Science & Tech
In an otherwise quite nice report from the Government Accounting Office (GAO) called Global Manufacturing: Foreign Government Programs Differ in Some Key Respects from those in the United States, the authors discuss the efforts of countries including Canada, Germany, Japan, South Korea, and the United States to support manufacturing, in part through the development of regional high-tech clusters. Yet the report’s authors argue that “the effectiveness of cluster policy has not been established; the formation of successful clusters in the United States, such as California’s Silicon Valley, suggests that government support for clusters may not be necessary.”
Unfortunately, here the GAO authors are echoing the point of view of individuals such as Michael Arrington, who believes that the Best Way to Fix Silicon Valley is to Leave it Alone. But as Robert Atkinson convincingly argues in Divorce Washington at Your Peril, Silicon Valley—as will a forthcoming MIT-ITIF report, Federally Supported Innovations: 22 Examples of Major Technology Advances that Stem from Federal Research Support (February 2014)—government support has actually played a fundamental underlying role in the development of Silicon Valley (as it has in the development of other … Read the rest
On Sunday evening, CBS’s 60 Minutes aired a report that reviewed the trials and tribulations of Kim DotCom—the self-styled villainous creator of the website MegaUpload. Prior to its infamous shutdown in 2012, MegaUpload was the premiere website for the illegal sharing of copyrighted works such as movies, TV shows, and music.
The 60 Minutes piece focuses primarily on the perspective of DotCom, including his delusion that he has been unfairly targeted by the U.S. Department of Justice (DOJ). He repeatedly states that he should not be held responsible for the actions of his users; the website was designed for file sharing, and what his users chose to share is not his concern. In fact, DotCom expresses a desire for his work to be compared to that of movie heroes such as James Bond, only to have Bob Simon aptly point out that he is in fact much closer in persona to Dr. No — the flamboyant lifestyle, the private island, etc. It is this persona that DotCom alleges is responsible for the FBI targeting him, rather than the fact that he built a website designed to illegally exploit copyrighted works … Read the rest
University spinoffs more innovative, more successful than comparable firms
A new working paper by Swedish economist Andreas Stephan asks whether startups that were born as spinoffs from public universities are more innovative than similar, non-spinoff firms. Using a 2004 survey of East-German firms, Stephan compares the innovativeness of firms as measured by their patent applications and the originality of their patents. Even compared to firms of a similar age, industry, and location, the paper finds that university spinoffs do a better job of innovating.
The obvious lesson here for economic policy is that universities are studying useful things, and that we should have policies that encourage their transition from academic papers to real-world businesses. Business incubation has been on the U.S. national agenda for decades—since at least the passing of the 1980 Bayh-Dole Act—but there is much more that we can do.
For instance, Stephan finds that spinoff firms were more successful due to their collaboration, their proximity to universities, and their ability to get public research grant funding. All three of these traits are easy to translate into policy. Stephan also notes that even those firms that were … Read the rest
The current issue of the New York Review of Books features an article by Harvard economist Benjamin Friedman, “Brave New Capitalists’ Paradise’: The Jobs?” which is yet another reminder why we should not let economists make economic policy.
Freidman starts off by rightly pointing to the period from after WWII to the early 1970s as a golden era of low unemployment and high median income growth. He then rightly points to slower income growth over the last 20 years. His solution: less technology and lower productivity.
For Freidman has joined the ever growing neo-Luddite movement in America that mistakenly attributes our economic problems to too much technology and automation. He writes, “New technology that enhances the productivity of labor… means less labor input is needed to produce what was made before.” So far so good. But he goes on to write that “increasingly over the last quarter century, the balance [of less labor for existing goods plus more labor for new goods] indeed appears to have shifted [toward less labor].”
Why? Because “the pace of labor saving technological change has accelerated.” Okay, let’s stop here. First, of all productivity growth … Read the rest
On Wednesday, October 16, ITIF hosted representatives from innovation and government agencies from Denmark, Finland, and Sweden to discuss Nordic Innovation: What Can America Learn from the Scandinavian Innovation Ecosystem. (Video and audio from the event are available here.) The speakers credited the recent success of the Nordic economies to several factors, including: a strong bipartisan consensus regarding the importance of federal investment in education, scientific research, and innovation; well-organized national innovation systems that benefit from formally articulated national innovation strategies (Finland’s, Sweden’s, Denmark’s) and well-funded national innovation agencies; and fundamental reforms undertaken in these economies over the past two decades that have made their tax structures more globally competitive, markets more competition-based, federal budgets better balanced, and workers greater skilled.
Indeed, across a range of indicators, it’s clear that Denmark, Finland, and Sweden represent some of the world’s most innovative and globally competitive economies. For instance, Finland, Sweden, and Denmark rank second, third, and eighth, respectively, in ITIF’s Atlantic Century II report, which benchmarks 44 nations and regions on 16 key indicators of innovation and competitiveness. In terms of national R&D intensity—how much … Read the rest
Scientific Researchers at Asian Universities Attracting More Industry Funding than American Counterparts
A report released last week by Times Higher Education, the World Academic Summit Innovation Index, finds that university scientific researchers from many Asian nations—including Korea, Singapore, Taiwan, and China—are attracting substantially more industry funding per researcher than their American counterparts. For example, the report finds that on average Korean researchers receive four times as much industry funding as their American peers, with the average value of industry funding per researcher in Korea totaling a world-leading $97,900, compared to just $25,800 for American researchers, which placed the United States 14th in the thirty-nation study. What makes this all the more striking is that American researchers tend to cost more than their Korean counterparts, and yet the latter still receive more funding.
Unfortunately, this report merely continues to present evidence from a long and troubling trend of faltering industry investment in university research in the United States. As ITIF found in its 2011 report University Research: The United States is Behind and Falling, from 2000 to 2008 the United States ranked just 23rd among 30 leading economies in percent change in business-funded research performed in the higher … Read the rest
On Monday, July 8, the Indian Prime Minister’s office, after consultations with India’s Department of Telecommunications and Department of Electronics, announced it would conduct a four-week review and reevaluation of the country’s controversial Preferential Market Access (PMA) mandate. The mandate imposed local content requirements on procurement of electronic products with “security implications for the country” by government and private sector entities. If the PMA had been implemented as originally envisioned, a specified share of each electronic product’s market—anywhere from 30 percent, rising possibly up to 100 percent by 2020—would have to be filled by India-based manufacturers, a requirement that could have eventually affected as much as half of the $50 billion spent annually on information and communications technology (ICT) products and services in India. In announcing the policy review, the Indian Prime Minister’s office acknowledged that, “Concerns have been raised in many quarters on different aspects of the PMA Policy, particularly relating to procurement by the private sector for electronic products with security implications.”
India conceived its PMA rules in an attempt to bolster domestic manufacturing of electronic products in India, a goal India has sought both to boost employment … Read the rest
Free trade is only successful if all sides are operating on a relatively level, market-based playing field. Unfortunately, in the last few years many nations, particularly developing ones, have dramatically ramped up their mercantilist policies designed to unfairly gain advantages in global trade. The use of these mercantilist policies hurts not only the aggrieved nations, but also, in certain cases, the aggressor. One tool in the mercantilist tool box is “dumping”: the practice of selling exports below the cost of production, often by relying on steep government subsidies. However, to date the system of addressing dumping claims has not been as effective as it should be. All too often by the time cases are brought to and adjudicated by the World Trade Organization (WTO) the damage has been done and many domestic firms put out of business.
We see this with the current conflict between the European Union (EU) and the United States with China over unfair Chinese trade policies in the solar industry. The chief issue for U.S. and EU policymakers concerns China’s use of mercantilist practices, especially selling below cost through large government subsidies, to promote Chinese solar … Read the rest
In the aftermath of the Boston Marathon bombing, we’ve seen a lot of discussion about the crucial role that the abundance of surveillance cameras and smartphones played in finding the suspects. The general consensus seems to be that these technologies were useful. For example, New York Mayor Michael Bloomberg said, “The Boston bombing is a terrible reminder of why we’ve made these investments—including camera technology that could help us deter an attack, or investigate and apprehend those involved.” And Chicago Mayor Rahm Emanuel similarly endorsed surveillance cameras when he said, “I will say, as I always have, because we have continued to put cameras throughout the city for security … purposes, they serve an important function for the city in providing the type of safety on a day-to-day basis—not just for big events like a marathon, but day-to-day purposes.”
Not surprisingly privacy advocates worry that such a high-profile display of the benefits of these camera systems will lead to more public acceptance and adoption, and so they are trying to minimize the value of these systems by arguing that this is a rare event. Jeff Chester, the executive director of … Read the rest
I had the opportunity to speak at the Bahrain International e-Government Forum this year—an annual conference which promotes the development of e-government in Bahrain. As part of the event, numerous Bahrain government agencies participated in an expo where they showcased their latest e-government services. One of the most impressive aspects of e-government in Bahrain is its successful deployment of electronic IDs.
I’ve written quite a bit about electronic ID systems in other countries, the benefits that they provide, and how the United States can more aggressively pursue this goal. The ability to securely identify users is a prerequisite to many e-government and e-commerce services, and the lack of a common identity platform raises costs for both the public and private sectors who must establish their own one-off systems for identification and authentication. Given how much the United States has been lagging on this technology, it was a real pleasure to have the opportunity to visit a country that has implemented an advanced electronic ID system.