The Innovation Landscape and Government’s Future Role

The United States is an innovative nation. The assembly line, air conditioning, personal computers, mobile phones, and microwave ovens—even masking tape and clothespins—were all birthed by American ingenuity. These innovations, and hundreds more, play a significant role in sustaining our nation’s economy, security, and way of life.

Innovation "is the foundation of American economic growth and national competitiveness." The United States has led the world in innovation since World War II; however, our dominance is declining as other countries aggressively work to raise their standing through investments and pro-innovation policies. By many measures, the United States remains the top innovative country, but is no longer dominant. Individual countries, such as China and Japan, are now innovating at roughly the same order of magnitude and may be poised to pass the United States within a decade.

In addition to competition from abroad, the United States faces many internal barriers to innovation. For example, basic research and Science, Technology, Engineering, and Math (STEM) education, the foundational items that serve as the pipeline for future innovation, continue to lag behind policymakers’ targets. A review of triadic patent applications, an indicator of mid-term innovation opportunities, shows that the United States has already been passed by the European Union and Japan.

In the shorter-term, there are a number of opportunities—as well as coinciding citizen expectations—for applying recent innovations within the federal government. However, government adoption of these innovations is often delayed by administrative and regulatory processes. Laws, government regulation, and policy must keep up with technological advances if both public and private organizations are to gain the benefits these technologies promise. For example, advances in precision medicine could revolutionize the treatment of disease, but they may require changes in both patent law and the new drug approval process to make the pharma business model viable in the face of new technologies. Likewise, advances in identity technologies could be leveraged to allow more secure interaction with the government, but they may require new policy and regulation to enable their use.

One of the key roles for the next presidential administration should be developing and implementing a U.S. innovation strategy. While the "private sector is America’s innovation engine," the federal government plays an important role, both directly and indirectly, within the nation's innovation ecosystem. It can drive or leverage innovations to fulfill its mission and provide a foundation that makes future innovation possible.

This document discusses the importance of the government's role in sustaining U.S. innovation, in collaboration with academia and industry, focusing on a number of critical technologies and domains. Our goal for this report is to support private-public deliberations on priorities and policies for the future.