November 24, 2008
Can America Invent Its Way Back?

A recent article in BusinessWeek by Michael Mandel asks this highly relevant question, noting that while the U.S. has spent almost $5 trillion on research and development and on higher education, "employment in most technologically advanced industries has stagnated or even fallen."

Mandel's focus is on the new field of "innovation economics," which studies what forms of funding drive successful innovation.1958ErectorSetAd.jpg

Collecting new data on American R&D initiatives is also part of this movement, to understand what's working and what's not, with the desired end result of making effective proposals.

"Will 2009 be the year of innovation economics?

"Economists and business leaders across the political spectrum are slowly coming to an agreement: Innovation is the best, and maybe only, way the U.S. can get out of its economic hole. New products, services, and ways of doing business can create enough growth to enable Americans to prosper over the long run.

"In January, the National Science Foundation (NSF) will launch an annual survey of 40,000 companies asking how much they spend on R&D in the U.S. and overseas, broken out by type of business and country. "'For the first time, we'll have a clear picture of what kind of research companies are doing globally and what benefits they are getting from their spending,' says Lynda Carlson of the NSF.

"Multifactor productivity -- a category that includes technological change and other improvements in business processes -- accounted for 45% of productivity gains between 1987 and 2007. 'Ninety five percent of economists agree that innovation is the most important thing for long-run growth,' says MIT economist Daron Acemoglu.

"Economists are also suggesting how to use new tools to boost innovation.

"They're studying when prizes for technological advances make sense. They're proposing ways state and local governments can best encourage innovation-based economic development. And they're exploring how to make optimal use of the billions of dollars' worth of research conducted in government-funded national labs."

Not addressed in the article is the irony of the National Science Foundation's acronym, which is also used by the banking world as the abbreviation for "Not Sufficient Funds."

Let's hope the science foundation fares better with their economics.

"Can America Invent Its Way Back?"
"'Innovation economics' shows how smart ideas can turn into jobs and growth -- and keep the U.S. competitive."

by Michael Mandel
September 22, 2008 issue

1958 Erector Set ad uploaded
to Flickr by Maproom Systems

Posted by at November 24, 2008 12:11 PM

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