Senior Vice President, C_TEC, U.S. Chamber of Commerce
April 18, 2022
The U.S. has long led the world in technological advancement. A close partnership between government, academia, and industry is the vibrant engine that has powered an innovation ecosystem that has secured America’s leadership role in setting rules and standards around the globe.
The Internet, for example, was developed from the technical foundation laid by the Advanced Research Projects Agency Network (ARPANET), which was established by the United States Department of Defense’s Advanced Research Projects Agency (ARPA). The Pfizer and Moderna vaccines are based on a new technology called mRNA that allows a person’s RNA to produce a vaccine, with key early contributions from researchers at the University of Pennsylvania.
Despite accomplishments like these, countries like China, Japan, the European Union, South Korea, and others are quickly closing in on the U.S.’s lead, spending record amounts on research and development (R&D) to bolster their innovative economies. America’s global competitors understand that winning the future means investing in science and technology.
In the U.S., government is no longer driving innovation priorities through R&D funding. Today, underpinned by a world-leading intellectual property system, many breakthroughs are instead driven by the private sector. And although the private sector’s share of R&D spending has nearly doubled since 1965, it is not a substitute for a robust basic and fundamental research ecosystem in the United States to effectively compete on the world stage. Congress must pass a balanced and bipartisan innovation and competition package this year to advance three imperatives.
Here are the three areas in which the country must invest meaningfully and immediately to keep America’s innovative edge:
- Research and development: Since 2000, U.S. R&D spending has grown by 4.3% annually, while Chinese spending has grown by 17% annually. China is working to outspend us on R&D, endeavoring to build self-sufficiency in foundational technologies and achieve absolute dominance in emerging technologies and industries of the future. To maintain and strengthen the engine of American innovation, the U.S. must invest in our own R&D by enacting legislation that supports and incentivizes our national research ecosystem. This includes increasing federal funding in R&D, providing R&D tax credits and expense deductions, and enabling private sector investments.
- Workforce of the future: There are 4.75 million more open jobs today than there are people looking for work, and as a result of COVID and other policy changes, there are one million fewer college educated immigrants in the United States today. To address our current critical workforce needs and ensure we have a high-skilled workforce in place for the digital economy, we must prioritize immigration reform and STEM education to increase the talent pipeline here at home. We must double the number of people legally immigrating to the U.S., increase access to STEM education to underrepresented groups, and decentralize tech by building new innovation hubs in cities across America.
- Domestic semiconductor production: To combat the massive global semiconductor shortage and build resilience into our supply chains, the U.S. needs to invest dollars and put the right tax incentives in place to produce semiconductors domestically. The U.S. share of semiconductor manufacturing capacity dropped from 37% in 1990 to 12% today. Moreover, 40 years ago, federal investment in semiconductor R&D was more than double that of private investment, but today, the private sector is investing 20-times more. Funding the CHIPS Act is a critical step to developing a strong and resilient semiconductor ecosystem in the U.S.
America’s innovation ecosystem – a virtuous cycle of development resulting from a partnership between government, universities, and industry – enabled us to put a man on the moon, connect to the Internet, and tackle COVID-19 in record time. Innovation is the key to enabling the United States to emerge from the pandemic, spurring economic recovery, creating jobs, and continuing America’s global leadership. But if we don’t invest in developing and nurturing this ecosystem, we are at risk of allowing other countries to write the rules of the road and losing our grasp on the future.
To keep America’s innovative edge, Congress must act expeditiously to pass a bipartisan package to address the core issues of research and development and competition.
About the authors
Crenshaw is Vice President of the Chamber Technology Engagement Center (C_TEC).