The Importance Of Innovation And The Means Of Fostering It

This article explains the importance of innovation in the global economy. Investments in human capital and R&D are the inputs to the output that we call innovation. The article also compares the US with the rest of the world in spending on R&D and investments in human capital. The federal government invests huge sums in defense. Some of this investment finds its way into commercial applications but most does not. The bulk of business R&D is done by multinational corporations. Some of that investment is migrating to emerging markets. The emerging market countries are also investing heavily in human capital development. They turn out a much larger percent of engineers compared to the US. Perhaps that is why immigration policy is mentioned as an important issue in the article. The US has become more dependent on importing human capital because we do not produce the technical talent that is demanded.

One of the problems raised in the article is that investments in human capital and R&D is growing at a slower rate in developed countries than in emerging market countries. It may be difficult for government to make the needed investments given the fiscal problems in many developed countries.

This article provides a good introduction the subsequent post which is about tax policy. We need to set priorities on where government spends its tax revenues as well as how they are raised. These are the kind of debates that we should be having leading up to the 2012 elections. They may be more important than debating our policies on the use of contraceptives and whether the display of french kissing on TV is pornography. The people who are concerned with those topics will not lead us into the future that most of us want. It will be a future that transforms our cultural and economic richness into what we find in the most backward parts of our country.