because these doctrines emphasize the “economy as machine” model, policymakers have developed a mechanical view of policy; if they pull a lever (e.g., implement a regulation, program, or tax policy), they will get an expected result. In actuality, economies are complex evolutionary systems, which means enabling and ensuring robust rates of evolution requires much more than the standard menu of favored options blessed by the prevailing doctrines: limiting government (for conservatives), protecting worker and “consumer” welfare (for liberals), and smoothing business cycles (for both).

As economies evolve, so too do doctrines and governing systems. After WWII when the United States was shifting from what Michael Lind calls the second republic (the post-Civil War governance system) to the third republic (the post-New-Deal, Great Society governance structure), there was an intense intellectual debate about the economic policy path America should take. In Keynes-Hayek: The Clash That Defined Modern Economics, Nicholas Wapshott described this debate between Keynes (a proponent of the emerging third republic), who articulated the need for a larger and more interventionist state, and Hayek (a defender of the second republic and a smaller state), who worried about state over-reach and loss of freedom.

Today, we are in need of a similar great debate about the future of economic policy for America’s “fourth republic.” Unfortunately, today’s debate is mostly a reprise of the 70-year-old Keynes-Hayek debate between the defenders of the third republic (liberals) and those who would try to resurrect the second republic (conservatives). However, as Lind writes, “it remains to be seen whether the global economic crisis that began in 2008 will mark the end of the Third American Republic and the gradual construction of a fourth republic by the 2020s or 2030s.”

It is in this context that the concept of evolutionary economics can play an important role, as any new economic framework for America’s “fourth republic” needs to be grounded in an evolutionary understanding. In this context, the central task of economic policy is not managing the business cycle—it’s driving a robust rate of economic evolution. It’s not about maximizing freedom or fairness as the right and left want, respectively—it’s about maximizing evolution.

Any new economic framework for America’s “fourth republic” needs to be grounded in an evolutionary understanding.

This report provides an overview of the evolutionary economics framework and the history of evolutionary economics thinking. It then discusses the three main drivers of U.S. economic evolution (geographic shifts in production, technological change, and demographic/cultural/governmental change). Finally, it lays out eight principles for an evolutionary economics-inspired economic policy:


• Support global economic integration based on firms’ market-based choices, rather than governments making political choices.

• At the same time, work to slow traded sector industry rate of loss where it makes sense.

• Don’t impede natural evolutionary loss.

• Limit government barriers to evolution.

• Foster a culture that embraces evolution, including natural evolutionary loss.

• Enact policies to spur organizations to act in ways that drive evolution.

• Support policies to speed economic evolution, especially from technological innovation.

• Develop a deeper understanding of the process of U.S. economic evolution.

How Can Technology and Innovation Improve the U.S. Economy?

October 1, 2014
Rob Atkinson was featured on Bloomberg Radio discussing the impact of technology and innovation on productivity, competitiveness and overall economic health.

Rob Atkinson was featured on Bloomberg Radio discussing the impact of technology and innovation on productivity, competitiveness and overall economic health.

How Immigration Policy Has Walled Off Silicon Valley

October 1, 2014
| Blogs & Op-eds

Restrictive immigration policies are holding Silicon Valley back and encouraging companies who need access to high skill labor to locate elsewhere. In an era where top talent, especially in STEM fields, is a valuable national resource, the United States should be actively working to recruit high-skilled labor, following the example of countries such as Chile and Canada, instead of closing the door to skilled immigration. 

ITIF Responds to White House Strategy for American Innovation RFI

September 23, 2014
| Testimony and Filings

The Obama Administration has requested public comment as it begins a process to author a second Strategy for American Innovation. ITIF commends the Administration as it begins to undertake this effort. ITIF's response to the RFI notes that a successful strategy for American innovation must promote both technological-based and non-technological-based (i.e., institutional and organizational) innovation throughout all layers of an economy, including the private sector, government agencies, and non-profit organizations. In other words, the strategy should not only address innovation in government; rather, its chief aim should be to fundamentally change private sector activity and behaviors to spur greater levels of innovation. 

The Global Innovation Economy and American Competitiveness

September 17, 2014 - 12:00pm - 1:30pm
Information Technology and Innovation Foundation
1101 K Street, NW
610 A
Washington
DC
20005

The growth over the last two decades of a globally integrated, innovation-based economy has transformed international trade, R&D and industrial development, while impacting job growth and competitiveness.

The Myth of 'Crony Capitalism'

September 17, 2014
| Blogs & Op-eds

Psychologists have identified a disorder they term dichotomous thinking (DT) where " .... someone is only able to see the extremes of a situation, and is unable to see the 'gray areas' or complexities of the situation." It's easy to think that many in Washington have chronic DT syndrome. Case in point is the talk decrying anything government does to help business as "crony capitalism."

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