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All posts by Kenan Jarboe

Response to competitiveness RFI – entrepreneurship, education and exports

Continuing our series of comments on the questions posed by the Commerce Department’s Competitiveness study RFI (see earlier postings), lets us move on to the three E’s: entrepreneurship, education and exports.

In topic #2: Entrepreneurship, the RFI asks the following questions:

Through what measures can government policy better facilitate the creation and success of innovative new businesses? What obstacles limit entrepreneurship in America, and which of these obstacles can be reduced through public policy? What are the most important policy, legal, and regulatory steps that the federal government could take to expand access to capital for high-growth businesses?

In order to comment on the questions relating to entrepreneurship, we must first separate out various concepts:

1) start up versus growth

2) entrepreneurial growth (through new business opportunities) versus market expansion (through expanding into new markets geographically or serving an underserved market or by capturing market share or simply through an expanding customer base).

The start up process concerns establishing a new entity.  There are numerous specific issues associated with forming a new entity — business or non-profit.

The growth process may or may not be associate with that

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Response to competitiveness RFI – manufacturing and services


Following on yesterday’s posting, I would like to take up some of those intriguing questions posed by the Commerce Department’s Competitiveness study RFI (see earlier posting).

Let’s start with something I have written on before: manufacturing and services.

For topic #6: Manufacturing.  The RFI asks the following questions:

What is the role of advanced manufacturing in driving American economic growth and international competitiveness, and what are the key obstacles to success at advanced manufacturing? In which manufacturing industries will our nation have comparative advantages?

The short answer to the first question is simple: manufacturing will continue to play a major role in American economic prosperity.  It will be a different role.  As we pointed out a year ago in our Policy Brief–Intellectual Capital and Revitalizing Manufacturing, manufacturing is in the process of being transformed into a much more knowledge-intensive activity.  The process is analogous to the transformation of agriculture in the early 20th century.  Farming did not simply move to other nations with lower-cost producers using the traditional techniques. Agriculture was mechanized–or industrialized, if you prefer. That transformation led to

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Responding to the RFI on the Strategy for American Innovation


Earlier this month, I posted an item on the Commerce Department’s Request for Information on Administration’s Strategy for American Innovation.  I made some comments when the document first come out.  But, as I noted, the RFI asks a number of questions that go beyond the framework of the strategy —  both in detail and in subject area.  In a series of postings I plan to address many of these specific areas of questions.  But first let me return to the overall framework.  

The strategy has three major components: Investing in building blocks of education, basic research and infrastructure; Promoting market-based Innovation; Catalyzing breakthroughs for national priorities.  They form a pyramid type arrangement, with basic foundations leading to market commercialization and then focusing on specific areas of special interest within that broader market framework.


This framework is fine as far as it goes.  It is useful for tying together the Administration’s policy initiatives.  But the framework and those initiatives don’t go far enough to effectively foster innovation in the new I-Cubed Economy.

The foundation of the pyramid is call, fittingly enough, “Building Blocks.” The framework describes three basic foundations:

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U.S. PTO looking at innovation measures — but needs to look at previous work

Here is an interesting short bit from FastCompany – Patent Director: “Patent Filings Do Not Equal Innovation,” U.S. Needs New Measure.  According to this short piece:
“David Kappos, director of the United States Patent and Trademark Office, says the United States needs new ways to measure innovation and also to give fast-track status to green technologies.
First, Kappos says his office is looking at new ways of measuring innovation. After all, open-source software, which explicitly rejects traditional intellectual property rights, powers large parts of the technology industry, such as the Android mobile operating system. Additionally, corporations often take out huge pre-emptive patents to prevent competition from forming.
‘Patent filings do not equal innovation, by any stretch,’ says Kappos. While his solution to the problem may not completely satisfy those eager to see the United States move beyond the patent paradigm, Kappos is pressing experts and universities to come up with new measures of innovation, such as job creation and job growth that arise from a particular idea.”


While I applaud efforts by the PTO to look for broader measures of innovation, I hope they won’t be re-inventing the

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Return of the digital divide

As Yogi Berra said, “It’s deja vu all over again.”  A new report is out about the Internet which raises the concern over a digital divide.  As the Washington Post story (“Survey of online access finds digital divide”) sums it up: “A first-of-its-kind federal survey of online access found that Americans in lower-income and rural areas often have slower Internet connections than users in wealthier communities.”

This new survey of internet usage, Digital Nation: Expanding Internet Usage, was released yesterday by the Commerce Department’s National Telecomminications and information Administration.  The press release highlights the following points:

  • Broadband Internet access at home continues to grow: 68 percent of households have broadband access, as compared to 63.5 percent last year. (In the survey, broadband was defined as Internet access service that uses DSL, cable modem, fiber optics, mobile broadband, and other high-speed Internet access services.)
  • Notable disparities between demographic groups continue: people with low incomes, disabilities, seniors, minorities, the less-educated, non-family households, and the non-employed tend to lag behind other groups in home broadband use.
  • While the digital divide between urban and rural areas has lessened since 2007, it
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Obama Innovation Strategy – and doing more

Last week, the White House released their updated Strategy for American Innovation.  This is part of the Administration’s new push on innovation, jobs and competitiveness.  As the Fact Sheet and the White House blog posting make clear, this is an expanded version of their earlier document.  To quote from the fact sheet, this latest version includes 5 new initiatives:

  • The Administration’s proposed Wireless Initiative, helping businesses reach 98% of Americans with high-speed wireless access within five years, accelerating wireless innovations, and substantially expanding, by 500 MHz, the development of new wireless spectrum for commercial use.  Expanding new commercial spectrum is critical to avoid “spectrum crunch” and facilitate the rapidly growing wireless technology revolution.
  • patent reform agenda, working to overcome the enormous backlog at the patent office and improve patent quality.  Legislative and administrative initiatives can allow the USPTO to adequately fund its operations through user fees and implement new initiatives to improve patent quality.  The overall agenda will reduce the average delay in patent processing times from 35 months to 20 months, and to less than 12 months where applicants prioritize their applications.
  • A commitment to
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Government reorganization and competitiveness

In an earlier posting on the State of the Union Address, I drew attention to the President’s plan for government re-organization.  Yesterday, the White House announced that Deputy OBM Director Jeffrey Zients to head up the government reorganization efforts.  Zients is also currently also the federal government’s Chief Performance Officer (CPO).  The announcement noted that “Our first focus will be looking at trade and exports to see how we can better reform these functions to give American companies a leg up in the global economy.”

This is a good step forward.  But there are other steps the President can take immediately to push forward the competitiveness agenda.

As I mentioned earlier, Center for American Progress (CAP) published a report outlining a number of process steps the Administration could take to address policymaking on competitiveness.  In that earlier posting, I highlighted the coordination and planning activities recommended in the report — based on the national security model.  I will come back to those recommendations.

However, the report (A Focus on Competitiveness) also addressed the reorganization question, with the following suggestion:

“To address the fragmented responsibility for key

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Rethinking competitiveness and the State of the Union

It is widely expected that this evening President Obama will use his State of the Union address to highlight America’s economic competitiveness and the challenges we face.  He will call for greater investments in R&D, education and infrastructure.  That will touch off a debate over the federal government’s budget and the role of government in the economy.  GOP critics are likely to call for less regulation, tax cuts and spending reductions as an alternative means on boosting competitiveness.

However, I fear that both sides may be stuck in an earlier vision of economic competitiveness that is no longer useful as a guide for policymaking (see our earlier paper Info Age: Recast Issues Demand New Solutions).  A quarter of a century ago, the United States confronted and overcame a challenge to its economic competitiveness.  The U.S. now faces a similar challenge.  However, the situation today is different in profound ways while our policy responses are, in many ways, echoes of the 1980s. We need to reevaluate so that we can reformulate appropriate policies.

The global economy has entered a new era. The industrial age was driven by machines and natural

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Lessons From the New NSF Innovation Survey

Last week the National Science Foundation released its 2008 Business R&D and Innovation Survey, which surveys over 1.5 million for-profit organizations and benchmarks the number of “new or significantly improved products and processes” U.S. firms developed between 2006 and 2008.  The data reveals much about the state of innovation in the U.S. economy.

First, the survey reveals while nine percent of all firms developed at least one new good or service and nine percent developed at least on new business process, there are significant discrepancies among industries.

Far and away the most innovative industry was software publishing: 77 percent of software firms innovated a new product or service and 19 percent innovated a process.  Following software designers are navigational and electromedical instruments, computer equipment, communications equipment, and pharmaceuticals. In other words, four of the top five innovative industries between 2006 and 2008 were IT-related industries.

These industries are big winners across the board for the U.S. economy: They pay more, have higher labor productivity, and have weathered the economic recession far greater than most.  Indeed, the average annual wage in 2008 within these industries equaled $74,000—170 percent above the

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