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A Toolkit of Policies to Promote Innovation

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  • Nicholas Bloom
  • John Van Reenen
  • Heidi Williams

Abstract

Economic theory suggests that market economies are likely to under-provide innovation due to the public good nature of knowledge. Empirical evidence from the US and other advanced economies supports this idea. We summarize the pros and cons of different policy instruments for promoting innovation and provide a basic "toolkit" describing which policies are most effective, based on our reading of the evidence. In the short-run, R&D tax credits or direct public funding seem the most productive, but in the longer-run increasing the supply of human capital (e.g. relaxing immigration rules or expanding university STEM admissions) are likely more effective.

Suggested Citation

  • Nicholas Bloom & John Van Reenen & Heidi Williams, 2019. "A Toolkit of Policies to Promote Innovation," CEP Discussion Papers dp1634, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1634
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. China Threatens America's Inventive Genius (Just Not How You Think)
      by ? in Noozilla Top on 2019-11-23 18:31:06

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    Cited by:

    1. Andersson, David & Berger, Thor & Prawitz, Erik, 2020. "Making a Market: Infrastructure, Integration and the Rise of Innovation," Working Paper Series 1319, Research Institute of Industrial Economics.
    2. Ziesemer, Thomas, 2019. "The effects of R&D subsidies and publicly performed R&D on business R&D: A survey," MERIT Working Papers 2019-036, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Joshua R. Bruce & John M. de Figueiredo, 2020. "Innovation in the U.S. Government," NBER Working Papers 27181, National Bureau of Economic Research, Inc.
    4. Stojčić, Nebojša & Srhoj, Stjepan & Coad, Alex, 2020. "Innovation procurement as capability-building: Evaluating innovation policies in eight Central and Eastern European countries," European Economic Review, Elsevier, vol. 121(C).
    5. Joshua R. Bruce & John M. de Figueiredo, 2020. "Innovation in the US Government," NBER Chapters, in: The Role of Innovation and Entrepreneurship in Economic Growth, National Bureau of Economic Research, Inc.
    6. Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Truger, Achim & Wieland, Volker, 2019. "Den Strukturwandel meistern. Jahresgutachten 2019/20," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201920, Fall.
    7. Pietro Santoleri & Andrea Mina & Alberto Di Minin & Irene Martelli, 2020. "The causal effects of R&D grants: evidence from a regression discontinuity," LEM Papers Series 2020/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    Innovation; R&D; intellectual property; tax; competition;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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