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Inn nnov ovation Po Policy cy L Lessons From m America Ame Dr. Robert D. Atkinson President, ITIF April 6, 2016 @RobAtkinsonITIF @ITIFdc ITIF: Who We Are The Information Technology and Innovation Foundation is a think tank at the

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SLIDE 1

@ITIFdc Inn nnov

  • vation Po

Policy cy L Lessons From m Ame America

  • Dr. Robert D. Atkinson

President, ITIF April 6, 2016

@RobAtkinsonITIF

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SLIDE 2

ITIF: Who We Are

The Information Technology and Innovation Foundation is a think tank at the cutting edge of designing innovation policies and exploring how innovation drives boost growth and competitiveness. ITIF focuses on:

  • Innovation processes, policy, and metrics,
  • Internet, big data and ICT policy,
  • Tech, productivity, and jobs,
  • Science and tech policy, and
  • Innovation and trade policy.
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SLIDE 3

Today’s Presentation

Explai aining g the P e Par arad adox

  • x of
  • f U

U.S .S. I . Innov

  • vat

ation

  • n

Lead eader ership Historical-Structural Reasons For U.S. Innovation Leadership Innovation Policy Reasons for U.S. Leadership Innovation Policy Principles Global Best Practices for Innovation Policy

1 2 3

3

4 5

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SLIDE 4

How Can the U.S. Lead When Other Nations Invest More in University Research?

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0. 0.0% 0% 0. 0.2% 2% 0. 0.4% 4% 0. 0.6% 6%

Swe wede den Switze tzerl rland Nethe herlands nds Icel elan and Fi Finl nland nd Austri stria Sin inga gapor

  • re

Austra stralia Esto stonia Portu rtugal Norway ay Cana nada da Fr Franc nce Ger erman any Ire Ireland Uni nited… d… Kor

  • rea

Ta Taiwa wan Isra Israel Bel elgiu ium Spain ain Unite ted S Sta tate tes Cz Czech ch… Jap apan Slov loven enia ia Hung ungary Pola

  • land

Tur Turkey Chi hina na Rus Russia

Source: ITIF Report: University Research Funding: The United States is Behind and Falling, May 2011

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SLIDE 5

How Can the U.S. Lead When Other Nations Have Much More Generous R&D Tax Incentives?

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0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350 0.400 0.450

Source: ITIF Report: We’re #27!: The United States Lags Far Behind in R&D Tax Incentive Generosity, July 2012

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SLIDE 6

How Can the U.S. Lead When Other Nations Have National Innovation Agencies?

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Count untry Has as Articu culat ated ed a N a Nat ation

  • nal

al Innov

  • vat

ation

  • n Strat

ategy egy? Nat ation

  • nal

al I Innov

  • vat

ation

  • n

Agen gency cy/Fou

  • undat

ation

  • n

Year ear A Agen gency cy Int ntroduc duced

Br Brazil

Yes Brazil Innovation Agency 1967

Chi hina na

Yes Ministry of Science and Technology 1998

Denma mark rk

Yes Danish Agency for Science, Technology, and Innovation 2006

Fi Finl nland nd

Yes Tekes 1983

Fr Franc nce

Yes OSEO 2005

Indi ndia

Yes National Innovation Foundation 2000

Ire Ireland

Yes Forfas 1994

Ita Italy

Yes ENEA (National Agency for New Technologies, Energy and the Environment) 1999

Jap apan an

Yes New Energy and Industrial Technology Development Organization (NEDO) 1980

Kor

  • rea

ea

Yes Korea Industrial Technology Foundation 2001

The The N Nethe herlands nds

Yes Senter Novem 2004

Nor

  • rway

ay

Yes Innovasjon Norge 2004

Por

  • rtugal

gal

Yes Agência de Inovação 2003

South th A Afri frica

Yes National Advisory Council on Innovation 2006

Swed eden en

Yes VINNOVA 2001

Tai aiwan an

Yes Industrial Technology Research Institute 1973

Tha Thailand nd

Yes National Innovation Agency 2003

Uni nited K d King ngdo dom

Yes Department of Business, Innovation, and Skills 2009

Unite ted S Sta tate tes

Yes N/A N/A

Urug ugua uay

Yes National Research and Innovation Agency (ANII) 2008

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SLIDE 7

Today’s Presentation

Explaining the Paradox of U.S. Innovation Leadership His isto toric rical-Struct ctural al Reas eason

  • ns F

For

  • r U

U.S .S. . Innov

  • vat

ation

  • n

Lead eader ership Innovation Policy Reasons for U.S. Leadership Innovation Policy Principles Global Best Practices for Innovation Policy

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7

4 5

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SLIDE 8

Scale Matters

  • Scale matters in innovation-based industries with high

fixed costs and low marginal costs.

  • The U.S.’s large integrated continental market means

its firms can get to scale faster than firms in most

  • ther markets.
  • This is one reason U.S. firms are much larger (32% of

AU firms over 200 workers; 50% of U.S. firms over 250 workers)

8

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SLIDE 9

This Is One Reason U.S. Firms Are Much Larger

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Percent of total workforce employed at enterprises by size, 2010. Source: OECD, Entrepreneurship at a Glance 2013

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SLIDE 10

First Mover Advantage Matters

  • In the 1960’s, the U.S. federal government spent more
  • n R&D than the rest of world, government and

business, combined.

  • United States was first in world to develop a venture

capital industry.

– American Research and Development Corporation in Boston in 1946

  • These helped U.S. innovation firms and U.S.

innovation gain first mover advantages that remain.

10

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SLIDE 11

Federally Supported Innovations

  • Google Search Engine
  • GPS
  • Supercomputers
  • Artificial Intelligence and Speech

Recognition

  • ARPANET: Foundation of the Internet
  • Closed Captioning
  • Smartphone Technologies
  • The Shale Gas Revolution
  • Seismic Imaging
  • Visible LED Lighting Technology
  • Magnetic Resonance Imaging (MRI)

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  • Advanced Prosthetics
  • The Human Genome Project
  • HIV/AIDS
  • Reverse Auctions
  • Kidney Matching Program
  • Fast Multipole Method
  • SCALE-UP (Student-Centered

Active Learning Environment for Undergraduate Programs) Learning Science Advances

  • Civilian Aviation
  • Hybrid Corn
  • Lactose Free Milk
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SLIDE 12

A Risk-Taking Culture Matters

  • Long culture of “Yankee

ingenuity,” meaning a deep- seated interest in tinkering, inventing, and making things better.

  • Acceptance and even embrace
  • f “Schumpeterian

destruction.”

12

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SLIDE 13

Americans Are More Eager to Take Risks and Compete

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http://ec.europa.eu/public_opinion/flash/fl_283_en.pdf

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SLIDE 14

Today’s Presentation

Explaining the Paradox of U.S. Innovation Leadership Historical-Structural Reasons For U.S. Innovation Leadership Innov

  • vat

ation

  • n Pol
  • licy

cy R Reas eason

  • ns for
  • r U

U.S .S. L . Lead eader ership Innovation Policy Principles Global Best Practices for Innovation Policy

1 2 3

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4 5

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SLIDE 15

Long Tradition of Policies to Support Tech-Transfer

  • Bayh Dole Act to give universities rights to IP from federally-funded research
  • Stevenson-WydlerTechnology Innovation Act in 1980 made a number of changes to

better enable the transfer of technology from federal laboratories to commercial use

  • System of industry-university institutes (e.g., Engineering Research Centers,

Industry-University Cooperative Research Centers)

  • The Small Business Innovation Research Program requires federal agencies to

allocate around 3% of R&D budgets to small business research projects related to agency goals

  • Cooperative Research and Development Act in 1984 allowed companies to gain an

anti-trust exemption for participating in pre-competitive R&D consortia 15

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SLIDE 16

Most U.S. States Have Innovation Policies

  • Illinoi
  • is Sci

cien ence ce & T Tech echnol

  • logy
  • gy C

Coal

  • alition
  • n Cor
  • rpor
  • rat

ate- St Startup Cha up Challeng nge

  • Pe

Penns nnsylvani nia B Ben Fr n Frank nklin n Tech echVen entures es

  • i2E,

, Inc. O

  • c. Okl

klah ahom

  • ma’

a’s P Proof

  • of-of
  • f-Co

Conc ncept pt Fund Fund

  • Geor

eorgi gia R a Res esear earch ch A Allian ance ce

16

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SLIDE 17

Today’s Presentation

Explaining the Paradox of U.S. Innovation Leadership Historical-Structural Reasons For U.S. Innovation Leadership Innovation Policy Reasons for U.S. Leadership In Innovatio tion P Polic licy Prin rincip iple les Global Best Practices for Innovation Policy

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SLIDE 18

Strategic Issues Related to S&T Goals

  • 1. S

. Sci-Tech h or Inno r Innovati tion

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SLIDE 19

Innovation is More Than Sci-Tech Product Development

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SLIDE 20

Innovation is More Than Sci-Tech Product Development

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SLIDE 21

Strategic Issues Related to S&T Goals

  • 1. Sci-Tech or Innovation

2.

  • 2. Devel

evelopment

  • pment or
  • r Diffusi

usion

  • n

21

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SLIDE 22

Strategic Issues Related to S&T Goals

  • 1. Sci-Tech or Innovation
  • 2. Development or Diffusion

3.

  • 3. All Technol

echnolog

  • gies or

es or Speci pecial alizat zation

  • n

22

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SLIDE 23

Strategic Issues Related to S&T Goals

  • 1. Sci-Tech or Innovation
  • 2. Development or Diffusion
  • 3. All Technologies or Specialization

4.

  • 4. Breakth

Breakthrou rough gh or In

  • r Incremen

cremental tal Advan ance ce

23

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SLIDE 24

Strategic Issues Related to S&T Goals

  • 1. Sci-Tech or Innovation
  • 2. Development or Diffusion
  • 3. All Technologies or Specialization
  • 4. Breakthrough or Incremental Advance

5.

  • 5. Lais

issez F Fair ire o

  • r “Industria

ial l Polic licy”

24

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SLIDE 25

Today’s Presentation

Explaining the Paradox of U.S. Innovation Leadership Historical-Structural Reasons For U.S. Innovation Leadership Innovation Policy Reasons for U.S. Leadership Innovation Policy Principles Glob

  • bal

al B Bes est Pract actices ces f for

  • r Innov
  • vat

ation

  • n P

Pol

  • licy

cy

1 2 3

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4 5

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SLIDE 26

Global Examples of Innovation Policy Best Practices: SME Support and Tech Transfer

  • Innovation vouchers (Austria, Netherlands, & Germany)
  • Refundable R&D tax credits (France, Norway, Australia)
  • Performance-based university funding (Sweden,

Finland)

  • Design assistance (UK, Ontario)
  • “On the spot” new firm registration (Portugal, Chile)

26

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SLIDE 27

Global Examples of Innovation Policy Best Practices: University Policies

  • Accountability for results (Finland and Sweden)
  • Industry-University Centers (Germany, Taiwan, U.S.)
  • Industry-Aligned R&D (U.C. San Diego)
  • Specialized Colleges (Olin College)
  • Cluster-based Higher Ed (Montreal’s Pharma Tech program)
  • Entrepreneurial Education (U.S.)
  • Professional Masters’ Degrees (U.S.)
  • Industrial Ph.D. program (Denmark, Brandenburg, Alberta)

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SLIDE 28

Global Examples of Innovation Policy Best Practices: Tax Policies

  • Patent boxes (Belgium, France, Netherlands, UK)
  • Refundable R&D tax credits (France, Norway, Australia)
  • Collaborative R&D tax credits (Korea, FR, JP, Spain,

UK)

  • R&D tax credits to services industries; (Australia,

Denmark, Finland, Netherlands, Norway)

  • Generous R&D tax credits (e.g., France, India)
  • Knowledge tax credits

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SLIDE 29

www.globalinnovationrace.com

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Yale le U Univ ivers rsity ity P Pre ress 2013 2013

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@ITIFdc Thank You!

  • Dr. Robert D. Atkinson | Ratkinson@itif.org | RobAtkinsonITIF