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Building Out and Filling in President Obama’s Strategy for American Innovation

Investments in Innovation Are One Thing We Can’t Afford to Cut

Obama in goggles SOURCE: AP Photo The president views an advanced lighting system at a facility in Green Bay, Wisconsin. Since his State of the Union Address the president has set a new path for American innovation policy, focusing his rhetoric on the link between innovation and economic growth.

Two weeks ago, President Barack Obama framed his State of the Union address around the need to build a competitive economy and declared “The first step in winning the future is encouraging American innovation.” Then, on the eve of critical federal budget debates in Congress, the White House late last week put substantial flesh on the bones of that speech with the release of “A Strategy for American Innovation: Securing Our Economic Growth and Prosperity.”

The White House report outlines a series of sustained efforts to stimulate American innovation—steps that are directly at odds with deficit-cutting proposals aired this week by the Republican leadership in the House of Representatives. In light of persistent unemployment and in response to other nations’ highly focused economic investments, Congress and the Obama administration need to agree on a coordinated set of innovation policies that ensure the nation’s long-term economic competitiveness. The president’s Strategy for American Innovation provides the roadmap—it should be built-out, filled-in, and implemented with abandon.

So let’s explore this strategy document. The administration’s most comprehensive, detailed innovation policy effort to date articulates a coherent narrative about our economic prosperity’s dependence on innovation, private firms as the engines of innovation, and the essential role of the federal government in facilitating firms’ innovative capacities. It then lays out the strategy’s elements in a logical framework with a three-part sequence:

  • Investing in innovation building blocks such as education, research, physical infrastructure, advanced information technology
  • Promoting market-based innovation through the R&D tax credit, intellectual property policy, entrepreneurship, and open, competitive markets
  • Focusing on national priorities, including clean energy, biotech, nanotech, advanced manufacturing, space, health care, and education technologies

Essentially, the document provides the first detailed view of the administration’s effort to frame the president’s “winning-the-future” argument through competitiveness and innovation. More inclusive and integrated than its September 2009 predecessor, the strategy provides a broad, logical foundation for action.

At the same time, it is a work in progress. Its framework would benefit from being built out and filled in to more fully justify and capture current and desirable administration activities that support innovation. To that end, here are a few suggestions.

Expand the discussion of the effort to create a world-class workforce with 21st century skills

The president’s strategy should

  • Indicate that desirable postsecondary educational attainment is not limited to formal degrees but also includes community college certificates and industry certifications.
  • Address the fact that to sustain a world-class workforce, adult workers will constantly need to return for skills upgrading due to occupational and industrial change.
  • Add as a strategic element implementation of a national labor market statistics system that allows students, workers, and postsecondary institutions to make better education and training decisions. The administration’s current and proposed investments in the Bureau of Labor Statistics, the National Center for Education Statistics, the Employment and Training Administration, and the Census Bureau will help ensure that students and laid-off workers choose education and training programs that lead to decent jobs, and that educators can match program offerings to regional and national demand.

Expand the list of activities that support U.S. leadership in fundamental research

The president’s strategy should include mention of the Technology Innovation Program of the Commerce Department’s National Institute of Standards and Technology. TIP supports innovation through investments in “high-risk, high-reward research in areas of critical national need.” As President Obama noted in his recent remarks to the U.S. Chamber of Commerce, innovation in manufacturing is a critical component of competitiveness.

Expand the list of efforts that promote high-growth and innovation-based entrepreneurship

The strategy should include discussion of NIST’s Manufacturing Extension Partnership. MEP links existing small manufacturers to technical advisors who facilitate the development, commercialization, and adoption of product and process innovations.

Expand the list of activities that promote innovative, open, and competitive markets

The strategy should include administration efforts to improve federal international trade and investment statistics. Better data would allow businesses and state and local governments to make smarter investment decisions in support of innovation. For instance, the International Trade Administration is examining ways to better measure services trade data. For a mere $3 million the Bureau of Economic Analysis wishes to restore and enhance data on over $1.4 trillion in foreign direct investment in the United States by state, industry, and type of investment.

Recognize the importance of building the capacity for intelligent government

The strategy should include a fourth category in its framework, “build the capacity for intelligent government.” To more effectively develop strategy and policies that facilitate market-based innovation over the coming years, the federal government requires access to substantially improved information about the innovation trends and dynamics over time and in comparison to other nations.

Right now, the federal government cannot determine the efficacy of most of its innovation policy spending because there are few tools that enable it to judge how well or ill these investments led to new technology products and services, company creation, and job growth. Addressing this information gap is crucial for policy makers to gauge how the private sector lacks sufficient incentives to invest in our nation’s future competitiveness and how federal government might reshape those incentives.

Categories of needed information include data, indicators, research, and program evaluation.

  • Mention important innovation data-related efforts underway, including recently revised R&D and innovation surveys produced by the National Science Foundation and BEA’s new Innovation Account, aimed at understanding the presence and contributions of innovation to the U.S. economy
  • Note BEA and BLS proposals to improve the value and reliability core economic statistics—such as new quarterly Gross Domestic Product by industry and more accurate price indices—that are valuable in the design of effective innovation policies
  • Identify current efforts to measure the outcomes of federal innovation-related programs, such as MEP and NSF’s STAR METRICS, and the need for similar efforts in all federal innovation-related programs
  • Call for more social science research and program evaluations to better understand the market and program factors that support and impede innovation

Map the link between innovation and competitiveness

This new category of building the capacity for intelligent government also should discuss the need for periodic comprehensive assessments of U.S. competitiveness and innovation capacity and the translation of findings into an updated competitiveness and innovation strategy. The first round of such an effort is mandated by the recently passed America COMPETES Act of 2010. The current strategy document, then, represents a credible down payment on a more analytical, detailed roadmap for action.

The White House has put forth a much needed story about the economic importance of innovation and has outlined concrete approaches for encouraging it. As strategy development will be an iterative process (this Federal Register notice makes clear), the above suggestions for building out and filling in are offered for consideration in the next round.

Andrew Reamer is a research professor at the George Washington Institute of Public Policy, George Washington University.

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