U.S. Must Invest in Scientific Research to Keep Innovation Edge, According to New CFR Report

Although the United States leads the world in technology innovation, it may fall behind if the government does not address emerging gaps in innovation policy and invest more in scientific research, argues a new progress report and scorecard from the Council on Foreign Relations’ (CFR) Renewing America initiative.

October 29, 2015

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October 29, 2015—Although the United States leads the world in technology innovation, it may fall behind if the government does not address emerging gaps in innovation policy and invest more in scientific research, argues a new progress report and scorecard from the Council on Foreign Relations’ (CFR) Renewing America initiative. The report is authored by Renewing America Associate Director Rebecca Strauss and CFR Bernard L. Schwartz Senior Fellow and Renewing America Director Edward Alden.

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At 2.8 percent of gross domestic product, the United States as a whole spends more on research and development (R&D) than other countries, but major Asian economies—including Korea, Taiwan, and Japan—have ramped up R&D spending, and are graduating more scientists and engineers than ever before. According to the report, by about 2020, China is projected to surpass the United States as the world’s largest R&D spender.

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Transforming an idea into an invention often takes years of scientific research, but businesses—currently accounting for two-thirds of R&D funding—have generally favored projects with shorter time-horizons and greater profitability over long-term research. At the same time, public universities, which conduct a majority of the country’s scientific research, have struggled under unprecedented financial pressure. Without the incentives or resources to carry out high-risk but potentially high-impact research, scientists and academics are not as likely to produce transformative discoveries.

 

“The challenge is to position policy so that business investments in innovation are enhanced rather than impeded or replaced,” write Strauss and Alden. “Government policy should find the sweet spot by funding research and innovation that is valuable to society but that the private sector would not undertake on its own.” 

Other innovation challenges the report identifies include the United States’ outdated and one-size-fits-all patent system, which gives rise to costly patent litigation, and a restrictive immigration system that makes it difficult for employers to hire the best talent from abroad. 

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Strauss and Alden conclude that “where the United States is weakest today—with businesses and universities stepping back from risky but essential scientific research—is also where the government can play the biggest role in ensuring the United States remains dominant for decades to come.” 

Read the Renewing America report and scorecard at www.cfr.org/KeepingtheEdge. Read more on U.S. innovation policy in Quartz.

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This is the eighth progress report and scorecard from CFR’s Renewing America initiative. Previous reports and scorecards have evaluated worker retraining policyU.S. debttransportation infrastructurefederal education policytradecorporate tax, and federal regulation policy.

CFR’s Renewing America initiative generates innovative policy recommendations on revitalizing the U.S. economy and replenishing the sources of American power abroad. Scorecards provide analysis and infographics assessing policy developments and U.S. performance in such areas as infrastructure, education, international trade, and government deficits. The initiative is supported in part by a generous grant from the Bernard and Irene Schwartz Foundation.

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