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Science & Tech

Government Support Actually Integral to Silicon Valley’s Development

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

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Universities are Innovation Engines: New Evidence

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

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Nordic countries

Effective Innovation Policies and Institutions Continue to Help Drive Success of Nordic Economies

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

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Scientists in An American Lab

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

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How Did You Sign Your Taxes This Year? Not with an Electronic ID

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.

The smart card IDs in Bahrain replaced a paper-based ID card system developed in the 1980s. Cards are valid for five years, and they are

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What’s Wrong with This Picture?


(Source: OECD)

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Policy by “Sunday Drivers”

I understand that experts are not the only ones who have the right to comment on complex policy issues. And that experts are sometimes wrong and often ideological in their views. But at least with experts, they have spent time studying the evidence before offering their advice to policymakers. Alas, the same cannot be said of some Sunday newspaper columnists. Case in point, pieces by op-ed writers in the Post and the Times.

The first comes from Tom Friedman who makes the claim in “No to Keystone. Yes to Crazy” that “Nothing would do more to clean our air, drive clean-tech innovation, weaken petro-dictators and reduce the deficit than a carbon tax.” Really? As ITIF has shown, many European nations have a defacto carbon tax in excess of $400 a ton (ala their massive gas taxes) – a carbon tax 20 times higher than anything that is remotely politically possible in the United States and they have even fewer electric cars than we do. Carbon taxes don’t drive the kind of breakthrough zero carbon innovations the world so desperately needs; they lead businesses to tweak existing

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HTTP Arrow

My State of the Net Comments on the Importance of the Internet to Economic Growth

I had the pleasure of presenting, along with Marvin Ammori, at last week’s State of the Net Conference on the economic impact of the Internet and how to maximize it.  Among the points I made on the impact:

  • The Dot-com domain makes global economy $1.5 trillion larger and will add $3.8 trillion annually to the global economy in 2020 – more than the total GDP of Germany
  • IT workers contribute significantly more to productivity than non-IT workers and IT has more impact on productivity than non-IT capital
  • Between 2001 and 2011, jobs  in IT occupations increased 22% while non-IT jobs were stagnant. Between 2007-2011, jobs declined 4.5%, while IT jobs up 6.8%, contributing $37 billion to the economy.

Among the points I made on how to maximize its impact:

  • First, we should recognize that Internet freedom does not mean Internet anarchy. In other words we should promote Internet innovation and free speech, but also work to limit Internet crime (like malware and copyright theft).
  • Second, we need to get a clearer overall framework to guide Internet policy. Right three competing narratives compete for attention: Abdicate, Regulate, Facilitate. Abdicate says that
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Terry Milholland

Five Q’s on Data Innovation with Terry Milholland

Terry Milholland is the Chief Technology Officer for the Internal Revenue Service. Before coming to the IRS, he had a long career as a technology leader in the private sector at companies such as Visa, EDS and Boeing. I asked Terry to discuss his experiences at IRS and emerging trends on the use of data in government.

Castro: While “Big Data” is new for some organizations, the IRS has been managing large amounts of data for years. But the technology keeps changing. What types of data analytic capabilities are available to you now that were not available a five or ten years ago?

Milholland: The biggest difference between today and five years ago is the expansion of capabilities to handle pools of data that are getting dramatically larger. Aggregation techniques have been developed, and new analysis methods are getting dramatically faster, while at the same time gotten easier to use. The technology like massive parallel processing today allows you to do trending over more dimensions and more years in a more timely manner than was previously possible. Because the technology can produce faster results, you get more effective use of

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Location Privacy Legislation is Move in Wrong Direction: Part 1 – User Notice and Choice

Over a decade ago, President Clinton ordered the Department of Defense to discontinue “Selective Availability”, the intentional degrading of the civilian Global Positioning System signal, in an effort to allow all businesses and residents in America to have access to the numerous benefits of location-based technology. This has been an enormously successful policy decision that has unleashed a wide range of innovations for consumers and businesses that use geo-location data in sectors as diverse as transportation, agriculture and public safety. Today location can be determined on mobile devices, with various degrees of precision, from a variety of data including GPS, cell towers, Wi-Fi signals, and IP addresses. Unfortunately Congressional legislation would prohibit companies from collecting or using location information from electronic devices without first obtaining consent from the user might stall many of these benefits.

This bill in question is the Location Privacy Protect Act of 2012 which passed the Senate Judiciary Committee in late December. This legislation would require any company that discloses geo-location information collected from an electronic device to another entity, including its affiliates, to identify these entities and obtain user consent. This is particularly

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