imperils both our long-term prosperity and, very directly, our national security. Although the U.S. must exercise fiscal prudence as it wrestles with its debt and deficits, the Committee believes that the investments advocated below will repay the expenditures in the aggregate, paving the way for the economic growth necessary to help solve our fiscal problems in the long-term.1
While it is neither desirable nor possible to freeze the global allocation of production, it is essential that the U.S. recognizes that other countries are pursuing vigorous policies and programs, at increasing funding levels, to nurture and grow the industries of the future as well as revitalize those of today. Some of these policies are mercantilist in nature and include measures that distort the international location of productive activity through national regulation of investment and trade, forced technology transfer, and toleration if not promotion of intellectual property violations that undercut the basis for a rules-based trading system.
Success in promoting innovation – from invention through commercialization – is necessary not only for reasons of national security but to preserve and enhance the economic well-being of the American people. It is the key to maintaining the promise that the opportunities for each future generation will be better than those enjoyed by the preceding one.
This chapter presents the Committee findings. There are seven major findings, which are further elaborated in sub-findings. The organization of these findings and sub-findings is presented in an outline, below, as a guide to the reader.
1 Although the Committee did not do a cost-benefit analysis of the policies and investments recommended in this report, the economics literature strongly suggests that investments in research, education, and infrastructure contribute to U.S. economic growth. See for example, Robert M. Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, 1956, 70(1):65-94. Robert M. Solow, “Technical Change and the Aggregate Production Function,” The Review of Economics and Statistics, 1957, 39 (3): 312-320. Richard Nelson, Technology, Institutions and Economic Growth, Cambridge MA: Harvard University Press, 2005. Dale W. Jorgenson et al., Productivity: Information Technology and the American Growth Resurgence, Cambridge MA: MIT Press, 2005.