ICT is a crucial driver of economic growth. This has made ICT R&D vital to sustaining ICT as an engine of global growth. Although the US still performs the most ICT R&D globally, competition has intensified as US ICT R&D investment as a percentage of GDP has fallen noticeably — and has been surpassed by competitors — in the past decade. In this IEEE journal article ITIF senior analyst Stephen Ezell and research analyst Scott Andes map the decline of U.S. leadership in ICT R&D.
Science and R&D
House Panel Puts in Motion Reauthorization of COMPETES Act
The reauthorization of the America COMPETES Act through a solid bipartisan vote in the House Science and Technology Committee represents a step in the right the direction. In a WebMemo, ITIF explains that the measure authorizes a number of programs aimed at closing the country’s innovation gap and includes some modifications long advocated by ITIF.
Eight Ideas for Improving the America COMPETES Act
Reauthorizing the American COMPETES Act provides an opportunity to continue policies the U.S. needs to compete in the innovation-based global economy, but more can and should be done. In this report, ITIF President Rob Atkinson outlines eight ideas to improve the U.S. innovation system by leveraging non-federal resources and spurring education, technology commercialization, and institutional reforms at the federal level.
Create Jobs by Expanding the R&D Tax Credit
A new ITIF report makes a compelling case that expanding the federal research and development tax credit would help create 162,000 jobs in the near term and enhance the nation’s long-term economic competitiveness.
Expanding the Alternative Simplified Credit (ASC) for research and development from 14 to 20 percent would spur badly needed job creation and get the country back on par with other industrialized countries’ R&D credits.
In particular, the report models the impact of expanding the ASC on jobs and other economic factors and finds that an expansion would create a number of critical economic benefits:
- 162,000 jobs in the near term
- A $90 billion increase in the GDP as the nation struggles through economic recovery
- 3,850 new American patents as nations compete for dominance in tomorrow’s technologies
The report also contrasts U.S. policy to incentivize private sector investment in R&D and experimentation with that of other leading industrial nations.
- The U.S. is 17th among OECD countries in terms of R&D tax credit generosity.
- Increasing the current credit to 20 percent would move the U.S. up to just 10th place.
The United States was a pioneer in using the R&D credit. Companies, workers and consumers will benefit from expanding a policy that has been shown by a wide range of scholarly research to work. Congress and the Administration should embrace this proposal an element of sustained economic recovery.
*This report was revised in August 2010 to reflect the fact that the estimated increase in economic output possible by raising the R&D credit to 20 percent was lower than originally calculated. Net tax revenues to the federal government would be roughly even after 15 years, rather than in the initial few years after boosting the credit.