Science and R&D

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

On average, business performs 74 percent of all U.S. R&D.

Research and development yields product and process innovations, adds to the knowledge base of industry, and is a key driver of economic growth. On average, business performs 74 percent of all U.S. R&D. After steadily rising in the 1980s and falling in the early 1990s, industry R&D as a share of GDP climbed to a peak in 2000 at nearly 2.03 percent of GDP, and then declined through 2004. In 2009, industry R&D was only slightly lower, at 2.02 percent of GDP. Read more »

The Impact of International Technology Transfer on American Research and Development

December 5, 2012
| Testimony and Filings

The reality is that forced technology transfer is enabling China and other nations to gain global market share. But even if this does not succeed in transforming the Chinese economy into an innovation-based one, forced technology transfer polices do considerable harm to U.S. technology companies and to the U.S. economy, if for no other reason than reducing their profits and ability to reinvest in the next wave of innovation. The United States needs to pursue a two-pronged trade strategy, continuing as best it can to improve conventional trade organizations like the WTO, but also creating alternative “play-by-the-rules” clubs of like-minded countries. Pressured or mandatory technology transfer by other nations has, is, and will continue to negatively impact American R&D and innovation capabilities. It’s time for the federal government to step up its actions to fight this corrosive mercantilist practice.

Counterpoint: R&D Tax Credit Spurs Innovation

November 19, 2012
| Blogs & Op-eds

The R&D credit is on the list of “extenders” that Congress should take up in the lame duck session before they adjourn in December. Earlier this year, Michael Rashkin wrote in EE Times that “The R&D credit doesn’t work” and advocated for its elimination.  Let’s hope Congress ignores Rashkin’s advice. The R&D credit corrects a serious market failure and spurs U.S. companies to invest in more R&D, creating more jobs, more competitive firms and a stronger U.S. economy.

While U.S. R&D intensity (R&D as a share of GDP) increased by a paltry 10.4 percent from 1995 to 2008, it increased substantially more in most other nations, including Germany (20.5 percent), Korea (42.2 percent), and China (170.2 percent).

Leading countries increasingly recognize the importance of coordinated R&D strategies in driving growth and spurring the competitiveness of their enterprises. These countries are also investing heavily in R&D. But while U.S. R&D intensity (R&D as a share of GDP) increased by a paltry 10.4 percent from 1995 to 2008, it increased substantially more in most other nations, including Germany (20.5 percent), Korea (42.2 percent), Finland (65 percent), Singapore (135.1 percent), and China (170.2 percent). Read more »

Winning the Race 2012 Memos: Science and Technology

October 29, 2012
| Reports

Innovation powers competitiveness and boosts living standards. Science and technology, in turn, are key enablers of innovation. This premise helped drive robust federal investment in science and technology in the 1960s, 70s, and 80s that fueled our post-war prosperity. It set the stage for the IT revolution, advances in life sciences, and the creation of millions of jobs and thousands of companies in the 1990s. But today we are shortchanging our future. The United States is now just eighth among OECD countries in R&D as a share of GDP. A key reason is that federal R&D investment grew in constant dollars at just 0.3 percent per year from 1987 to 2008. To restore federal support for research as a share of GDP to 1987 levels, we would have to increase federal funding by almost $110 billion per year. Unfortunately, we are moving in the opposite direction. Fiscal hawks want to put “everything on the table” when cutting the budget, even federal support for science. Many policymakers (usually, but not exclusively, Republicans) are wary of government funding for applied research and technology commercialization and prefer to confine public funding to basic science. While most Democrats are more willing to support R&D funding, too often they are willing to trade it off for increased social welfare spending. If we are to once again become a globally competitive innovation economy we will need to do what other nations are doing: boost public investment in research and put in place new efforts to spr commercialization of this research.

Eroding Our Foundation

October 16, 2012
| Blogs & Op-eds

Reducing the budget deficit is important, but it should not and does not have to come at the expense of growth-inducing investments in areas like federal support for R&D. In fact, undermining growth capability is disruptive of a deficit control policy. Cutting federal support for R&D, a key "fuel" for the U.S. economic growth engine, would not only lead to a relatively smaller U.S. economy and higher unemployment, it would reduce U.S. global competitiveness precisely at a time when the U.S. economy is struggling to stay in the race for global innovation advantage.

R&D Tax Credits: They Work! Will Policy Maker’s Listen to the Evidence?

October 15, 2012
| Blogs & Op-eds

R&D Tax Credits do increase innovative activity. With no policy currently in place, will the United States become even less competitive by failing to create an environment that properly induces firms to innovate? Policy makers must act by making increasing and making permanent the R&D tax credit, or we will all pay the price.

Cuts to R&D from sequestration will result in job losses of approximately 200,000 in 2013.

ITIF estimates that sequestration of R&D would result in the U.S. economy having approximately 200,000 fewer jobs per year between 2013 and 2016. This would result in the U.S. unemployment rate being 0.2 percentage points higher than it otherwise would be.

Research Advocates Raise Alarm as Sequester of Federal Budget Funds Nears Deadline

The Chronicle of Higher Education
ITIF issued a report concluding that the threatened cuts in federally sponsored research would reduce U.S. economic output by $203-billion to $860-billion over nine years.
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