Rising Above the Gathering Storm Energizing and Employing America for a Brighter Economic Future (2007) / Chapter Skim
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Ensuring That the United States Has the Best Environment for Innovation
Ensuring That the United States Has the Best Environment for Innovation
Pages 455-472
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From page 455... ...
Statements in this paper should not be seen as the conclusions of the National Academies or the committee. 1American Electronics Association.
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can mobilize resources and the national imagination in pursuit of important innovation-related goals. How can the United States sustain and improve the environment for innovation even in a future where its relative share of global S&E inputs to the innovation process (such as R&D spending, S&E personnel, and the quantity and quality of scientific literature)
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Human Capital • Create incentives for investments by employers and employees in lifelong learning, including the creation of tax-protected accounts. • Restructure and expand worker-assistance programs like the Trade Adjustment Assistance program so that they are more flexible and cover workers displaced by reasons other than trade.
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Other economists have focused on a more qualitative study of the institutions and practices underlying innovation in individual industries and entire economies. The effort to understand "national innovations systems" has been one focus of recent studies.4 Others have examined the performance of particular industries.5 The Sloan Foundation has given understanding innovation a high priority in its funding.6 2Wm.
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since the early 1990s has been similar to what it was before.7 Yet the Japanese economy's ability to reap the rewards of innovation in the form of higher productivity and incomes was much higher in the earlier period. This can be explained partly by the dual nature of the Japanese economy, where world-class manufacturing industries serving a global market exist side by side with inefficient industries, such as construction.8 Economic mismanagement and a lack of flexibility in factor markets (labor and capital)
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McKinsey and Company's international studies on sector productivity during the 1990s showed that competitive markets were the key factor separating successes and failures.13 A wide variety of policies and practices influence the market, regulatory, and legal environment for innovation. These include financial regulations, 12T.
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Already China and India have learned from the successful use of stock options in Silicon Valley and are using it to attract and retain businesses and employees." • "The Federal government, through the Internal Revenue Service or Treasury Department, should establish clear guidelines in the Internal Revenue Code on the acceptability of investment of foundation assets in startup ventures."16 14Council on Competitiveness, 2004, p.
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"Broadcast to Broadband: Completing the Digital Television Transition Can Jumpstart Affordable Wireless Broadband." US Senate Testimony, July 12, 2005. • "The Federal government should encourage best practices and processes for standards bodies to align incentives for collaborative standard setting, and to encourage broad participation."17 • Congress should "use the DTV transition to encourage both licensed and unlicensed wireless broadband networks as competitive alternatives to wireline cable and DSL offerings."18 • "Provide industry the incentives to promote broadband and cellular penetration.
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As a result, the United States risks losing momentum in further opening global markets to US products and services."21 INTELLECTUAL PROPERTY With the rise of knowledge-based industries and a number of legislative, judicial, and administrative actions, intellectual-property protection in the United States has been significantly strengthened over the last 25 years.22 20R. Samuelson.
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Second Annual BSA and IDC Global Software Piracy Study. Washington, DC: Business Software Alliance.
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The time, cost, and other characteristics of this proceeding should make it an attractive alternative to litigation to resolve patent validity questions both for private disputants and for federal district courts. The courts could more productively focus their attention on patent infringement issues if they were able to refer validity questions to an Open Review proceeding."25 • "Leverage the patent database as an innovation tool.
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As part of the discussion of fundamental reforms of the tax code to promote investment and manufacturing in the US, the Congress should consider allowing companies to expense high technology equipment."29 • "Use the required repeal of the Foreign Sales Corporation exemption to fund a revenue-neutral tax credit for investment in informationprocessing equipment, software, and industrial equipment. In response to WTO rulings, Congress passed a reduction of the corporate tax rate, which really does little to encourage companies to be more competitive and innovative.
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Several recent reports have suggested ways to encourage skilled foreigners to continue immigrating. US openness to people and ideas from around the world is a longstanding strength of the American environment for innovation.32 In particular, immigrant scientist-engineer-entrepreneurs from Alexander Graham Bell and Andrew Carnegie to Andrew Grove have played key roles in the creation of leading US companies and entire industries.
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Furthermore, society would benefit from the continuous education of workers, which also increases productivity and decreases downtime between jobs."33 • Create lifelong learning accounts for employees that allow taxexempt contributions by workers and tax credits for employer contributions.34 • "Reform and rename the Trade Adjustment Assistance Program to cover workers displaced for reasons other than trade, including service sector workers."35 • "Offer more flexibility and focus under federal-state employment and training programs. States and the federal government should have more discretion to devote employment and training resources toward high-performance programs, high-growth skills and skills in demand by local firms."36 33American Electronics Association, 2005, p.
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The Alternative Trade Adjustment for Older Workers Program should be expanded to include younger workers and should not be linked exclusively to trade dislocation."37 • "Re-institute H1-B training grants to ensure that Americans are trained in the skills and fields for which companies now bring in foreign nationals."38 • "Establish an expedited immigration process, including automatic work permits and residency status for foreign students who: a) hold graduate degrees in S&E from American universities, b)
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These plans are popular with many employees and have significant advantages over many defined-contribution plans.43 • Have the states and the federal government encourage the widespread availability of Health Savings Accounts, including affordable options for low-income workers, as a health-insurance option that provides portability for employees.44 • "States and the federal government should define a role for government re-insurance of higher-cost healthcare expenses, so as to reduce the cost of employer-provided coverage and reduce the cost of healthcare to employees."45 • "Government procurement rules should favor work done in the United States and should restrict the offshoring of work in any instance where there is not a clear long-term economic benefit to the nation or where the work supports technologies that are critical to our national economic or military security."46 40American Electronics Association, 2005, p.
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to conglomerate in specific regions has been a subject of economic inquiry for some time.48 The Council on Competitiveness sponsored a multiyear initiative to study the phenomenon in the US context.49 One recent analysis postulates that regions need to draw a "creative class" human-resource base to compete effectively in knowledge-intensive industries.50 Although many of the policy levers to promote regional innovation are in the hands of state and local governments, the federal government could play a larger role through such actions as the following: • "The federal government should create at least ten Innovation Hot Spots over the next five years. State and local economic development entities and educational institutions should raise matching funds and develop proposals to operate these pilot national innovation centers."51 • "Innovation Partnerships need to be created to bridge the traditional gap that has existed between the long-term discovery process and commercialization.
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Yet no single institution in government or the private sector has the horizontal responsibility for strengthening the innovation ecosystem at the national level -- it is and always will be a shared responsibility. The United States should establish an explicit national innovation strategy and agenda, including an aggressive public policy strategy that energizes the environment for national innovation."54 • "Establish a focal point within the Executive Office of the President to frame, assess and coordinate strategically the future direction of the nation's innovation policies.
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