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.
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.
Data Innovation 101
New technologies have made it easier and cheaper to collect, store, manipulate, analyze, use, and disseminate data. But while the potential for vastly more data-driven innovation exists, many organizations have been slow to adopt these technologies. Policymakers around the world should do more to spur data-driven innovation in both the public and private sectors.
Challenging the Clean Energy Deployment Consensus
A majority of clean energy advocates believe that the world has all the low-carbon technologies it needs to address climate change; what we lack is the political will to mandate and subsidize their deployment. To support this view holders of this “Clean Energy Deployment Consensus” point to a range of studies purporting to demonstrate technological readiness. Unfortunately, as ITIF shows in its new report Challenging the Clean Energy Deployment Consensus these reports either gloss over major challenges, including significantly higher costs of clean technologies, sub-optimal performance, and challenges in grid integration and storage or advocates miss their critical message on the need for innovation. Without a comprehensive and aggressive innovation strategy clean energy will not be cheap enough and good enough to be adopted voluntarily around the planet.
Innovation Economics: How a New Theory Casts Light on an Old Problem of the Budget Deficit
The recent government shutdown and debt ceiling brinksmanship just postpones the time when the nation’s budget issues will have to be addressed. Unfortunately the “Washington consensus” on the budget, based on neoclassical economic thinking, leads to the wrong solutions. With its focus on cutting debt, rather than the debt-to-GDP ratio, and its overriding mantra that “everything should be on the table,” this mantra, being promoted by groups such as Simpson-Bowles, Domenci-Rivlin, The Concord Coalition, and the Committee for a Responsible Federal Budget, is generating budget solutions that will lead to less, not more U.S. growth.
It is time for a budget debate that is based on a new approach to economics – innovation economics – that focuses on maximizing innovation and long-term growth. This report argues that any budget solution must set a goal of improving the debt-to-GDP ratio as opposed to simply cutting the debt. It also needs to actually increase public investment and cut corporate taxes to drive growth, even though in the short run these steps will increase the budget deficit. These policies will be much more effective at spurring growth and U.S. competitiveness, which is what the ultimate goal of any economic policy, including budget policy, should be. Moreover, by spurring growth, these policies will help cut the debt-to-GDP ratio, a more accurate measure of the government’s fiscal condition.
How to Craft an Innovation Maximizing T-TIP Agreement
The Transatlantic Trade and Investment Partnership (T-TIP) Agreement should be designed to maximize innovation in the United States and the European Union. Innovation is a central driver of economic growth, and thus a key focal point of U.S. and EU economic development strategies. Ideally, the T-TIP would eliminate all tariffs and non-tariff barriers to trade. However, realistically, both the European Union and the United States are going to make trade-offs, and it is important to make these trade-offs in a manner that promotes innovation-based trade as a fundamental driver of global growth.
Eliminate all tariffs in trade on innovation industries.
Liberalize trade in innovative services, especially telecommunication services and audiovisual services.
Create transparent, science-based regulatory regimes in the pharmaceutical, automotive and agricultural sectors.
Prohibit the use of data center localization as a condition of market access.
Honor existing international data flow agreements, such as the Safe Harbor.
Introduce rules to prevent restrictions on the import and use of commercial encryption technologies.
Lower all barriers to foreign direct investment.
Implement an expansion of the EU-U.S. procurement commitments.
Outlaw the use of forced offsets.
End government production subsidies to areas of innovative trade, like aerospace.
Clarify the scope and coverage of national treatment in the General Agreement on Tariffs and Trade (GATT), explicitly subjecting state-influenced entities to a robust national treatment obligation.
Enshrine 12 years of data exclusivity for biopharmaceutical products.
Adopt a common definition for trade secrets: any information that has economic value (actual or potential), is not generally known to the public, and for which the trade secret owner has taken reasonable measures to keep private.
Establish a bilateral R&D participation model in order to coordinate cross-border pre-competitive research partnerships.
Allow companies participating in pre-competitive research to freely transfer ownership and access rights for foundational IP to affiliates across and between the European Union and the United States.
Restoring America's Lagging Investment in Capital Goods
This report analyzes U.S. business investment the past three decades. Business investment in capital equipment, software and structures grew by 2.7 percent per year on average during the 1980s and 5.2 percent annually during the 1990s. However, from 2000 to 2011 it grew by just 0.5 percent. As a share of GDP, business investment has declined by over 3 percentage points since the 1980s. Moreover, investment that was once broadly distributed across industries is now much more concentrated in a few select domestic service sectors, while industries that once powered U.S. investment growth and global competitiveness have seen sharp declines. This decline in investment negatively affects U.S. productivity growth and competitiveness. The authors argue that “short-termism,” the growing focus on short-term profits over long-term planning by many firms, and the diminished global competiveness of the U.S. economy has contributed to declines in private capital investment. ITIF calls on Congress to establish an investment tax credit and on the Administration to create task force to investigate the causes of and solutions to market short-termism.