Science and R&D

In an economy powered by innovation and technology, more proactive R&D policies are key to success.

Of 30 nations, the U.S. ranks just 14th in attracting industry funding per university researcher; Korean researchers receive, on average, four times as much industry funding ($97,900) as their American peers ($25,800).

High levels of industry funding for university researchers is indicative of successful applications and commercialization of academic research. In the United States, academics performing applied research often face a disconnect between the knowledge they are creating and its end use. Encouraging more public/private partnerships between universities and industry can increase knowledge flows between sectors and speed the commercialization of pure and applied research. This will ultimately improve U.S. competitiveness, job growth and economic development.

Debunking the Myth of a STEM Surplus

July 22, 2014
| Blogs & Op-eds

The Census bureau recently reported that only 26 percent of STEM graduates go into STEM fields. Rather than expressing a surplus of STEM talent, this statistic reflects an overly broad definition of STEM majors, a narrow definition of STEM occupations, and demand for STEM skills in all sectors of the economy. High wages and low unemployment rates show for STEM careers show that the STEM surplus is actually a STEM shortage. 

CCEI Praises Bipartisan Bill to Reform DOE Labs

Government R&D and Manufacturing Competitiveness

July 7, 2014
| Blogs & Op-eds

For the United States to regain its lost manufacturing prowess, it must dramatically increase government investment in research, development and technology transfer. The private sector cannot do this alone, as businesses have been shown to underinvest in new technologies, while foreign governments have invested significantly in their own manufacturing sectors. A focus on industrially relevant applied research can pay major dividends for the U.S. economy and help us compete in the increasingly globally race for innovation advantage. 

ITIF Report: Evaluating the U.S. National Innovation System

Understanding the U.S. National Innovation System

June 30, 2014
| Reports

The conventional view of innovation is that it is something that just takes place idiosyncratically in “Silicon Valley garages” and R&D laboratories. But in fact, innovation in any nation is best understood as being embedded in a national innovation system (NIS). Just as innovation is more than science and technology, an innovation system is more than those elements directly related to the promotion of science and technology. Rather, it also includes all economic, political and other social institutions affecting innovation (e.g., a nation’s financial system; organization of private firms; the pre-university educational system; labor markets; culture, regulatory policies and institutions, etc.). Indeed, as Christopher Freeman defined it, a national innovation system is “the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies.”

This report identifies the broad elements that make up a national innovation system, including a description of the innovation success triangle, which measures the business environment, regulatory environment, and innovation environment of a nation, and is used to predict the success of an innovation system in promoting technological development and economic growth. It then uses this framework to analyze the U.S. national innovation system and assess the strengths and weaknesses of individual components  and whether those components  are improving, stable or deteriorating relative to our competitors. Unfortunately, in many areas the U.S. national innovation system falls behind our global competitors, hampering our ability to foster the innovation that is imperative for success in the 21st century economy.

As nations compete to win the global innovation race, the effectiveness of their national innovation systems will be a key factor in deciding the winners and the losers. Thus, the challenge for the United States going forward is whether it can make the needed changes to its innovation system to keep up with the international innovation leaders and remain a key player in the innovation economy. The future health of our nation will depend on the answer.

Winners Only the State Can Pick: Mariana Mazzucato's The Entrepreneurial State

June 23, 2014
| Blogs & Op-eds

In The Entrepreneurial State, Mazzucato, a Professor of Economics at the University of Sussex, argues that contrary to the popular opinion of many, the state is an innovative, entrepreneurial actor in ways that the private sector cannot be, because only the state possesses the vision, resources and long-term commitment necessary to facilitate large-scale or speculative innovation. Private actors, in contrast, step in only once the state has laid the technological and legal framework to establish a viable market.

The United States should offer young innovative firms refundable R&D tax credits in lieu of using carry-forward or carry-backward provisions on business losses.

Investing in R&D is risky, but creates a large societal benefit through knowledge spillovers. Furthermore, R&D creates new products and practices that create economic growth. Many of the benefits of R&D are not captured by the firm producing the research. This is why the United States, like most other countries, offer incentives to firms investing in R&D. Unfortunately, the incentives only impact firms that are profitable. Many of the most innovative young firms engaged in R&D, which the credit should be particularly interested in supporting, will not become profitable until after a high-risk period of R&D investment needed to develop an idea into a marketable product. Offering a refundable R&D tax credits in lieu of using carry-forward or carry-backward provisions on business losses will allow the R&D tax credit to extend to young firms. Australia, Canada, France, Norway, and the United Kingdom have already adopted this method of incentivizing R&D in young innovative firms. Additionally, within the EU, governments can give extra incentives to firms less than six years old that invest more than 15 percent of their total revenues on R&D across all regions and sectors without breaking EU state aid rules.

ITIF Unveils 2014 Summer Innovation Reading List

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