Building on Success Reforming the U - Great Transformations.docVIP

Building on Success: Reforming the U.S. Innovation System A White Paper by Fred Block and Matthew Keller December 1, 2008 Executive Summary Crises are a time of both danger and opportunity. The current economic crisis in the U.S. is no exception. The danger of a long term economic slowdown in the U.S. and in the global economy is very real. In this crisis, the need for “stim-novation” is urgent. Stim-novation spending combines economic stimulus with measures that strengthen the economy’s capacity for innovation. U.S. high technology has been one of the world’s economic success stories in the past thirty years. But there has been too little recognition that the U.S. government has developed a remarkable capacity to nurture innovation and the commercialization of new technologies across all sectors of the economy. Through financing, guidance, and connecting key players, government agencies have played a crucial role in developing America’s innovation economy. This highly decentralized system has significantly shortened the time span between technological breakthroughs by researchers and their transformation into usable products or processes. Over the last twenty-five years, this system has produced key advances in computers, biotechnology, medical instruments and the development of new materials. In the face of environmental crisis, it has helped to nurture hundreds of new companies pursuing both alternative energy sources and new green technologies. However, this formidable machinery for supporting innovation has many key weaknesses. First, Federal budgetary support for the innovation system has been insufficient and unstable, and sometimes resources for commercialization have come at the expense of foundational scientific research. Second, the priorities of the U.S. innovation system have been too often dominated by national security concerns or the needs of entrenched corporate interests. Moreover, weak priority setting co-exists with weak coordi