Spurring Innovation to Lift the Economy

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The United States is one of only three industrialized nations that lack a national innovation policy. Most international competitors boast recently created or long-standing innovation agencies in addition to scientific research bodies. But not only is U.S. innovation policy disorganized, it is woefully underfunded. In 2006, the federal government spent a total of $2.7 billion, or 0.02 percent of gross domestic product, on its principal innovation programs and agencies. Compare that to the 0.07 percent of GDP Sweden spends, Japan’s 0.04 percent, and South Korea’s 0.03 percent investments.

A key way for the United States to improve productivity, create jobs, and grow the domestic economy over the long term is for the government to support the growth of regional centers of innovation. Yesterday morning, the Center for American Progress hosted an event, “Enabling Economic Recovery Through Innovation,” that explored policies for place-specific, technology-based economic development. But investment alone will not enable the next Silicon Valley—as panelist and former Chief Democratic Council to the U.S. House Committee on Science and Technology Jim Turner noted, “If we’re not organized, we’re going to fail.”

Joining Turner on the panel were CAP Senior Fellow Tom Kalil, Information Technology and Innovation Foundation President Rob Atkinson, University of Chapel Hill Public Policy Professor Maryann P. Feldman, and Richard Seline, CEO and Principal of New Economy Strategies.

Innovation is not distributed, noted Feldman, saying that “what makes the world interesting are spikes,” or areas with technological corridors and communities that serve as hubs of innovation. Speaking specifically about case studies assessing Silicon Valley, San Diego, and Route 128 in Massachusetts, Feldman said it was the creation of good infrastructure and the support for small and medium enterprises that helped the flow of innovative ideas. But even for less glitzy innovation outside of computer software and biotech, she explained the importance of place: Toledo, Ohio is in fact a world leader in photovoltaic technology.

Atkinson explained the comparative inadequacy of U.S. investment in innovation support, noting that to match the per-capita government contributions of Finland, the government would need to spend $34 billion a year. State and regional economies underinvest in innovation, he said, and his proposed solution is the creation of a National Innovation Foundation that would coordinate efforts across the country. Kalil also said that, “The capacity of the federal government to promote various kinds of innovation is not even distributed,”which was a coordination problem that Seline echoed.

While policymakers work to remove those federal barriers, Kalil explained that universities—often hubs of regional innovation—can shift priorities to enhance the innovation process by funding students and faculty with novel ideas and incorporating entrepreneurial principles across the curriculum. Young students, Seline explained, are excited about starting innovative projects not just to make money, but also to find solutions to societal problems.

For more on this event, please visit the events page.

To learn more, read the reports from the Taskforce on Regional Centers of Innovation:

Place Matters

Innovation Springs from Many Seeds, But Soil Is Equally Important

By Maryann Feldman

The Federal Role in Catalyzing Innovation

Beyond the Beltway and Through the Networked Economy

By Richard Seline and Steven Miller

Pittsburgh’s Targeted Incubator

Taking Innovation to the Next Level

By James F. Jordan and Paul L. Kornblith

Creating a National Innovation Foundation

Economic Prosperity Rests on Diverse Technology

By Robert Atkinson and Howard Wial

Benchmarking Foreign Innovation

The United States Needs to Learn from Other Industrialized Democracies

By Stephen Ezell

British Innovation Policy

Lessons for the United States

By Will Straw

Regional Centers of Innovation 101