Rising to the Challenge U.S. Innovation Policy for the Global Economy (2012) / Chapter Skim
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Chapter 3 Findings
Chapter 3 Findings
Pages 127-162
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economic and military power throughout the post-war era. The United States must continue to lead as an innovator and manufacturer of leading edge technologies and products, especially in the current environment where other nations are pursuing active innovation policies to enhance their world role.
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Dale W Jorgenson et al., Productivity: Information Technology and the American Growth Resurgence, Cambridge MA: MIT Press, 2005.
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A vibrant national innovation ecosystem is an essential component of U.S. security c.
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Focusing on building innovation clusters and science parks 5.
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international position as a location for the production of new processes and products is declining relatively as other nations, especially emerging economies, have accelerated their efforts to catch-up technologically.4 b. A Vibrant National Innovation Ecosystem is an Essential Component of U.S.
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c. The Importance of Innovation for Jobs and Technological Leadership: An assessment of a nation's economic health must go beyond simple aggregate measures such as gross domestic product and include the ability to innovate and manufacture new products 5 As the "Six Countries" report cited above notes, the globalization of innovation "will have a potentially enormous impact for U.S.
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innovation system amplify key recommendations of the National Academies report Rising Above the Gathering Storm, op.
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has increased over two and a half times during the past 20 years while federal R&D spending as a percentage of GDP has remained roughly constant. National Science Foundation, National Center for Science and Engineering Statistics, Science and Engineering Indicators 2012, NSB 12-01 (January 2012)
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19 As Vernon Ruttan has observed, "government has played an important role in the development of almost every general purpose technology in which the United States was internationally competitive." Vernon W Ruttan, Technology, Growth and Development: An Induced Innovation Perspective, Oxford: Oxford University Press, 2001.
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Bartlett, and Warren Davis, Creating Advantage: Semiconductors and Government Industrial Policy in the 1990s, Semiconductor Industry Association and Dewey Ballentine, 1992. 23 For a review of these programs and the challenges they address, see National Research Council, An Assessment of the Small Business Innovation Research Program, C
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Audretsch, Innovation and Small Firms, Cambridge, MA: MIT Press, 1990. See also Zoltan J
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Innovation System: The United States has some of the world's best framework conditions that create a pro-innovation environment. These include an open and flexible innovation system, strong intellectual property-rights protection, constructive bankruptcy laws, well-developed capital markets, and extensive worker mobility.
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33 Joseph Stiglitz, "Bankruptcy Law; Basic Economic Principles," in Stijn Claessens et al. eds., The Resolution of Financial Distress, An International Perspective on the Design of Bankruptcy Laws, Washington, DC: The World Bank, 2001.
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. 39 For a detailed affirmation of the importance of national investments in R&D for economic growth, see Ben S
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SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Science and Engineering Indicators 2012, NSB 12-01 (January 2012) , Figure 4-2.
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142 RISING TO THE CHALLENGE proven to be enormously successful in sustaining U.S. leadership in science and technology, with their benefits for growth, employment and security.41 Although U.S.
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at a disadvantage as a place to invest.47 Nations such as Japan, Canada, the Netherlands, and South Korea have sharply lowered their corporate tax rates since the 1990s, leaving the U.S. with one of the highest nominal corporate tax rates among OECD nations, although effective tax rates are considerably less.48 U.S.
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a. Developing National Strategies:52 Both advanced and emerging nations such as China, India, Russia, Germany, South Korea, and Finland, have formulated - or are seeking to formulate comprehensive national strategies for improving their innovation capacity and are backing them with substantial public investments, broad policy support, and attention at the highest levels of government.53 b.
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Innovation Programs such as the SBIR and the Sematech Consortium have been widely emulated. Countries as diverse as Sweden, the Netherlands, India, South Korea, and Russia have adopted SBIR-type programs.
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SOURCE: UNESCO, UNESCO Institute for Statistics, Science and Technology, Table 25. NOTES: GERD refers to gross domestic expenditure on R&D.
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The policies have not yet proved themselves sound in terms of creating nodes of innovation, but they do affect the capture of the economic value of global innovation in multiple ways: i. Their impact on international trade and investment.
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India's Small Business Innovation Research Initiative, launched in 2007, supports highrisk R&D projects by biotech start-ups. The Netherlands introduced its SBIR program in 2004.
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work visas, residency, and citizenship.73 h. Focusing on Building Innovation Clusters and Science Parks:74 Governments around the world have recognized the powerful competitive advantages of strong regional innovation clusters and are investing aggressively in developing science parks75 as part of comprehensive strategies to foster innovative clusters.76 In the United States, until recently, there has tended to be little alignment between federal economic-development programs and state and 72 Since launching an aggressive campaign to lure top foreign talent a decade ago, Canada has recruited more than 3,000 foreign researchers and more than 600 university department chairs.
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See presentation by Ginger Lew, then of the White House National Economic Council at the National Academies conference on Clustering for Prosperity, Washington, DC, February 23, 2010. 78 See the related discussion of "New Trends in Global Innovation" in Chapter 1 of this report.
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See also Carl Dahlman, "China and India: Emerging Technological Powers." in Issues in Science and Technology, Spring 2007. See also Alice Amsden, Asia's Next Giant: South Korea and Late Industrialization, Oxford: Oxford University Press, 1989, Alice Amsden, Beyond Late Development: Taiwan's Upgrading Policies, Cambridge: MIT Press, 2003, and AnnaLee Saxenian, The New Argonauts: Regional Advantage in a Global Economy, Cambridge: Harvard University Press, 2006.
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85 Home to a large Samsung Electronics factory, Suwon, South Korea is a major educational center that is home to 14 university campuses. For a review of the impact of Korean innovation clusters, including Suwon, see Doohee Lee, "Regional Innovation Activity: The Role of Regional Innovation Systems in Korea." KIET Occasional Paper No.
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Increasingly, these centers are a part of the integrated innovation system of global enterprises including GE, IBM, Intel, 3M, and Microsoft that connects company research across borders.90 86 According to a map of global innovation clusters by the McKinsey Global Institute and World Economic Forum, some U.S. cities are losing ground to these and other emerging "hot springs" of innovation in Asia and Europe.
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S federal government remains the world's largest sponsor of basic research, and total federal R&D spending reached $148 billion in FY 2010, traditional trading partners and emerging nations alike are more focused than the U.S.
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For details on Germany's long-term plans to advance transportation-related industries, see German Federal Government's National Electromobility Development Plan, August 2009, and for its information and communications technology strategy, see Federal Ministry of Education and Research, ICT Strategy of the German Federal Government: Digital Germany 2015, November 2010. Among South Korea's initiatives targeting specific industries are its plan to invest $12.5 billion over 10 years to become the world's dominant producer of advanced batteries.
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Taiwan's Industrial Technology Research Institute has 6,000 staff that collaborates with manufacturers in emerging industries such as flexible displays, sold-state lighting, photovoltaic cells, and MEMs devices. South Korea's Electronics and Telecommunications Research Institute has 1,700 researchers with doctoral and master's degrees helping industries such as semiconductors, digital mobile communications, and fuel cells.
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109 These would include, for example, the Fraunhofer-Gesellschaft in Germany, the Industrial Technology Research Institute in Taiwan, and the Korea Institute of Industrial Technology in South Korea., and on a smaller scale, the Industrial Research Assistance Program in Canada. 110 To cite one example, military purchases of integrated circuits were critical to establishment of America's semiconductor industry in the 1960s and 1970s.
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See chapter 7 on Regional Innovation Clusters in this volume and Everett M Ehrlich, A Study of the Economic Impact of GLOBALFOUNDRIES, June 2011.
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Chapter 5 provides a further description of China's trade and innovation policies. 117 HIER, KEIL and NRC, Conflict and Cooperation in National Competition for High Technology Industry, Washington, DC: National Academy Press, 1996.
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SOURCE: U.S. Census Bureau, Foreign Trade, Trade in Goods with Advanced Technology Products.
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121 The national innovation strategies of China, Germany, and India, among others, all call for greater international research collaboration. 122 Hamburg Institute for Economic Research, Kiel Institute for World Economics, and National Research Council, Conflict and Cooperation in National Competition for High Technology Industry, Washington, DC: National Academy Press, 1996.
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Yet the United States currently invests little to track foreign technology investments, industrial policies, and pro innovation policies, much less project their implications into the future. The Role of India and China," paper presented at Druid Summer Conference 2010, Imperial College London Business School, June 16-18, 2010.
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