Innovation Policy and the Economy: Some New Research

We’ve seen a recent flurry of interesting (to me at least) academic writing on innovation policy, much of which is linked to the NBER’s annual Innovation Policy and the Economy conference..  Here’s a quick snapshot and some links to some articles that might be worth a scan.

The Spatial Mismatch between Innovation and Joblessness (Glaeser/Hausman):  Ed Glaeser is considered one of the leading “gurus” on regional economics and innovation. Here, he and his colleague, Naomi Hausman address one of the key issues facing the US economy today:  why are innovative activities concentrated in expensive, crowded cities and are not being dispersed to less expensive and job and innovation hungry areas across the US?  The essay reviews various causal factors for this “spatial mismatch,” and addresses potential policy solutions, such as creation of new “entrepreneur friendly zones,” providing more education support to residents in distressed areas, targeting grants and research funds to these regions, and so on.  Ultimately, the authors are somewhat skeptical about any of these potential “solutions,” but they recognize that the spatial mismatch problem cannot be ignored.

The Changing Structure of American Innovation:  Some Cautionary Remarks for Economic Growth (Arora, Belenzon, Pattaconi and Suh):  This paper describes a critical divide in American innovation.  For the past thirty years, corporations have dropped their research arms to focus primarily on “development” as opposed to pure research.  Universities have stepped in to fill the research void, but this division does not bode well for economic growth.   Today, small start-ups and university tech transfer offices fill the gap that was previously addressed by deep pocketed corporate research arms that tackled major technological challenges.   This new innovation division of labor does a poorer job of turning good ideas into novel products and processes.

The Gift of Global Talent (Kerr):  This article summarizes William Kerr’s recent book of the same name.  He makes a strong case that America’s past innovation success is largely due to our role as the prime landing spot for global talent.  As immigration rules tighten, this innovation edge is being lost.  Kerr makes the case for an expanded commitment to attract high-skilled immigrants to the US; their contributions will be critical to fueling future economic growth and in addressing widely expected shortages in coming years.