Winning in the New Innovation-Based Global Economy: Is Boosting the Supply Side Enough? Presentation at the 2006 Accelerat...
The Information Technology and Innovation Foundation <ul><li>ITIF is a non-partisan public policy think tank committed to ...
Waves of Innovation Drive Cycles of Growth & Change Robert D. Atkinson The Past and Future of America’s Economy: Long Wave...
Technology Transformations  and Growth 1945-58  59-74  74-93  94-2000  2001-?-  ??   Time Old Technology System New Techno...
Periods in American Economic History <ul><li>_____________________________________________ </li></ul><ul><li>Period   Year...
Transformations Drive Growth Annual Change in Labor Productivity Growth
IT is the Major Engine of Growth Today Sources of Total Factor Productivity Growth Source: Jorgenson,  Information Technol...
Transformations Also Drive Regional Restructuring
R&D Performed Overseas by Majority-Owned Foreign Affiliates of U.S. Companies  (in $millions) *2000 **2001; Source: U.S. B...
Industry R&D as a Share of GDP
Change in R&D/GDP Ratio, 1991-2003 Source: OECD
U.S. Trade Balance  in High-Tech Products Source: U.S. Census Bureau Foreign Trade Statistics, U.S. International Trade in...
Chinese Trade by  Technological Intensity   Source: Andrew Wyckoff, OECD.
Why Does Innovation and Competitiveness Matter? Economic growth comes from either boosting productivity in all sectors or ...
Which Future For America?
Renewal Through Innovation
Relative Decline?
So, What Should We Do? <ul><li>One side says, “Not much, everything is fine.” </li></ul><ul><li>Another side says rightly,...
So, What Should We Do? Boost the Supply of Innovation Production  Factors (e.g., scientists,  basic research) Boost the de...
Why Is So Much of the Policy Focus on Supply-Side Factors? <ul><li>According to the conventional neo-classical economics’ ...
While Some Companies Compete Internationally, All Countries Do <ul><li>Workers have context-specific knowledge whose value...
Outlines of a Comprehensive Innovation and Competitiveness Strategy <ul><li>Don’t ignore the demand side (e.g., research f...
U.S. Rank in R&D Tax Credit Generosity Has Fallen Significantly
Outlines of a Comprehensive Innovation and Competitiveness Strategy <ul><li>Don’t ignore the demand side (e.g., research f...
<ul><li>www.innovationpolicy.org </li></ul>
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Winning in the New Innovation-Based Global Economy: Is Boosting the Supply Side Enough?

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Discussion of current U.S. competitiveness and innovation policy debate, with indicators of innovation capacity and policy recommendations.

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Winning in the New Innovation-Based Global Economy: Is Boosting the Supply Side Enough?

  1. 1. Winning in the New Innovation-Based Global Economy: Is Boosting the Supply Side Enough? Presentation at the 2006 Accelerating Innovation Conference Washington, DC Dr. Robert Atkinson President Information Technology and Innovation Foundation
  2. 2. The Information Technology and Innovation Foundation <ul><li>ITIF is a non-partisan public policy think tank committed to articulating and advancing a pro-innovation and public policy agenda internationally, in Washington and in the states. Recognizing the vital role of technology in ensuring American prosperity, ITIF focus exclusively on innovation, productivity, and digital economy issues. </li></ul>
  3. 3. Waves of Innovation Drive Cycles of Growth & Change Robert D. Atkinson The Past and Future of America’s Economy: Long Waves of Innovation that Power Cycles of Growth (Northampton, MA: Edward Elgar, 2005)
  4. 4. Technology Transformations and Growth 1945-58 59-74 74-93 94-2000 2001-?- ?? Time Old Technology System New Technology System Takeoff Installation Slowdown Takeoff Installation Slowdown
  5. 5. Periods in American Economic History <ul><li>_____________________________________________ </li></ul><ul><li>Period Years </li></ul><ul><li>_____________________________________________ </li></ul><ul><li>Mercantile/craft 1840s to 1890s </li></ul><ul><li>Factory-based industrial 1890s to 1940s </li></ul><ul><li>Corporate mass production 1940s to 1990s </li></ul><ul><li>Entrepreneurial, knowledge-based 1990s to – ?? </li></ul>
  6. 6. Transformations Drive Growth Annual Change in Labor Productivity Growth
  7. 7. IT is the Major Engine of Growth Today Sources of Total Factor Productivity Growth Source: Jorgenson, Information Technology and the American Growth Resurgence
  8. 8. Transformations Also Drive Regional Restructuring
  9. 9. R&D Performed Overseas by Majority-Owned Foreign Affiliates of U.S. Companies (in $millions) *2000 **2001; Source: U.S. Bureau of Economic Analysis
  10. 10. Industry R&D as a Share of GDP
  11. 11. Change in R&D/GDP Ratio, 1991-2003 Source: OECD
  12. 12. U.S. Trade Balance in High-Tech Products Source: U.S. Census Bureau Foreign Trade Statistics, U.S. International Trade in Goods and Services.
  13. 13. Chinese Trade by Technological Intensity Source: Andrew Wyckoff, OECD.
  14. 14. Why Does Innovation and Competitiveness Matter? Economic growth comes from either boosting productivity in all sectors or shifting to higher-value added sectors. In the twenty-first-century global economy, nations can no longer be indifferent to the industrial and value added mix of their economy.
  15. 15. Which Future For America?
  16. 16. Renewal Through Innovation
  17. 17. Relative Decline?
  18. 18. So, What Should We Do? <ul><li>One side says, “Not much, everything is fine.” </li></ul><ul><li>Another side says rightly, “We need to act now.” </li></ul>
  19. 19. So, What Should We Do? Boost the Supply of Innovation Production Factors (e.g., scientists, basic research) Boost the demand from companies for innovating in the United States. We Need to Act Now
  20. 20. Why Is So Much of the Policy Focus on Supply-Side Factors? <ul><li>According to the conventional neo-classical economics’ view, firms compete, nations do not. </li></ul><ul><li>According to this view, the task is to ensure that factors of production are mobile and quickly redeployed in case of firm failure. When you lose, it the job is to quickly reuse it. </li></ul>
  21. 21. While Some Companies Compete Internationally, All Countries Do <ul><li>Workers have context-specific knowledge whose value declines significantly when the context is lost. </li></ul><ul><li>Significant spillovers from firm activities and significant first-mover advantages, including learning effects, which let firms translate early leads into dominant positions. </li></ul><ul><li>There are also significant network effects that mean that advancement in one industry (e.g., broadband telecommunications) can lead to advancement in a host of others (e.g., Internet video). </li></ul><ul><li>If you lose it, you can’t easily reuse it. </li></ul>
  22. 22. Outlines of a Comprehensive Innovation and Competitiveness Strategy <ul><li>Don’t ignore the demand side (e.g., research funding, skills, STEM workforce). </li></ul><ul><li>But also create incentives for organizations to invest in innovation and innovation-based production in the United States (e.g., knowledge tax credit, health care restructuring). </li></ul>
  23. 23. U.S. Rank in R&D Tax Credit Generosity Has Fallen Significantly
  24. 24. Outlines of a Comprehensive Innovation and Competitiveness Strategy <ul><li>Don’t ignore the demand side (e.g., research funding, skills, STEM workforce) </li></ul><ul><li>Create incentives for organizations to invest in innovation and innovation-based production in the United States (e.g., knowledge tax credit, health care restructuring). </li></ul><ul><li>Fight foreign technology mercantilism. </li></ul>
  25. 25. <ul><li>www.innovationpolicy.org </li></ul>

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