A series of National Academies of Sciences, Engineering, and Medicine reports starting in the mid-1990s has illustrated the complex nature of information technology (IT) research and the interdependencies among various subfields of computing and communications research. This work has dispelled the assumption that the IT sector is self-sufficient by highlighting how government-funded university research, sometimes through long incubation periods of years and even decades, has been instrumental to the sector’s commercial success. This report extends the earlier work by describing key patterns in how research over time has significant cumulative impact and exploring the ultimate impacts of IT innovation on major U.S. industry sectors.
IT’s impacts on the U.S. economy—both directly (the IT sector itself) and indirectly (other sectors that are powered by advances in IT)—continue to grow. IT-enabled innovation and advances in IT products and services draw on a deep tradition of research and rely on sustained investment and a uniquely strong partnership in the United States among government, industry, and universities. Past returns on federal investments in IT research have been extraordinary for both U.S. society and the U.S. economy. This IT innovation ecosystem fuels a virtuous cycle of innovation with growing economic impact.
CONFLUENCE AND TIMESCALES
A virtuous cycle of innovation has evolved as IT innovation has become increasingly woven into innovation across the economy.
- IT innovations—in combination with deep domain expertise, design and production knowledge, and new business models—create transformative results across the U.S. economy. This confluence of research innovation is fueling advances in sectors such as health care, agriculture, transportation, and commerce. An important enabler of confluence is IT research that is deeply informed and inspired by challenges in other domains, from health care to entertainment. Likewise, domain experts can invent transformative products and business models inspired by IT innovations.
- The timescale for translation from basic research to commercial impact varies widely. Rich connections in the ecosystem and the availability of funding make it possible for some research results to be quickly scaled up for commercial use. At the same time, some payoffs emerge only after years or decades, as innovations compound, design and product knowledge mature, and viable market paths emerge. The interests of researchers and funders can fall off in areas where progress has slowed, to be followed by a resurgence when new ideas or enablers emerge. It is difficult to predict a priori which research will pay off rapidly and which will take time. Collateral results, often unanticipated, can be as important as the anticipated results of research programs.
INFORMATION TECHNOLOGY RESEARCH AS A PARTNERSHIP
The United States fosters a unique and powerful range of research investment and partnerships that have made it a global leader in IT.
- The federal government plays an essential role in sponsoring fundamental research in IT, largely based in universities, because its investments in long-term, basic research are an essential complement to industrial research, which reflect different incentives, resulting in differences in style, focus, and time horizon.
- Universities are especially well suited for research for which there may be no immediate application. Examples include decades of research in
number theory that ultimately gave rise to modern cryptography and decades of federal investment, starting with early work on neural networks, in order to better understand the brain, which ultimately gave rise to deep learning.
- The partnership has been enhanced by drawing top-notch talent from the research community to serve as program managers and empowering them to take risks in designing programs and selecting grantees.
- Some areas of research prosper only with industry participation, for example, because the research requires access to data or other resources of a type or scale not typically available at universities.
- Companies sometimes partner with researchers or federal agencies to build additional targeted research capacity in foundational areas that they believe are under-invested in nationally, to the benefit of all.
TRANSLATION AND TRANSFER
The IT innovation ecosystem relies on a growing number of pathways to foster innovation uptake and interactions between emergent commercial needs and research.
- Many companies directly implement cutting-edge IT capabilities stemming from research—from cloud storage to speech recognition services—fueling U.S. leadership across many sectors.
- Start-ups launched by faculty and students are fostered by the availability of venture capital, the encouragement of universities, Internet and cloud infrastructure, and a thriving support ecosystem for small businesses.
- Jointly funded programs and laboratories are playing an increasing role in enabling new IT research informed by deep domain expertise with collaborating industries.
- Government sponsorship of research, especially in universities, also helps to develop the IT talent relied on by industry, universities, and other parts of the economy. University research provides formative experiences for those who go on to work in industrial research and development in IT and other sectors.
- Open-source projects initiated by both universities and companies are important mechanisms for capturing, combining, and refining research results and making them available in usable form and at low cost to companies, to subsequent university research, and to other organizations.
- Attention to interfaces, modularity, and interoperability in research and development accelerates their impact, enables the absorption of research results into diverse sectors, and propels industry investment by creating network effects. A classic example of the power of well-designed interfaces is the TCP/IP suite of Internet protocols.
THE ECONOMIC PAYOFF OF RESEARCH
Figure 2.1 illustrates the phenomena and lessons summarized above. The left side of the figure shows how fundamental research in IT, conducted in industry and universities, has led to the introduction of new capabilities, products, and services and shows how a complex research environment—in which concurrent advances in multiple subfields have been mutually reinforcing, stimulating, and enabling one another—has led to powerful IT innovations carried forward by top-performing U.S. firms. The right side illustrates how, through confluence, major U.S. economic sectors have been transformed by the cumulative impact of IT innovation coupled with domain-based innovation and expertise. The background ripples in the figure depict schematically how this left-to-right flow of innovation to impact is part of a larger cycle dependent on use-inspired and informed interdisciplinary research.
Past returns on federal investments in IT research have been extraordinary for both U.S. society and the U.S. economy.
- Federal investments in research have a multiplicative economic payoff for the U.S. economy when new companies are formed to further develop research results and when companies create innovative products and services.
- The transformative effects of IT grow as innovations build on one another and as know-how compounds. Priming that pump for tomorrow through investments in research and education remains a top priority for continued economic returns.
The lessons of this history are clear. Without committing the resources needed to continue fueling IT innovation, the United States risks ceding IT leadership to other nations.