26 May 2011

Capsule Reviews of Three New Studies of Innovation

Three news studies of the benefits of innovation policy have crossed my desk in the past few days.  In general I have problems with such studies, and more accurately how they are used, because they often reduce innovation to a pipeline metaphor.  The pipeline has federal dollars inserted in one end and -- after some magic occurs inside the pipeline -- from the other emerge the fruits of innovation, such as computer technologies, medicine, green energy and so on.

To understand innovation requires getting a handle on the processes that translate investments into desired outcomes, which inevitably is much more complicated than any pipeline. 

The first study is from McKinsey (PDF) and is on the role of the internet in the global economy.  The report has some fascinating data on the role of the internet in 13 different countries around the world, but its most important contribution is its assessment of those factors that contribute to economic growth via the internet.  Among these are human capital, infrastructure, a favorable business environment and financial capital.  Governments have a role to play in each of these areas.

The second study comes from a group called United for Medical Research (PDF) and is focused on evaluating the economic consequences of government spending through the National Institutes of Health.  This study is much more a "pipeline" study with a focus on funding to NIH and various correlates of economic consequences with only a bit of hand-waving at mechanisms of innovation.

The third report comes from Batelle (PDF) and is focused on the economic and functional consequences of the Human Genome Project.  While the report has much valuable information about technologies, processes and outcomes related to the HGP, it is thin (remarkably so) on the public and private context which enabled such outcomes, lending itself to a "pipeline" interpretation.

It seems to me that the McKinsey report is far more focused on providing information that might be useful in thinking about innovation policies, whereas the UMR and Batelle studies seem aimed at providing simple justifications for more federal funding for R&D.  Innovation policies however are far more than money spent on R&D.


  1. Are there any books you would recommend comparing the effectiveness of different setups for innovation?

    Has anyone systematically compared the effectiveness of grants to Universities against setting up large permanent research places like NIH and even giving out prizes for achieving specific goals?

  2. Also important is how research is regulated. Many an Institutional Review Board has drifted from its original objective of protecting human subjects to preventing the institution from ever getting sued. Productivity has been adversely affected.