Breakthrough Institute's Program on Innovation and the Economy is dedicated to crafting innovation-centered policies to accelerate economic growth and secure long-term, shared prosperity. Breakthrough Institute believes that the only way to create a prosperous and inclusive economy is through sustained economic growth driven by continuous innovation.
Breakthrough's economic research explores the sources of technological innovation, its impact on economic growth, and how innovation can be harnessed to create new industries and jobs in the United States. Breakthrough's research suggests that proactive public policies are required to maintain US competitiveness in key strategic industries and tackle key economic challenges like the nations mounting investment, trade, and budget deficits.
Watch Devon Swezey introduce Breakthrough Institute's efforts to rethink the role of advanced manufacturing in the American economy...
The Government's Key Role in Innovation
When most Americans think of technological innovation, they think of Apple pioneering miraculous technologies like the iPhone and iPad. They think of Amgen creating "blockbuster" drugs that have saved the lives of countless Americans stricken with cancer or other diseases, or they think of the personal computing and information technology revolutions that have transformed the way we work, live, and play.
But most Americans remain unaware of the large and decisive role that the federal government played in creating these and countless other technological innovations throughout history. In a widely cited report, "Where Good Technologies Come From," the Breakthrough Institute documents the long and successful history of federal investment in technology—investment that led to the creation of railroads, hybrid seeds, aviation, solar, wind and nuclear energy technologies, microchips, computers, the Internet, GPS, biotechnology, and many more.
Even the iPhone, a national symbol of private sector ingenuity and entrepreneurship, would not have been possible without federal investment. From the microprocessor at its core to the GPS that ensures that you're never lost and the multi-touch display that makes using the device so intuitive, practically all of the key platform technologies the iPhone built upon were developed in partnership with the government, through taxpayer funding for communications and information technologies.
Breakthrough's Program on Innovation and the Economy works to uncover the often hidden role of government in funding and enabling technology innovation and explores the key public-private partnerships that have delivered generations of economic prosperity.
The entry of two billion workers into the global economy has eroded American competitiveness in traditional, labor-intensive manufacturing sectors that have served as a backbone of middle class families for years. This has led to the manufacturing sector's relative decline as a percentage of both employment and GDP and has spurred a debate over the fate and importance of American manufacturing. One side argues that we should try to preserve traditional US manufacturing that offered high-paying middle class jobs in the past. The other side is content to see manufacturing decline in the United States and argues that the economy is better off as a result.
The truth is manufacturing is in fact critical to the long-term prosperity of the US economy, but not simply for the working-class jobs it creates. Advanced manufacturing--which is characterized by the rapid transfer of science and technology into manufacturing processes and products--is critical because it is a key source of innovation, productivity and growth, is central to reducing and eventually closing the nation's trade deficit, and has large multiplier effects, generating output and employment throughout the economy. Indeed, losing advanced manufacturing capabilities in one industry can lead a nation to be locked-out of future technologies and growth industries that spring from or depend on it.
Breakthrough's Program on Innovation and the Economy highlights the importance of advanced manufacturing to the American economy and crafts sensible and effective policies to ensure that America's advanced manufacturers remain competitive in new technology industries that will determine future global economic leadership.
Policymakers are consumed by a debate over the nation's large budget deficit, but the truth is that America actually faces three deficits, each of which must be addressed to ensure future economic prosperity.
Apart from the budget deficit, America faces a large and persistent trade deficit, which is a drag on economic growth and job creation. America even records a growing trade deficit in advanced technology products, typically assumed to be America's "comparative advantage." America also faces a growing investment deficit, which is the shortfall in investments in scientific research, infrastructure, and new technologies that are needed to just to maintain our current standard of living.
The predominant budget strategy in Washington is to pursue "across-the-board" spending cuts to help close the budget deficit. Yet such a strategy, which would cut key public investments that are vital to economic growth, would simply transfer financial debt to investment or trade debt, and may even increase the budget deficit through lower economic growth in the future.
The only way to tackle all three of America's deficits simultaneously is to increase targeted investments that spur economic growth. This means preserving or strengthening programs that spur innovation, increase productivity, and enhance economic competitiveness.
Breakthrough's Program on Innovation and the Economy aims to help policymakers distinguish consumptive government spending from growth-enhancing public investments that are central to both economic prosperity and fiscal balance.
Securing American Economic Competitiveness in the 21st Century
America faces unprecedented competitive challenges from rising powers like China, India and Brazil--what Fareed Zakaria has termed "the rise of the rest." The entry of billions of new workers into the global economy, facilitated by ever-improving information and communication technologies and the globalization of corporate supply chains, has led to severe disruptions for American workers and industries and challenges to America's traditional leadership in new technology industries.
Restoring American competitiveness will require a new conversation about the role of government in promoting innovation and sustaining industrial ecosystems. Indeed, many countries around the world now leverage strategic government investments and incentives to move into strategic advanced technology industries. Without a national commitment and strategy to develop its own advanced industries, America may find itself unable to keep up with the competition.
Breakthrough Institute's Program on Innovation and the Economy is committed to creating and promoting innovative policies that help American business and entrepreneurs remain at the cutting edge and compete in global markets.
Devon Swezey Project Director, Program on Innovation and the Economy
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Jesse Jenkins Director of Energy and Climate Policy (Affiliated staff)
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Devon Swezey
Jesse Jenkins
Taking on the Three Deficits: An Investment Guide to American Renewal
Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy
State of Innovation: The US Government's Role in Technology Development
Where Good Technologies Come From: Case Studies in American Innovation
Strengthening Clean Energy Competitiveness