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Innovation Economics

Innovation Economics: The Race for Global Advantage

Robert D. Atkinson
Stephen J. Ezell
Copyright Date: 2012
Published by: Yale University Press
Pages: 384
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  • Book Info
    Innovation Economics
    Book Description:

    This important book delivers a critical wake-up call: a fierce global race for innovation advantage is under way, and while other nations are making support for technology and innovation a central tenet of their economic strategies and policies, America lacks a robust innovation policy. What does this portend? Robert Atkinson and Stephen Ezell, widely respected economic thinkers, report on profound new forces that are shaping the global economy-forces that favor nations with innovation-based economies and innovation policies. Unless the United States enacts public policies to reflect this reality, Americans face the relatively lower standards of living associated with a noncompetitive national economy.

    The authors explore how a weak innovation economy not only contributed to the Great Recession but is delaying America's recovery from it and how innovation in the United States compares with that in other developed and developing nations. Atkinson and Ezell then lay out a detailed, pragmatic road map for America to regain its global innovation advantage by 2020, as well as maximize the global supply of innovation and promote sustainable globalization.

    eISBN: 978-0-300-18911-7
    Subjects: Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. 1 The Race for Global Innovation Advantage
    (pp. 1-16)

    The so-called Great Recession that convulsed the U.S. economy from the end of 2007 to the middle of 2009 has been officially over for several years, but for most Americans it certainly doesn’t feel that way. The official unemployment rate still hovers around 8.5 percent, and if the part-time workers who would rather be working full-time were included, the rate would be almost double.¹ In fact, the Congressional Budget Office reported in February 2012 that after three years with unemployment topping 8 percent, the United States has seen the longest period of high unemployment since the Great Depression, yet it...

  4. 2 Explaining U.S. Economic Decline
    (pp. 17-56)

    It will be many years before we truly understand the nature of the current economic downturn. Is it a typical but severe downturn caused by a financial crisis, the kind that the world has seen many times in many different nations?¹ Or should it be seen as more akin to the Great Depression, although moderated this time by better fiscal and monetary policy? Or might it be an inflection point in U.S. economic history? Looking back, will future generations point to this period and say, yes, this was when U.S. postwar economic dominance ended and the United States stood poised...

  5. 3 Learning from the Wrong Master: LESSONS FROM U.K. INDUSTRIAL DECLINE
    (pp. 57-84)

    After being the global economic leader for more than a century, the experience of relative economic decline is new for the United States, a bit like waking up one morning to find that your mansion has termites and your Cadillac is leaking oil. This is not to say that some U.S. regions, particularly in the Northeast and Midwest, haven’t had termites and leaking oil for some time. Places like western Pennsylvania saw their economies go into relative decline in the 1950s and 1960s. But for most of America, until fairly recently, the economic foundations were termite-free and the economic engine...

  6. 4 Why Do So Many Refuse to See U.S. Structural Economic Decline?
    (pp. 85-127)

    Given how clear it is that the United States is losing the race for global innovation advantage, why isn’t this regularly the subject of op-eds, conferences, and congressional hearings? The simple answer is that notwithstanding the occasional report or op-ed,¹ most U.S. pundits, policymakers, and economists have steadfastly refused to heed the abundant warning signs of long-term structural U.S. economic and competitive decline. For example, in a 2008 report prepared for the Bush administration, the RAND Corporation reviewed key indicators to evaluate the current state of U.S. science and technology (S&T) competitiveness.² The report contended that the “clarion call” of...

  7. 5 What Are Innovation and Innovation Policy and Why Are They Important?
    (pp. 128-161)

    Innovation has become the central driver of national economic well-being and competitiveness—and this is why so many nations are engaged in the race for global innovation advantage. But what actually is innovation? Most believe innovation is only technological in nature, resulting in shiny new products like Apple’s iPad or Boeing’s 787 Dreamliner. Others believe it pertains only to the research and development (R&D) activity going on at universities, national laboratories, and corporations.

    While that is all true, it is much too limiting; innovation is about much more. The Organization for Economic Cooperation and Development (OECD) defines innovation as “the...

  8. 6 Crafting Innovation Policy to Win the Race
    (pp. 162-189)

    Countries that want to lead the pack in the race for global innovation advantage must craft and implement a range of constructive policies to support the innovative capacity of their economies. To that end, some three dozen countries have created formal national innovation strategies and at least two dozen have established national innovation agencies, actions that have only further intensified the global competition for innovation leadership. These countries are not content to let their government policies and actions influence innovation in a haphazard and uncoordinated way. They seek to develop mechanisms to assess their nation’s strengths and weaknesses, to examine...

    (pp. 190-225)

    Since the beginning of the Industrial Revolution, communities, states, and nations have sought to gain economic advantage, in part by ensuring that firms in their jurisdiction become more productive and innovative, but also by trying to gain advantage over neighboring jurisdictions with which they trade. For example, after World War II (WWII), U.S. states began to seriously compete with each other for jobs and investment, while European nations increasingly competed within the European Common Market. Now, as global economic integration has become much more widespread, the scope of economic competition has substantially broadened. Today, what China does affects what happens...

  10. 8 Winning the Race for Innovation Advantage with the Eight “I’s” of Innovation Policy
    (pp. 226-263)

    How can the United States apply the lessons learned from other countries in crafting its own effective innovation policy? We’ve seen that the United States suffers from many of the same ailments that led to the United Kingdom’s industrial decline, including a persistent blindness to the problem. But like someone who goes on a diet and starts exercising after an overweight friend suffers a heart attack, perhaps America can learn from Britain’s economic “heart attack” and begin a rigorous diet and exercise program for industrial renewal.

    The key is whether America can act before it’s too late. The lesson learned...

  11. 9 Why Don’t We Have More Innovation and Innovation Policy?
    (pp. 264-300)

    If innovation is the elixir that amplifies incomes and advances economic competitiveness, and if innovation policy is required for an even more potent elixir, why don’t we have more of both? With the proliferation of innovations in our daily lives—iPads, smartphones, and new drugs, to name a few—these may seem like odd questions. But in contrast to some who marvel at the innovations appearing almost daily, we wonder why there aren’t more. George Bernard Shaw wrote: “You see things; and you say ‘Why?’ But I dream things that never were; and I say ‘Why not?’ ” Why is...

  12. 10 Can Nations Overcome the Barriers to Innovation?
    (pp. 301-337)

    There is no doubt that winning at innovation involves hard work, although a measure of luck doesn’t hurt. Just ask Mark Zuckerberg, who happened to get Facebook to market and gain a critical mass of users faster than the social network’s competitors. But at the end of the day, if the result of any individual effort to innovate involves a set of odds, the chances of success escalate if the individual takes the right steps. Societies are no different. If nations are organized so that individuals and organizations have the right incentives to innovate, the resources needed to innovate, and...

  13. 11 Creating a Robust Global Innovation System
    (pp. 338-366)

    We want to end this book the way we started it, with a vision. We envision the global race for innovation advantage as one in which virtually all nations win, with higher productivity and per capita incomes, new and better products and services, and a better quality of life for all. We picture a world in which potentially catastrophic problems of hunger, disease, and environmental degradation are effectively tackled, reducing the risks of wars over scarce resources. In our vision, transformative technological and scientific advances help unite nations and people in common pursuits. And finally, we see old global institutions...

  14. NOTES
    (pp. 367-416)
  15. INDEX
    (pp. 417-431)