Assessing the Role of the Federal Government in the Development of New Products, Industries, and Companies: Case Study Evidence since World War II

Based on case studies of 40 major innovations in the post-World War II period, we assess the role of the federal government in the development of new products, industries, and companies. To guide our selection of major innovations, we identify general purpose technologies (GPTs) that were established during this period. GPTs generate substantial positive spillovers and have broad economic and social effects. Given that universities and federal/national labs conduct the overwhelming majority of federally-funded research and have also been heavily involved in the development of GPTs, we focus on the role of these institutions in our analysis of technological diffusion. Two key stylized facts emerge from our analysis. The first is that many innovations with significant commercial applications were initially developed and adopted by military and space agencies (e.g., nuclear energy, electronics, computers and the Internet, airplanes, laser technology, biotechnology, and pharmacogenomics). The second is that the role of the federal/national labs in technology development and technology transfer may be understated, given that university technology transfer has generated much more attention in academia and the popular press.