Accelerating Innovation

Business Week on Commerce Innovation Metrics Report

A Better Way To Track the Economy

Mike Mandel, Business Week chief economist, comments on the Commerce Dept. Advisory Committee report: Innovation Measurement: Tracking the State of Innovation in the American Economy. It recommends new yardsticks for measuring growth and the contribution of innovation.

· Plus: Video: Measuring the State of Innovation

· Podcast: Unmasking the Economy

Commerce Department Announces Steps to Improve Measurement of Innovation

Commerce Secretary Carlos M. Gutierrez announced January 18 steps for the federal statistical agencies and others to work to explain and quantify one of the largest and most elusive drivers of the economy—innovation. Among the innovation measurement initiatives announced were comprehensive accounting of the effect of high-tech goods and services, measuring the increase in productivity due to increased investments in innovation, and expanding collection of data on innovation.

Secretary Gutierrez announced these measures based on a report by the Advisory Committee on Measuring Innovation in the 21st Century Economy. Committee members are CEOs and prominent academics who worked over the past year to develop innovation metrics.

“Innovation has proven an essential driver of growth for the U.S. economy,” said Secretary Gutierrez. “Thanks to the leadership of the committee and Chairman Carl Schramm, we now have a well-informed framework for moving forward and ensuring that we as a nation foster innovation and its contribution to a healthy 21st Century economy.”

“While we recognize that the American economy is changing in profound ways—mostly due to innovation—our understanding is minimal,” commented Chairman Carl Schramm. “Data collection and measurement loom large in helping us to understand these changes and to identify and replicate what we’re doing well.”

Here are some of the key recommendations.

-The Bureau of Economic Analysis (BEA) will work with the Bureau of Labor Statistics (BLS) to provide a comprehensive accounting of the effect of high-tech goods and services on growth and productivity.This will set the stage for the development of integrated estimates for major sectors and detailed industries. Although total factor productivity growth is not a direct measure of innovation, correctly capturing productivity at the sectoral level will greatly improve our understanding where innovation occurs.

-BEA will design a supplemental innovation account by January 2009. This account will be a framework for directly measuring how much of the overall increase in productivity is due to increased investments in innovation. It will include investments in intellectual property (including patents, copyrights, and trademarks) and in human capital. In addition to directly measuring the impact of innovation on growth, such a measure would take into account the fact that knowledge, just like other property, is wealth—and those policies that increase knowledge increase the wealth of our society.

-Building on their successful efforts in developing measures of the impact of R&D on GDP growth, partners at the National Science Foundation are asked to maintain and expand their commitment and effort to the collection of data on research and development and innovation-related inputs. These efforts will provide an important piece of the puzzle of what drives innovation in the U.S. economy.

-Recognizing the clear benefits that can be achieved through better statistical coordination and data synchronization, Secretary Gutierrez pledged to work with the Council of Economic Advisors, the Office of Management and Budget, the Departments of Treasury and Labor, and Congress to see whether a framework that meets everyone’s data confidentiality concerns is achievable.

-The Committee members expressed a desire for the dialogue to continue after the release of these recommendations. In particular, the Secretary indicated he would direct the bureaus in Commerce to conduct various workshops on the drivers and impediments to innovation.

The Report is available on line at www.commerce.gov and www.innovationmetrics.gov.

Direct links to the report of the Advisory Committee:
Click here to access the full report
Click here to access the press release
Click here to access quotes
Click here to access key facts

Science and Engineering Indicators 2008 Released. National Science Board Calls for Bolstering Basic Research and New Metrics to Sustain US Competitive Edge

Members of the National Science Board today delivered to the President and the Congress Science and Engineering Indicators 2008 (SEI'08), the Board's biennial report on the state of science and engineering research and education in the United States. Called the "gold standard," it is the most comprehensive source of information on research and development conducted by universities, industry, the federal government and the international science and engineering enterprise.

The Board also introduced its new publication, Digest of Key Science and Engineering Indicators 2008 containing a selected set of indicators electronically linked with detailed data tables and discussions in the main volumes of SEI. In addition to SEI'08, the Board, concerned that the data revealed disturbing trends with serious policy implications, published a companion piece, Research and Development: Essential Foundation for U.S. Competitiveness in a Global Economy. In this policy statement and in presentations in the U.S. House of Representatives, National Science Board Chairman Steven Beering, Subcommittee Chairman on SEI'08 Louis Lanzerotti and SEI'08 Subcommittee Member Arthur Reilly stressed the need for increased government and industry sharing of funding for basic research.

"These indicators come at an important time," said Chairman Beering. "The confluence of a range of indicators raises key questions about future U.S. high-technology industry's competitiveness in international markets and implications for highly skilled jobs at home."

The Board made three major recommendations:

1. The federal government should take action to enhance the level of funding for, and the transformational nature of, basic research;
2. Industry, government, the academic sector and professional organizations should take action to encourage greater intellectual interchange or synergy between industry and academia, with industry researchers encouraged to also participate as authors and reviewers for articles in open, peer-reviewed publications.
3. New data are critically needed, and this need should be expeditiously addressed by relevant federal agencies to track the implications for the U.S. economy of the globalization of manufacturing and services in high technology industry.

To review Science and Engineering Indicators 2008, visit http://www.nsf.gov/statistics/indicators.

 

FACT SHEET: A Prime 13

1-2 Science and Engineering (S&E) Capabilities - People and Skills

Science and Engineering Indicators 2008 tell a mixed story regarding the achievement of U.S. students in science and math in international comparisons.

• U.S. grade school students continue to lag behind other developed countries in science and math, although fourth and eighth grade U.S. students showed steady gains in math since 1990. Only fourth graders showed gains in science compared to 1996.
• High school completion and college enrollment rates across ethnic groups increased steadily in recent years. But college enrollment and completion rates differ across socioeconomic groups.

3-4 Science and Technology (S&T) Capabilities and Workforce

The capability to do science and technology work increased throughout the world, and the National Science Foundation is out front tracking the trends.

• In 2000, the United States held about one quarter of the world's 194 million tertiary degrees -- degrees broadly equivalent to a U.S. baccalaureate. Twenty years earlier, the U.S. share was closer to one third of the world's then 73 million tertiary degrees.
• From 1994 to 2004, U.S. firms increased the number of people they employed in R&D jobs outside the United States by 76 percent and employment within the United States by 31 percent, while U.S. subsidiaries of foreign firms increased their U.S. R&D employment by 18 percent.

5-6 S&T Capabilities - U.S. Research & Development (R&D)

The U.S. is the largest, single, R&D-performing nation in the world supplying an estimated $340 billion for R&D in 2006, a record high.

• Of the $340 billion R&D total, basic research accounted for 18 percent or $62 billion; applied research accounted for 22 percent or $75 billion; and development accounted for the other 60 percent or $203 billion. In 2006, the federal government supplied about 60 percent of all basic research funds, industry about 17 percent, with private foundations, academic institutions and other governmental entities supplying the rest.
• Federal obligations for all academic research, basic and applied, declined in real terms between 2004 and 2005 and are expected to drop further in 2006 and 2007. This would be the first multiyear decline for academic research since 1982.

7-9 High Technology - U.S. Position

Based on key indicators, the U.S. sustained a relative economic advantage over other developed and developing economies. Growth has been far more rapid in the emerging markets of China and India.

• The U.S. is a leading producer in high-tech manufacturing and knowledge-intensive services, but several Asian countries, led by China, have rapidly increased their global market share.
• The U.S. leads the world in economically-viable patents, filed in the U.S., Japan and Europe.
• The U.S. comparative advantage in exports of high-technology products has eroded: the U.S. trade balance in advanced technology products shifted from surplus to deficit starting in 2002. Information and communications products geographically concentrated in Asia -- particularly China and Malaysia -- account for this deficit.

10-11 Public Support for Science in the U.S.

U.S. public support for government funding of scientific research is strong and growing.

• In a 2006 survey, 87 percent of Americans supported government funding for basic research, up from 80 percent in past surveys dating back to 1979. Also, Americans who said the government spends too little on scientific research grew from 34 percent to 41 percent between 2002 and 2006.
• In 2006, Americans expressed greater confidence in leaders of the scientific community than those of any other institution except the military. On science-related public policy issues, including global climate change, stem cell research and genetically modified foods, Americans believe that science leaders, are knowledgeable and impartial and ought to be influential.

12-13 Federal Support for Academic Scientists and Engineers

Academic scientists and engineers are more diverse today, and federal funding remains important to them.

• From 1973 to 2006, in the academic, doctoral labor force the share of women increased from 9 percent to 33 percent, of underrepresented minorities (African-Americans, Hispanics, and American Indians/Alaska Natives) from 2 percent to 8 percent, and of Asian/Pacific Islanders from 4 percent to 14 percent.
• Academic S&E doctorate holders employed in academia who received federal support has remained steady during the last 20 years: just under half, 47 percent in 2006, and in the late 1980s. Among life scientists, this percentage has dropped from 65 percent in 1989, to 58 percent in 2006, although the actual number of those reporting federal support increased.

Egils Milbergs, Center for Accelerating Innovation, commented:  "This is an important document for policy makers.  Today's Science and Engineering Indicators 2008 report makes clear that the public continues to support higher investment in scientific research. Yet we see in the data an erosion of federal basic research funding and, more disturbing, a relative decline in private sector R&D support of academic research. This raises the question of how to implement the National Science Board recommendation to encourage greater intellectual interchange or synergy between industry and academia. Investing in the scientific  talent and technological infrastructure of our overseas rivals appears to be more synergistic to global corporations than here in the US." 

Science and Engineering Indicators 2008 Will Rollout January 15

Members of the National Science Board will rollout Science and Engineering Indicators 2008, the Board's biennial report on the state of science and engineering research and education in the United States on Jan. 15 in Washington DC. Every two years, the Board presents its report to the president and Congress. It is the most comprehensive source of information on research and development conducted by universities, industry, the federal government and the international science and engineering enterprise. This will be the earliest release date for any issue of the Science and Engineering Indicators (SEI) series.

The presentation will focus on data in Indicators 2008 and the Board's conclusions contained in its companion piece, Research and Development: Essential Foundation for U.S. Competitiveness in a Global Economy. The companion piece focuses on the important role of research and development and basic research supported by industry and the federal government in sustaining U. S. global competitiveness in high technology industries. The Board will also introduce its new publication, Digest of Key Science and Engineering Indicators 2008, containing a selected set of important indicators to be electronically linked with detailed data tables and discussions in the main volumes of SEI.

Link to http://www.nsf.gov/statistics/indicators to access a PDF version of Science and Engineering 2008 after 10 a.m. on Jan. 15.

Who:

Steven Beering, Chairman, National Science Board
Louis Lanzerotti, Chairman, Board Subcommittee for SEI
Art Reilly, Member, Board Subcommittee for SEI
Kathie Olsen, Deputy Director, National Science Foundation

What:

Rollout, Science and Engineering Indicators 2008

When:

Jan. 15, 2008, 10 a.m.

Where:

House Science and Technology Committee Hearing Room 2318 Rayburn House Office Building
Washington, D.C. 20515

To review Science and Engineering Indicators 2006, visit http://www.nsf.gov/statistics/seind06/.

The National Innovation Ecosystem: A Metrics Framework for Guiding Innovation Policy in the 21st Century

The Center for Accelerating Innovation has been collaborating with ASTRA (The Alliance for Science & Technology Research in America) on a framework for describing the “national innovation ecosystem” and for guiding the development of an innovation measurement system we call Innovation Vital Signs (IVS). Download innovation_vital_signs_framework_report_v.2.8.pdf   The purpose of such a system is to provide a tool to evaluate the nation’s innovation capabilities and performance, and better assess policy choices and potential impacts. [1]  More information on the IVS project can be found at www.usinnovation.org.

The framework is based on a systematic review of 52 public indicator reports and 95 private sector sources. Our review generated an inventory of 3,126 indicators measuring multiple dimensions of innovative activity. We discovered during our review that no common framework for organizing and presenting such indicators exists. The framework we designed is comprehensive and approaches innovation as a complex and multi-faceted process and recognizes:

• both the innovation supply (inputs) and demand (outputs) and the process that connects inputs to outputs and ultimate national impacts.
• context in which innovation takes place including the macroeconomic environment, public policies, infrastructure and the national mindset for innovation.
• changes in the nature of innovation including globalization of innovative activity, new business models for managing innovation, types of innovation, service sector innovation, entrepreneurial activity and diffusion/adoption rates for innovation.

The framework organizes indicators in four broad domains as illustrated and into 14 specific factors that drive knowledge from original insight to economic impact. Based on a detailed evaluation of these indicators and a workshop we identified a set of baseline indicators from which to evolve innovation vital signs for the national innovation ecosystem. We conclude that currently available indicators and measurement methods do not adequately describe in a timely manner the dynamics of innovation today. Innovation cannot be approached as an isolated inventive activity and linear process. We need to move beyond indicators dominated by inputs such as R&D, scientific and engineering personnel, patents and number of publications. A comprehensive indicator framework is required that can link innovation inputs, processes and outcomes to better reflect the reality of innovation today. Innovation is best viewed an ecosystem of relationships, connections and diverse patterns interaction among individuals and organizations. It is a complex process in which new knowledge eventually becomes embedded into a new products, services, processes and business models that create value. This value creation process in turn generates national benefits and revenue and profit to entities who undertake the risk of being innovators.

Innovation is a process by which value is created for customers through public and private organizations that transform new knowledge and technologies into profitable products and services for national and global markets. A high rate of innovation in turn contributes to more intellectual capital, market creation, economic growth, job creation, wealth, and higher standard of living.

Innovation policy should be based on evidence. Timely, high quality relevant information is available in abundance to support fiscal, monetary and trade policies. Innovation policy for the 21^st century will require new indicators, improved data collection and integration methods, and sophisticated visualization tools to understand the more subtle, qualitative and interactive elements of innovation and greater recognition of role innovation plays in the service sector. The framework offered in this report integrates the fundamental change in innovation practices from the previous closed, static, linear and individualistic perspective into a multidimensional, dynamic approach that is capable of staying abreast of the demands of a global economy.

The Innovation Vital Signs conceptual framework identifies 4 domains and 14 innovation factors that collectively interact to create the innovation capacity and performance of a nation. The innovation framework report summarizes the provisional set of indicators that emerged from our global assessment of innovation indicators. Download innovation_vital_signs_framework_report_v.2.8.pdf

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[1]The framework builds on the innovation ecosystem concepts and recommendations prepared by Egils Milbergs, Center for Accelerating Innovation for the 21^st Century Innovation Working Group of the National Innovation Initiative, Council on Competitiveness. PDF] 21st century innovation working group final report , Innovate America Final Report, December 2004.  www.compete.org   Additional information on the Innovation Vital Signs Project can be found at www.usinnovation.org