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Returns to Federal Investments in the Innovation System: Proceedings of a Workshop - in Brief
Pages 1-12

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From page 1...
... On December 15, 2016, the Innovation Policy Forum of the Board on Science, Technology, and Economic Policy held a workshop designed to gather leading researchers to explore the returns to federal investments in the innovation system, which include economic growth, job creation, as well as improved health and quality of life. The workshop was structured into four panels investigating social returns to: (1)
From page 2...
... In order to better track the link between basic research and its ultimate economic impacts, Jones drew on a linear model of innovation, popularized by Vannevar Bush, which sees a series of linkages starting from basic research leading to applied research, which then leads to development and then the commercialization of products for the market. This model, Jones noted, has motivated the organization of public science institutions and funding, with public and government provision of funding and university performance of basic research, which the private sector will draw on and develop into patentable inventions.
From page 3...
... Direct Government Support for Innovation Sabrina Howell turned the discussion to the direct government funding of R&D in private companies, either through competitive grants to small companies or through subsidizing venture capital. She reported that some observers have raised concerns about whether this funding would crowd out private funding and whether (assuming a certain linearity in the innovation process)
From page 4...
... Second, there is tremendous heterogeneity in the patent system and it is difficult to make general statements on the social returns to patenting. Much of the economic analysis of patents has focused somewhat narrowly on assessing specific questions that matter for patent policy and practice, such as evaluating changes in patent protection brought about by legislation (e.g., the Bayh-Dole Act of 1980)
From page 5...
... KEYNOTE: MIDDLE-CLASS INCOMES AND INNOVATION POLICY Jason Furman opened his keynote address with the observation that the rate of middle-class income growth in America has slowed down over the past four decades. This is attributed to decreased labor productivity, increased income inequality, and declining labor force participation rates.
From page 6...
... Furman commented on some of the funding mechanisms discussed in the preceding panel: R&E tax credit, which subsidizes inputs to research and enables firms to take more risk, and an "innovation box," which allows for a lower tax rate on income earned from IP. According to Furman, an R&E credit is preferable to subsidizing the outputs of research as it encourages future innovation rather than rewarding past research or behavior.
From page 7...
... Although other factors, such as parental involvement, may be part of the reason for this difference, Furman said that inequality and the policies associated with this have caused uneven investments in public education that is potentially neglecting "an awful lot of innovation and talent." PANEL III: WHAT ARE THE SOCIAL RETURNS TO PUBLIC INVESTMENT IN HUMAN CAPITAL AND INFRASTRUCTURE? Introducing the third panel, Lee Branstetter (Carnegie Mellon University)
From page 8...
... That was critically what the government ended up doing." Third, and relatedly, the development of widely used protocols by NSF and DARPA spurred significant investment by the private sector once NSFNET was privatized. "Sure, the government helped unleash economic growth by funding the Internet, but that is an ex post rationalization, and at best, an explanation for only part of the experience." Greenstein observed that some of our digital investments leave little economic trace in traditional national income measures, and that this makes the social returns from government investment hard to measure.
From page 9...
... Finally, another participant suggested that universities should do more to highlight the impacts of their research on their own regions to state and federal legislators. PANEL IV: SOCIAL RETURNS TO INNOVATION IN LIGHT OF INEQUALITY Introducing the final panel, Benjamin Jones noted that economists have long separated the issue of inequality from their analysis of the innovation process.
From page 10...
... Innovation, Inequality, and Social Mobility Participating remotely, Philippe Aghion (College de France and Harvard University) next presented research that innovation is an important factor behind the observed acceleration in wage and income inequality in the United States.5 He and his co-authors found parallel evolutions from 1963 to 2013 between the growth of innovation (measured by either the flow or quality of patents in the state)
From page 11...
... The data show that lower income households experience high inflation rates. This has policy implications for food stamp recipients since food stamp increases are indexed to an overall food consumer price index, not an income-adjusted food inflation index.
From page 12...
... Jones (Chair) , Northwestern University; Pierre Azoulay, Massachusetts Institute of Technology; and Heidi Williams, Massachusetts Institute of Technology.


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