What if we took the world's best ideas for helping young companies and stitched them together to create a kind of Innovation Super-Nation? Maybe it would look like this...
"The first step in winning the future is encouraging American innovation," President Obama declared in his 2011 State of the Union address. He's right. But what's the pathway to "encouraging American innovation?"
Innovation is a central element in promoting national economic performance, especially for the United States, which is at the technological frontier and can't effectively adopt technology invented elsewhere to achieve growth. As Paul Romer proposed in his New Growth Theory, investing in innovation is a crucial endogenous factor - and therefore one firmly in the grasp of policymakers - that creates economic growth. Future growth depends upon our ability to make new things. Nations with the ability to innovate are better poised to nurture entrepreneurship, attract early-stage risk capital and sustain a diversified ecosystem that bolsters long-term economic growth.
Some of the answers to our innovation challenge will come from within the U.S. We remain in many ways the most dynamic country in the world, with more top universities and multinational corporations than any other nation. But it's foolish to imagine that the best innovation ideas in the world already have a home in policies coming from Washington, D.C. Here is a world-wide tour of the best ideas that our government should import to jump-start innovation.
These policies encapsulate human capital, both indigenous and from immigration. Some are aimed at enhancing research and development (R&D), such as direct government funding of R&D, R&D tax credits and corporate tax rates. Others nurture innovative small and medium firms and improve access to risk capital. I've also considered policies encouraging technology transfer and commercialization from universities and other research centers and those relating to the overall business environment.