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Innovation Fact of the Week: U.S. IT Companies Contribute Outsized Share of U.S. and Global R&D Investment

(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.)

Companies invest in research and development activities to remain at the forefront of technology, stay ahead of their competitors, and create new waves of innovations—and by these measures, the U.S. information technology sector is intensely focused on maintaining its global leadership position. A report from the European Commission’s Joint Research Centre underscores the point. It found that in 2014, the world’s 2,500 largest companies together invested $810 billion in R&D. One-third of those companies were based in the U.S., yet they accounted for approximately 40 percent of the global R&D figure. Why the outsized share? A big reason was that 286 of those U.S. companies were in the R&D-intensive information technology sector.

Not surprisingly, those 286 large IT companies also accounted for an outsized share of total business R&D in the United States—46 percent. This was a far higher percentage than the equivalent share of contributions that the largest IT companies made in other countries and regions. For example, the Chinese IT companies

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University Startups Conference Showcases Latest ITIF Tech Transfer and Commercialization Policy Proposals

ITIF Vice President for Global Innovation Policy Stephen Ezell spoke at the National Council of Entrepreneurial Tech Transfer’s University Startups and Global 1,000 Conference in Washington, DC, on April 5, 2016. The following excerpts his remarks.

With innovation being the lifeblood of the American economy, I’d like to offer several policy recommendations that could bolster America’s broader innovation, tech transfer, and commercialization ecosystem.

First, as a society, we’re simply not investing enough in scientific research. We’re not investing as much in research and development (R&D) compared to our own history. In fact, if our own federal government invested as much in scientific research as a share of gross domestic product (GDP) that we did in 1983, we’d invest at least $60 billion more a year in R&D than we do now. So closer to $200 billion a year than $138 billion a year. Moreover, we’re not investing as much as a share of R&D compared to competitor nations. Preliminary data for the forthcoming 2016 OECD Science, Technology, and Industry Scoreboard shows the United States falling to 10th of the 39 OECD countries in national R&D intensity (national R&D investment in

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Innovation Fact of the Week: U.S. Businesses Spend Up to 4% of GDP on ICTs

(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 organizations invest in better communication tools, processing equipment, and advanced software, it has a direct impact on their productivity, so it is a good sign for the United States that its businesses are investing more in these information and communications technologies (ICT) than businesses in any other country.

National Science Board data show that from 2012 to 2014, U.S. businesses spent an average of $650 billion on ICT goods, or 4 percent of U.S. GDP in that period. Among developed nations, Japanese businesses came in second, spending the equivalent of 3.5 percent of Japan’s GDP on ICT goods. Among developing nations, Chinese businesses were hot on the heels of their U.S. counterparts, spending just under 4 percent of China’s GDP.

As a group, businesses in developed countries spent an average of 3.2 percent of their respective countries’ GDPs on ICT goods, while businesses in the developing world spent less—just 2.8 percent, on average. But developing economies receive more productivity benefit on

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Music Piracy: Streaming to an App Near You

The distribution of music has evolved over time, from records, tapes, and CDs, to downloading and streaming online from computers, mobile devices, and a growing array of connected devices in the home and car. Music piracy has also evolved as those peddling and consuming infringing content adapt to new technologies. A new study from MusicWatch (a research firm that focuses on the music and entertainment industries) highlights the changing nature of music piracy and shows that while there is no “silver bullet” to combating online piracy, stakeholders involved in protecting intellectual property need to adapt their efforts to meet this evolving challenge.

The study has four main findings: music piracy is still prevalent; “streamripping” of music has emerged alongside the rise in legitimate music streaming services; music apps and app stores play an increasingly important role in music piracy; and piracy has a substantial negative impact on musicians and content owners.

First, the MusicWatch study shows that music piracy is still rampant, with an estimated 57 million Americans engaged in some form of illegal online downloading or streaming of music. In December 2015, the study surveyed 1,000 U.S. respondents aged

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High-Growth Entrepreneurship for Development: Report of a Roundtable with Michael Dell

Policymakers around the world have increasingly come to realize that entrepreneurship, particularly high-growth entrepreneurship (HGE), is critical for economic development in nations at all levels of development. That is one reason the United Nations Foundation asked Michael Dell, founder and CEO of Dell Inc., to be the Global Advocate for Entrepreneurship and to work closely with the Foundation and its Global Entrepreneurs Council to help shape and advance a global entrepreneurship agenda.

To inform the Council’s thinking, Michael Dell led a meeting in Washington, DC, on December 2, 2014, hosted by 1776, a cutting-edge “accelerator” to help technology-based entrepreneurs translate their ideas into growing businesses. The meeting participants included tech-based entrepreneurs and policymakers, and I was asked to participate and serve as rapporteur.

Michael Dell opened up the roundtable with a discussion of proposed policy mechanisms to spur high growth entrepreneurship, including ensuring access to capital, technology, talent, and markets. The following is a summary of the themes and recommendations from the discussion.

The Nature of Technology-Enabled Entrepreneurship Opportunities

Policymakers around the world are interested in HGE because they understand that technology opportunities driving this type of entrepreneurship have exploded.

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What Would the Wright Brothers Think?

What a difference a century makes. No, not in technological innovation, but in technological pessimism. As David McCullough writes in his new history of the Wright brothers, their discovery was met with near universal excitement and optimism, even in the face of setbacks, some of them fatal. Today, a century later, innovation and innovators are more often met with skepticism, approbation, and opposition.

Case in point is from Joe Nocera’s op-ed in The New York Times about Google’s driverless car effort, as part of its Google X project. Nocera relates how John Simpson, head of the nonprofit Consumer Watchdog, bought a few shares of Google stock so he can go to their board meeting to berate Google executives for developing an autonomous vehicle. Simpson noted that Google’s cars have been involved in 11 accidents (although all have been minor and none of them caused by the AV car itself). He also warned that the Google car would steal our privacy. In other words, he berated Google for trying to innovate what could well be one of the most important technological breakthroughs of the 21st century. Indeed, as I wrote

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Anatomy Of A Smear Attack on GMO Supporting Scientists

This article was originally published in The Huffington Post. It is co-authored by Val Giddings and Jon Entine

Recently on the Huffington Post we came across a disturbing article – an attack by Jeffrey Smith on two respected university professors who apply a critical eye to the claims made by various advocates alleging dangers to human health linked to genetically modified organisms (GMOs.) 2015-04-01-1427906926-6335062-HuffPoheadline.png

Smith, if you are not familiar with him, heads up a one-man band rabidly anti-GMO organization known as the Institute for Responsible Technology–he and his organization are controversial to say the least, but more on that later.

The subject of the attack piece was co-written by University of Illinois emeritus professor Bruce Chassy and University of Melbourne geneticist David Tribe. It appears on the website of AcademicsReview, an independent non-profit set up by the scholars to address the maelstrom of misinformation that passes for debate on the GMO issue. In one of their most pointed and heavily circulated critiques, Chassy and Tribe examine one of Smith’s two self-published books that supposedly ‘prove’ that GMO foods are reckless and dangerous.

Chassy and Tribe’s critique titled “Yogic Flying

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Roundup® a Carcinogen? Never Mind the Science…

Today, the International Agency for Research on Cancer (IARC) has departed from the scientific consensus to declare glyphosate, the active ingredient in Roundup®, to be a class 2A “probable human carcinogen”. This contradicts a strong and long standing consensus supported by a vast array of data and real world experience, and comes from an organization that rarely addresses potential pesticide carcinogenicity, perhaps because the real concerns in this area are minimal, and lie elsewhere. The IARC statement is not the result of a thorough, considered and critical review of all the relevant data. It is beyond the pale.

A vast body of relevant information, including dozens of detailed genotoxicity, studies, animal bioassays, peer-reviewed publications and regulatory assessments, that show no evidence of carcinogenicity, and confirm its safety were presented to the IARC, but seem to have been ignored. On the other hand, witnesses report one paper so severely criticized and discredited that it was condemned by the scientific community and withdrawn by the publisher was actually taken on board by IARC.

That the IARC seems to have even considered such a fatally flawed and withdrawn paper

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How Immigration Policy Has Walled Off Silicon Valley

In today’s fast-paced, globalized world, knowledge workers can choose to work anywhere. In fact, being an appealing place for people to locate, especially those with advanced skills, is a valuable national resource. Highly skilled workers earn high wages, spend those wages locally, pay domestic taxes, and contribute to spill-over effects that benefit everyone in the area. Most engineers will tell you that the most appealing location for tech workers is located right here in the United States. Some countries strike oil. Others find diamonds. The United States hit it rich with Silicon Valley.

However, Silicon Valley has a weakness that threatens this preeminence: the lack of enough skilled workers to promote expansion and innovation by existing firms and industries and the development of new ones. One of the chief causes of this problem is America’s growth-stymying, restrictive immigration policies toward high-skill, foreign-born talent. For example, for the first time in American history, there are fewer startups founded by immigrants than there were 10 years ago. The effect is especially apparent in Silicon Valley, where immigrant-founded startups dropped from 52.4 percent to 43.9 percent from 2005 to 2012. And unfortunately for

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A Modi Administration Report Card on the Eve of His Visit to the United States

Indian Prime Minister Narendra Modi’s historic election was viewed with a great deal of optimism by much of the world, including here in the United States. His campaign platform—putting economic growth front and center—championed the kinds of policies needed to get India’s economy back on track. With the Modi Administration having been in office for just about four months now, and as he embarks on his first official visit to the United States, it’s a good moment to take stock of the Modi Administration’s accomplishments to date—and areas where we hope to see continued progress toward improving the state of U.S.-India economic and trade relations.

On the positive side, the Modi Administration has announced a number of promising economic reforms. In particular, it has:

  • Retired India’s Planning Commission, a vestige of centralized state planning;
  • Eased some restrictions and limitations on foreign direct investment (FDI), notably in the defense and railway sectors (with the FDI ceiling in the former raised to 49 percent and in the latter to 100 percent);
  • Committed to renewed infrastructure investment in power generation and transportation networks;
  • Set a year-end target to complete long-pending implementation of a

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