supercomputers. It can either provide incentives to the nongovernment sector or it can conduct the research itself.

Government Incentives

Government policy can provide broad encouragement to private industry to develop and commercialize supercomputing technology and affect the broader information technology marketplace. The government can influence the private sector by providing incentives for innovation and development investments, including grants or other subsidies, tax incentives, and intellectual property protection.

The government may subsidize private R&D activities. For example, a pervasive form of federal support for scientific and engineering research is grant and research contract programs, ranging from the peer-reviewed grant systems maintained by the National Science Foundation and other institutions to research contracts awarded by mission agencies such as DARPA. Such programs are particularly effective when the government would like to encourage basic research in specific areas but has limited information or knowledge about the precise nature of the outputs from research in that area. For example, grants and subsidies to the supercomputer center at the University of Illinois during the early 1990s were the principal form of support underlying the development of the Mosaic browser technology, an enormously beneficial innovation whose precise form, features, or impact could not have been forecast prior to its invention.4

Alternatively, R&D tax credits can provide important incentives for innovative investment. R&D tax credit programs provide direct incentives to private firms at a relatively low administrative burden.5 How-

4  

A somewhat similar approach is for the government, a nonprofit organization, or even a private firm to offer a prize. This approach has been tried throughout history with mixed results. For example, in 1795, the French Directory offered a prize of 12,000 francs “to any Frenchman who could devise a method of ensuring fresh, wholesome food for his armies and navies.” The prize was awarded by Napoleon Bonaparte to Nicholas Appret, who in-vented a method for preservation by sealing foods in airtight bottles and immersing them in boiling water for varying periods, which led to modern-day canning. Sobel provides an extremely rich description of the deficiencies and politics of government-sponsored prizes in his history of a prize for longitude at sea (David Sobel, 1995, Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time, New York, N.Y.: Walker and Company). Recent examples of prizes range from the efforts by U.S. electrical companies to encourage research on a refrigerator that runs on 25 percent less electricity to the Ansari X Prize, which awarded $10 million to the first privately sponsored spacecraft to reach 100 km above Earth’s surface (www.xprize.org).

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The costs and delays in grant review are often cited as the reason private firms are un-willing to apply for government subsidy programs.



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