INfrastructure

Innovation Fact of the Week: Insufficient Infrastructure Investment Will Cost U.S. Economy $4T & 2.5M Jobs by 2025

(Ed Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

Investment in U.S. infrastructure lags behind the levels necessary to maintain the country’s roads, bridges, ports, railways, and other transportation networks. As this infrastructure deteriorates, U.S. businesses face increasing transportation costs, while households face increasing water and electricity service costs. The American Society of Civil Engineers estimates that by 2025, this investment deficit, if left alone, will cost the U.S. economy $4 trillion and 2.5 million jobs.

Maintaining current standards of surface transportation infrastructure will require an investment of approximately $2 trillion through 2025, of which only $941 billion has been earmarked, a 54 percent deficit. Maintaining current standards of water infrastructure (such as drinking water and sewage systems) will require an investment of $150 billion in the same period, of which only $45 billion has been earmarked, a 70 percent deficit.

For more on this issue, including other areas of the U.S. economy where investment isn’t sufficient, see ITIF’s recent report, “Restoring Investment in America’s Economy.”

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StephVsLeBron

What Steph Curry and LeBron James Can Teach Us About Innovation

“You have to see this kid from Davidson,” said my friends who had brought me to a small college gym in Spartanburg, South Carolina, in 2008, as I watched a midseason college basketball game of little importance. And sure enough, just a few minutes in, this painfully skinny sophomore comes flying off a screen several feet behind the three-point line, still dogged by a defender, and then somehow sets his feet and still moving laterally lets an improbable shot fly. Only it wasn’t improbable. Swish. My jaw dropped. A huge basketball fan, I had never seen anything like it. I had just seen Stephen Curry for the first time.

A few months later, as Curry led his underdog Davidson team deep into the NCAA tournament, newly-minted NBA MVP LeBron James watched Curry play. “I saw a kid who didn’t care how big someone was, how fast someone else was, how strong someone else was,” said James afterwards.

James is a dominant player in the NBA precisely because he is, indeed, bigger, faster, and stronger than people he is playing against. However, LeBron James and Steph Curry today sit atop the

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MNC Growth

Innovation Fact of the Week: Every Dollar a U.S. Multinational Company Invests in Domestic R&D Creates $1.80 in Economic Benefits for its Foreign Affiliates

(Ed Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

When U.S. multinational companies invest in domestic R&D, they create myriad economic returns for their foreign affiliates. These benefits include improved productivity, increased trade with the U.S. headquarters, and induced foreign R&D investment. Economists L. Kamran Bilir and Eduardo Morales estimate that every dollar a U.S. multinational invests in domestic R&D generates an average of $1.80 in knock-on benefits for its overseas affiliates.

This supports economic growth in both developing and developed countries. Kamran and Morales further estimate that for the computer industry alone, if U.S. multinationals’ foreign affiliates could no longer benefit from domestic R&D investment in the United States, then economic output would fall by 2.26 percent in Mexico, 2.40 percent in Indonesia, 8.11 percent in Canada, and 10.54 percent in Finland.

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Photo Credit: Raaziq International via Flickr

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geoblocking-2

Don’t Block Geoblocking

One reason information technologies have delivered huge benefits to the world—and promise even greater gains in the future—is that they lower the cost of producing high-value, information-driven products and services, from movies and games to software tools. Yet, because these information products are fundamentally different from physical goods or services, their pricing models have often led to confusion. An example of this is the current debate in Australia about geoblocking, the practice of varying the availability or price of a digital good or service, market by market, depending upon the location of the purchaser.

A recent draft report by the Australian Government’s Productivity Commission renewed longstanding complaints against geoblocking. Citing a previous report by the Australian House of Representatives, plus pricing data from 2012, the report found that Australians paid an average of 50 percent more for digital goods than did Americans. In response to this perceived unfairness, the commission urged copyright holders to provide more timely and less costly access to digital works. It also encouraged the government to affirm that consumers may use software that circumvents geoblocking technology without violating Australian copyright laws.

Such a policy could reduce

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GM Soy

Innovation Fact of the Week: Global Biotech Crop Production Has Generated Over $130B in Economic Benefits for Farmers

(Ed Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

Between 1996 and 2013, farmers around the world who have adopted biotech crops have increased their incomes by a total of $133.4 billion. Two main factors explain how biotech crops increase farmers’ income. First, pest-resistant plants reduce the need for pesticides, which produces cost savings. Second, disease-resistant crops provide greater yields, thereby giving farmers more product to sell.

Farmers clearly understand the economic benefit of adopting biotech crops. In 2013, the three most commonly grown biotech crops—corn, cotton, and soybeans—covered more than 200 million hectares of land globally, or slightly more than half of the arable land used to grow all varieties of these crops.

Farmers in the developing world have earned more than half of the global economic benefit that biotech crops have generated since the mid-1990s (close to $70 billion), even though developed countries were the first adopters. Given the positive economic benefits, governments should do more to spur research and development of new biotech crop varieties.

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