United States Ranks 10th in Net Impact on Global Innovation
The United States ranks 10th in how its domestic policies support worldwide innovation, according to an analysis released today by the Information Technology and Innovation Foundation (ITIF), a global technology policy think tank.
The findings come in a new report assessing 56 countries—which together comprise close to 90 percent of the world’s economy—on the extent to which, on a per-capita basis, their economic and trade policies contribute to and detract from innovation globally.
“Robust innovation is essential for economic growth and progress,” said co-author Stephen Ezell, ITIF’s vice president for global innovation. “As countries increasingly vie for leadership in the innovation economy, they can implement policies that try to benefit only themselves but harm the production of innovation in the rest of the world. Or they can implement win-win policies that bolster their own innovation capacity while also generating positive spillovers for the entire global economy. For innovation to flourish around the world, we need a system that is doing much more of the latter.”
While previous research has ranked countries based on innovation capabilities or outcomes, this report is the first to assess the impact of countries’ policies on the broader innovation system. The authors examined 14 factors that not only support innovation domestically but have positive spillover effects globally, such as supportive tax systems and investment in R&D and human capital, and another 13 factors that have negative spillover effects, such as forced localization and weak intellectual property protection.
The United States’ 10th-place overall ranking reflected a combination of policies that the report found to be 17th best in their positive contribution to the global innovation ecosystem and also the 6th least damaging. In other words, while the United States falls short of many other nations when it comes to making positive contributions to global innovation, it also does comparatively little to detract from global innovation.
The report also found a strong correlation between countries’ contributions to global innovation and their levels of domestic innovation success, meaning that doing well domestically on innovation policy can also mean doing well for the world.
“The United States does well in terms of not distorting global innovation,” said Robert D. Atkinson, ITIF’s president and a co-author of the report. “But because the federal government does not invest as much as many other nations in the building blocks of innovation, such as science, and because the U.S. tax code provides fewer incentives for innovation, the United States lags the leaders when it comes to positive contributions to global innovation on a per-capita basis.”
Among the ITIF report’s recommendations for the U.S.: reduce the effective corporate tax rate to 18.2 percent; increasing the R&D tax credit to 24 percent; increasing government funding of R&D by $68 billion annually; and increasing its number of college science, technology, engineering, and math graduates by 20 percent.
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