America has remained a dominant force in innovation since the last world war through its ongoing commitment to investing in research which is three times as much as any other OECD country. (Sirkin & Rose, 2017) While America still leads the world in research and development, China has surpassed the world with twice as much than the US in development research—which takes new ideas and transforms them into commercial products and new manufacturing processes. A study by the Boston Consulting Group says the US can reverse the trend by incorporating development and disseminating applications to local manufacturers as a matter of national industrial policy and through collaboration with universities, private business, and research consortiums. (Sirkin & Rose, 2017) Economist suggests that public policy that supports domestic industries like manufacturing are paramount to ongoing innovation. According to Price Water Coopers, a strong manufacturing sector not only improves the balance sheet but increases productivity in mining, construction, and agriculture. (Misthal & Eddy, 2013) The effects of innovation in manufacturing are responsible for improving the quality of life through increased efficiencies in agricultural equipment, clean energy, and automation of factories which drive down the price of consumer goods.
“The most innovative manufacturing companies managed a 38% increase in revenues over the past three years, which is four times the rate of growth of the least innovative companies in the sector”. (Misthal & Eddy, 2013) As an advisor to the US government, sound policymaking that is conducive of innovation within these sectors can be spearheaded with robust tax incentives like accelerated depreciation which encourage organizations to invest in expensive manufacturing equipment and workforce development tax credits. These accounting measures can reward corporations for domestic innovation which reinvest in American manufacturing.A strong infusion of federal money, tax incentives and a culture of innovation is not enough to revive the manufacturing industry and commercial product sector. There is a disconnect within academia which receives significant funding from the US government, 65 billion, to conduct research by over 450,000 graduate students which could be translated into commercial products. Increased measures for funding should require more transparency and increased cooperation within the private sector to maximize the current outlay on applied research. These findings could be made readily available to the private sector by establishing a centralized government database, of research aimed toward commercial innovation.
According to the BCG, accelerating product and process innovation in the US can increase manufacturing output by more than 5% or 100 billion and will add 700,000 factory jobs with another 1.9 million in other sectors.DIGITAL ECONOMY– According to the Atlantic, “Nations should not only expand public investments in IT that envelopes just healthcare, energy, transportation, government, and education but to pave the right regulatory framework to spur, not hinder digital investments.” From a policy perspective, we would recommend the United States position its regulatory and procurement policy to intentionally encourage a digital transformation.
This could be achieved through establishing a centralized repository geared toward commercialization of government research at universities.