America's Innovation and Incumbency Problem: Economic Growth Under Pressure
America's Innovation Challenge
How do you boost economic growth? This question deeply troubles the new British government and its American counterparts. Economists traditionally argue that growth improves with increased productivity, usually spurred by R&D infusion. Politicians love to advocate for more innovation initiatives.
R&D Trends in America
- U.S. R&D rose from 2.2% of GDP in the 1980s to 3.4% in 2021.
- Private sector involvement in R&D has doubled.
- However, productivity growth rates have declined.
The Paradox of Stagnation
Michael Peters reveals a troubling trend, with labor productivity dropping from an average of 2.3% (1947-2005) to just 1.3% (2005-2018). This decline has implications, costing the U.S. an estimated $11 trillion in potential output.
Innovation Allocation Issues
- R&D funds often entrench the dominance of big corporations.
- The concentration of inventors employed by large companies increased from 48% in 2000 to 58% in 2015.
- Increased financial support for R&D hasn’t necessarily led to enhanced innovation.
Future Implications
As sentiment surrounding corporate concentration continues, the need for a discussion about the R&D ecosystem, antitrust enforcement, and corporate political influence grows urgent. Ignoring these crucial policy issues risks stalling America's innovation potential.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.