The report examines 22 cases of successful U.S. innovation in which the development of key foundational technologies stemmed at least in part from federal investment in research and development (R&D). The cases cover technologies developed across a wide range of fields over the past half century, from information and communications technology, energy, and healthcare to transportation, agriculture, and mathematics. The report explains how federal support for R&D is critically important to today’s innovation system, including because of its investment in research and in technologies too far from market for the private sector to invest in, and because federal investment in R&D complements and spurs additional private sector R&D investment. It concludes by arguing that if the United States wishes to regain the world lead in terms of innovation (as a share of its economy) it will need to expand, not contract, federal support for R&D, which means reversing the sequestration cuts to federal R&D scheduled to return in FY 2015.
100 Data Innovations
Businesses, government agencies, and non-profits in countries around the world are transforming virtually every facet of the economy and society through innovative uses of data. These changes, brought about by new technologies and techniques for collecting, storing, analyzing, disseminating, and visualizing data, are improving the quality of life for billions of individuals around the world, opening up new economic opportunities, and creating more efficient and effective governments. This list provides a sampling, in no particular order, of some of the most interesting and important contributions data-driven innovations have made in the past year.
An Innovation and Competitiveness-Centered Approach to Deficit Reduction
The "Washington Consensus" on the federal budget process is grounded in faulty economic theory which leads to a fixation on reducing the debt and a focus on putting "everything on the table," coming at the expense of growth-inducing investments and long-term economic growth. A new approach to the budget is required to accomplish the dual goals of reducing the budget deficit and growing the economy. This report presents a series of recommendations designed to focus federal spending and tax policy on investments that promote growth while also reducing the national debt.
The 10 Worst Innovation Mercantilist Policies of 2013
Innovation is a central driver of growth. As a result, an increasing number of countries are seeking to become innovation leaders. Unfortunately, the methods that many choose are grounded in “innovation mercantilism”: a strategy that sees technology-based exports as the key to success while relying on distortive and protectionist tactics. These practices do not just damage other economies; they damage the entire global innovation system, leading to less innovation and productivity. Moreover, they often do not even help the countries embracing the practices; instead, mercantilist policies lead them to neglect the greater opportunity to spur growth by raising the productivity of all sectors of their economies, not just a few high-tech ones.
This first annual report documents what ITIF believes to be the ten worst innovation mercantilist practices proposed, drafted or implemented in 2013. Only one policy was chosen per country in order to document the pervasive nature of innovation mercantilism globally.
University Research Funding: Still Lagging and Showing No Signs of Improvement
It will come as a surprise to many that America is no longer, and nowhere near, the lead nation in terms of funding university research. In fact, of 39 nations, the U.S. ranks just 24th in government funding and 27th in business funding as a share of GDP. In fact, the leading seven nations invest more than double the U.S. level. The result over time will be a continued loss of U.S. competitiveness.
The False Promise of Data Nationalism
A growing number of policy makers believe that data is more private and secure if it is stored domestically. This report shows why this is a false promise by providing a short guide to the implications of storing data on servers in foreign countries, with a foreign-owned service provider, or both, under various conditions. The report also recommends the United States engage its trade partners in developing a “Geneva Convention on the Status of Data” that establishes international legal standards for government access to data.
Concluding a High Standard, Innovation-Maximizing TPP Agreement
The TransPacific Partnership (TPP) should be designed to maximize innovation in the United States and the other 11 participating Asia-Pacific countries. However, it will only do so if it both includes and holds the nations that sign it to the very highest standards, including those regarding intellectual property rights protection; liberalized trade in services; transparency and openness in government procurement; restrictions on preferential treatment toward state-owned enterprises; elimination of a host of non-tariff barriers, including barriers to foreign direct investment; and at least equal, if not greater, emphasis on enforcement as on market access.
The Logic Chain to an Effective Global Clean Energy Policy
Addressing global climate change requires clean energy technologies that are cost and performance-competitive with fossil fuels without subsidies. Yet, the dominant energy policy approaches in the United States and internationally, characterized by carbon prices, subsidies, and mandates, do the opposite. Only a cohesive and aggressive energy innovation strategy can develop and deploy affordable clean energy options the entire world wants to purchase and use. In nine steps, ITIF explains the logic behind the essential connection between the global climate challenge and the need for aggressive policies to support innovation at the federal and international levels. The report also recommends several policy suggestions to support such an innovation strategy.
The Internet of Things
The "Internet of Things" refers to the concept that the Internet now serves as a platform for devices to communicate electronically with the world around them, creating an explosion of data that is transforming how we work and live. This report provides an overview of how the devices that make up the Internet of Things are affecting nearly every aspect of society. It also highlights policy opportunities to maximize the potential economic and social benefits of these technologies.
An Alternative to Mercantilism: Manufacturing Extension Services in Latin American and Caribbean Countries
A growing number of Latin American nations are turning to "innovation mercantilist" practices to grow their economic sectors, including manufacturing. Yet, an alternative approach, enhancing innovation among manufacturers, particularly small and medium sized enterprises (SMEs), is actually much more effective in spurring sustainable growth. This report benchmarks SME manufacturing extension services in eight Latin American and Caribbean countries and highlights best practices in bolstering manufacturing productivity, innovation, and export potential. The report also provides a comprehensive impact analysis of manufacturing extension services in both developed and developing countries, finding that such programs have achieved significant impacts in bolstering competitiveness.