Government-funded R&D and innovation

If you follow me on Twitter, Facebook or Gchat you already saw this, but just in case: check out my latest post at The Atlantic Tech on the argument for energy R&D. I’ve had some questions on the specifics of energy and there’s room for a follow-up there, but I wanted to make a very basic point about government-funded R&D as an input in the innovation pipeline. Here’s a taste:

Private actors are excellent at taking a newly proven technology and commercializing it, but they have little incentive to invest heavily in the basic science that leads to those breakthroughs. The benefits of a new innovation inevitably spill over into society; firms are unable to capture 100% of the value of new information. The result is that the private sector will always under-invest in R&D, making government funding essential. Corporate R&D, while important, is nowhere near sufficient…

…The majority of academic R&D is, of course, government-funded. The Internet, GPS, CT scans and countless other technologies on which we currently rely are the direct result of government investment.

Last week, the International Energy Agency’s Clean Energy Progress Report stressed the importance of substantially increasing public clean energy R&D, particularly as stimulus funding ends. Yet here we are, debating possible cuts. Innovation is a mantle claimed by both parties, but no matter one’s philosophy of government, any serious account of how it happens must recognize that government funding of R&D is a crucial input. If America is serious about developing the next generation of clean energy technology, it must take ideology out of the equation.