The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth

Ashish Arora, Sharon Belenzon, Andrea Patacconi, Jungkyu Suh

NBER Working Paper No. 25893
Issued in May 2019, Revised in August 2019
NBER Program(s):Productivity, Innovation, and Entrepreneurship

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.

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Document Object Identifier (DOI): 10.3386/w25893

Published: The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth, Ashish Arora, Sharon Belenzon, Andrea Patacconi, Jungkyu Suh. in Innovation Policy and the Economy, Volume 20, Lerner and Stern. 2020