Investment in Innovation Needed

There is no denying the U.S. is in an economic crisis. It seems every day brings more news of major companies laying off employees. The Chinese word for crisis is made up of the characters for danger and opportunity. Maybe just maybe innovation is the opportunity that will not only lead the U.S. out of this crisis, but lay the foundation for a stronger economy.

The website, InnovationEconomics.org defines innovation as "the development and adoption of new products and services, more efficient production process­es, and new business models," and calls for innovation to be put "at the center of our nation's economic policies."

A report titled An Innovation Economics Agenda for the Next Administration states that the Congress and President need to "take concrete steps to ensure that the economy is on a robust growth path over the next decade." The report lists eight steps that should be taken:

1. Significantly Expand the Federal Research and Development Tax Credit
2. Create a National Innovation Foundation
3. Allow Foreign Students Receiving a graduate Degree to Receive a Green card
4. Reform the Patent System to Drive Innovation
5. Let companies expense new investments in information technology in the first year
6. Establish a federal chief information officer
7. Implement a national nroadband strategy
8. Implement an Innovation-based national trade policy

A recent BusinessWeek article proclaims that there is a "daring new direction in economic strategy sweeping U.S. states." States have been investing in innovative projects, blurring the line between public and private. The areas states have invested in include renewable energy, which is needed to stop climate change.

A report by the National Governors Association and the Pew Center on the States lists steps the states can take:

1. Develop a statewide research and innovation
strategy that not only puts in place all the
components for innovation, but aligns them
in ways that provide advantages to in-state
companies;
2. Make investments to gain talent, build topnotch
research enterprises and compete for
federal dollars in those focused areas where
the state can be world-class;
3. Encourage, even mandate, collaboration
among universities, the private sector and
other institutions;
4. Put world-class professionals, not political
pals, in key positions;
5. Create an organization and consistent
funding source that facilitates a continuity
in R&D partnering and spending; and
6. Hold the recipients of public investments
accountable for delivering on promised
benefits.

The current economic crisis has hit the states hard and most of them have huge budget deficits. Clearly, federal investment is needed. The stimulus bill passed by the House this week includes funds for research and development.