Trump and Congress should ‘localize’ the impact of federal R&D

On Wednesday Dec. 14 President-elect Trump met with chief executive officers of leading tech companies to discuss how his administration can be supportive of America’s innovation economy. The meeting was a welcome first step to positioning the new administration as “pro-innovation,” but of course actions will speak louder than conversations. 

The federal government invests over $140 billion each year in research and development, and these investments are the feedstock of next-generation technologies that drive economic growth. Economist Fred Block finds, for example, that since the 1990s over two-thirds of the most influential technologies were supported by federal research funding. But though the support comes from Washington, the new products and services are developed outside the Beltway and across the country.

This spatial level of innovation includes not just hot spots like Silicon Valley; Austin, Texas; or Boston, but also scores of communities like Chattanooga, Tenn.; Denver; Minneapolis; Mobile, Ala.; and Pittsburgh, which are intensively developing their innovation ecosystems at the regional level. Indeed, innovation occurs in all of America’s 435 Congressional Districts.

This dispersion matters because regional technology clusters engender concentrated knowledge flows and spillovers, workers with specialized skills, and dense supply chains that improve firm productivity. Many R&D-intensive firms benefit from proximity to innovation resources such as universities and federal laboratories, and this closeness produces myriad “ecosystem” benefits.

Thus, if America’s innovation economy is to function maximally, Washington needs to promulgate smart policies and initiatives that effectively work in concert at the city, regional, state, and national levels.

To help the Trump administration and Congress achieve this mission, in a new publication the Brookings Institution and The Information Technology and Innovation Foundation offer 50 policy actions to bolster America’s technology transfer, commercialization, and innovation capacity, from the local to the national level.

These recommendations include:

Strengthen innovation districts and regional technology clusters

1. Prioritize innovation districts within federal R&D outlays
2. Task federal laboratories with a local economic development mission
3. Create off-campus “microlabs” to provide a front door to labs
4. Support technology clusters by assessing and managing local-level federal R&D investments
5. Assess federal real estate holdings and reallocate physical research assets to innovation districts
6. Allow labs to repurpose a small portion of existing funds for timely local collaboration
7. Standardize research partnership contracts within cities
8. Create regional pre-competitive consortia through the National Institutes of Health (NIH) to address national health concerns
9. Allow Department of Energy (DoE) labs to engage in non-federal funding partnerships that do not require DoE approval
10. Dismantle funding silos to support regional collaboration
11. Incentivize cross-purpose funding based on the economic strength of cities
12. Expand the national Regional Innovation Program
13. Support the innovation potential of rural areas
14. Facilitate regional makerspaces
15. Introduce an “Open Commercialization Infrastructure Act”

Bolster institutions supporting tech transfer, commercialization, and innovation

16. Establish a core of 20 “manufacturing universities”
17. Complete the buildout of Manufacturing USA to 45 Institutes of Manufacturing Innovation (IMIs)
18. Create a National Engineering and Innovation Foundation
19. Create an Office of Innovation Review within the Office of Management and Budget
20. Create a network of acquisition-oriented Department of Defense labs based in regional technology clusters
21. Establish manufacturing development facilities
22. Establish a foundation for the national energy laboratories

Expand technology transfer and commercialization-related programs and investments

23. Increase the importance of commercialization activities at federal labs/research institutes
24. Allocate a share of federal funding to promote technology transfer and commercialization
25. Develop a proof-of-concept, or “Phase Zero,” individual and institutional grant award program within major federal research agencies
26. Fund pilot programs supporting experimental approaches to technology transfer and commercialization
27. Support university-based technology accelerators/incubators to commercialize faculty and student research
28. Allow a share of Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards to be used for commercialization activities
29. Increase the allocation of federal agencies’ SBIR project budgets to commercialization activities
30. Modify the criteria and composition of SBIR review panels to make commercialization potential a more prominent factor in funding decisions
31. Encourage engagement of intermediary organizations in supporting the development of startups
32. Expand the NSF I-Corps program to additional federal agencies
33. Authorize and extend the Lab-Corps program
34. Provide federal matching funds for state and regional technology transfer and commercialization efforts
35. Incentivize universities to focus more on commercialization activities
36. Establish stronger university entrepreneurship metrics
37. Expand the collaborative R&D tax credit to spur research collaboration between industry and universities and labs
38. Increase funding for cooperative industry/university research programs at universities
39. Establish an International Patent Consortium

Promote high-growth, tech-based entrepreneurship

40. Encourage student entrepreneurship
41. Help nascent high-growth startups secure needed capital
42. Establish an entrepreneur-in-residence program with NIH
43. Implement immigration policies that advantage high-skill talent
44. Implement a research investor’s visa

Stimulate private-sector innovation

45. Implement innovation vouchers
46. Incentivize “megafunds” around high-risk research and development
47. Increase R&D tax credit generosity
48. Ensure that small and medium-sized enterprises are familiar with available R&D tax credits
49. Implement an innovation box to spur enterprises’ efforts to commercialize technologies
50. Revise the tax code to support innovation by research-intensive, pre-revenue companies