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RIO Country Report United States 2015

RIO R&I International Country Reports analyse and assess the research and innovation system, main challenges, framework conditions, regional R&I systems, and international co-operation, including with the European Commission's Joint Research Centre (DG JRC).

 
 

Chapters

1. Overview of the R&I system

The U.S. economy is the largest and among the most innovative in the world. The government invests massively in research—both basic and applied. The innovation system benefits from entrepreneurial universities that develop new ideas and have a culture that supports its exploitation by their faculty and students, who are in turn able to obtain early stage funding from a variety of sources in order to take these ideas to the market. The markets in turn are both competitive and largely open to the emergence of new, sometimes disruptive, technologies. The supportive policy framework, e.g. bankruptcy laws, and the willingness to accept new technologies, in addition to the presence of venture funding and experienced management sometimes enable these new firms to obtain significant global scale. The system is not without its challenges, nonetheless, the innovation system of the United States remains the most robust system in the world. Its strengths rely heavily on its university systems, multiple mission-oriented research agencies, deep financial markets, and positive framework conditions with regard to labor, bankruptcy, and tax laws. The strengths of its institutions, notably its innovation agencies and research universities, combined with the scope and scale of the technology investments, the size of the domestic market, and the impact of innovative procurement all give the United States unique advantages in fostering innovation. 

 

2. Public and private funding of R&I and expenditure

Government plays a key role in the U.S. science and technology enterprise. The most immediate rationale for government investment is the need to address government missions in agriculture, environment, energy, health, infrastructure, and of course, national security. But government investment is also driven by the societal benefits of R&D, which are normally considered greater than the private benefits from R&D investments. The last decades have also seen growing recognition of the importance of government investment in research projects that entail considerable risk, with uncertain prospects for success and unclear future utility. To undertake these promising but high risk endeavors often requires a longer term of commitment of resources (and infrastructure) than the private sector can normally make. The key development in the last decades is the change in shares of R&D expenditure between the public and private sector. As the federal share of R&D has declined, it has been more than offset by increased expenditures from industry as well as small additional contributions from universities, state governments, and foundations. Industry now counts for the great majority of American R&D, which has seen steady growth for decades. Interestingly, the character of expenditure has not changed substantially, even as government and industry funding shares have changed places.

 

3. Framework conditions for R&I

The United States’ innovation ecosystem greatly benefits from a policy environment that facilitates openness to science and innovation and encourages the commercialization of new ideas. For starters, there is a generally high level of public trust in science and scientific institutions. This translates to openness towards innovation, which in turn facilitates the entry and uptake of innovative new products. While the United States is correctly known for its broad reliance on private sector markets in generating competitive outcomes, the role of the government in driving innovation is less widely recognized. This is particularly true in the case of small business finance, where the government provides highly-competitive awards to innovative small companies in order to address societal and government needs. Some 6,500 companies receive awards annually and the current program is approximately $2.8 billion per year.

4. Smart specialisation approaches

Smart specialisation is not a term of art in current use in U.S. policy circles. However, the concepts underlying smart specialisation have been adopted on a de-facto basis in a number of U.S. regions. The development of high-tech clusters has often been organic to a considerable degree, although more recently (2008-16) both federal and state initiatives are now consciously seeking to drive development in promising technology areas that are anchored in regional assets. The federal government under the Obama Administration has launched a series of initiatives based on the concept of regional specialisation, often with a focus on new technologies. For example, the Department of Energy has launched a series of initiatives to support clusters in renewable energy. Another major effort is being led by the National Institute for Standards and Technology (NIST), which is overseeing the establishment of the National Network for Manufacturing Innovation (NNMI). These are geographically-distributed, thematic large-scale centers to facilitate prototyping, pilot production and scale-up support for innovative technologies. The federal system in the U.S. also permits considerable latitude for state-based initiatives, many of which involve substantial resources designed to develop innovation clusters through long-term investments in human capital, scientific infrastructure, and knowledge-based entrepreneurship. Many states are focused on harnessing emerging technologies, such as the successful New York Nanocluster in the Albany region.

5. Internationalisation of R&I

The U.S. continues to play a leading role in global science, research, and development. U.S. participation in cooperative programmes recognizes that modern research as an international enterprise. U.S. science and technology policy fosters cooperation on international research, especially global mega-projects, e.g. climate change. The US uses international science cooperation as a means of fostering good will, reinforcing political relationships, furthering democracy and civil society, and moving the frontiers of knowledge forward. From the U.S. perspective, cooperation with major research centres and national research programmes provides opportunities to benefit from shared facilities, expertise, and shared costs. Some forms of research, e.g. global warming necessitates offshore research and can often involve shared facilities or equipment, e.g. monitoring water temperature. Combining efforts in cooperative research offers significant benefits for all parties participating in global science while cooperative work on innovative products, such as electric cars, can help develop common standards and platform technologies.

Conclusions

The United States has a long and successful history of meeting new challenges and investing in new opportunities. A major challenge remains the unwarranted level of complacency, which acts as an impediment to needed investments in infrastructure, education, and research, as well as in the institutions and programmes needed to capitalize on them. Key challenges include the need to maintain and augment support for the university systems, expand both best practice and financial support in vocational education, increase and sustain support for manufacturing, and generate greater awareness of the nature of global innovation competition, which is increasing in scope and intensity. More broadly, the tradeoff between the focus on reducing government expenditure and debt versus investments in future knowledge and wealth generating capability remains to be resolved, even as there is growing recognition of the need to address global challenges in health, energy, the environment, and security. Perhaps the major challenge in the U.S. is to restore a sense of common purpose and constructive compromise in order to make the government a more effective tool in the service of current and future generations.  

Geo coverage
Report year
2015
Official publication date
Monday, 31 October, 2016
Country Report file
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