Working Paper: NBER ID: w25893
Authors: Ashish Arora; Sharon Belenzon; Andrea Patacconi; Jungkyu Suh
Abstract: A defiining feature of modern economic growth is the systematic application of science to advance technology. However, despite sustained progress in scientific knowledge, recent productivity growth in the U.S. has been disappointing. We review major changes in the American innovation ecosystem over the past century. The past three decades have been marked by a growing division of labor between universities focusing on research and large corporations focusing on development. Knowledge produced by universities is not often in a form that can be readily digested and turned into new goods and services. Small firms and university technology transfer offices cannot fully substitute for corporate research, which had integrated multiple disciplines at the scale required to solve significant technical problems. Therefore, whereas the division of innovative labor may have raised the volume of science by universities, it has also slowed, at least for a period of time, the transformation of that knowledge into novel products and processes.
Keywords: Innovation; Economic Growth; Research and Development
JEL Codes: O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| division of innovative labor (J59) | decrease in effectiveness of translating scientific knowledge into new products (O36) |
| decline in corporate research (O32) | decrease in effectiveness of translating scientific knowledge into new products (O36) |
| decline in corporate labs (G33) | decline in research productivity in corporate labs (O32) |
| decline in research productivity in corporate labs (O32) | slowdown in productivity growth (O49) |
| decline in corporate labs (G33) | difficulty in replacing unique capabilities (L15) |
| scientific knowledge remains relevant (D80) | mechanisms for transforming knowledge into commercial applications have become less effective (O36) |