ITIF Report: Evaluating the U.S. National Innovation System

July 1, 2014

William Dube

WASHINGTON (June 30, 2014) - The conventional view of innovation is that it is something that just takes place idiosyncratically in "Silicon Valley garages" and R&D laboratories. But in fact, innovation occurs in the context of national innovation systems. Unfortunately, the U.S. innovation system suffers from a number of significant weaknesses and the trend for many factors is not positive.
Understanding the U.S. National Innovation System, a report by the Information Technology and Innovation Foundation (ITIF), identifies 32 factors that make up a national innovation system and analyzes how the U.S. system compares to its chief global competitors. This includes analyzing how America ranks in the various components of the "innovation success triangle:" the business environment, regulatory environment, and innovation policy environment. Disturbingly, the U.S. system falls behind our global competitors in several key areas, hampering our ability to support the high growth innovation industries that are imperative for success in the 21st century economy.

"While the U.S. has relatively strong business and regulatory environments, it lacks a comprehensive and coordinated innovation strategy and has seen key government inputs, including federal investment in research and development, decline," says Robert Atkinson, President of ITIF and author of the report. "At the same time many of our competitors have created strong innovation strategies and infrastructure, backed by significant investment. These systems are designed to spur the development of new products and processes that will drive next-generation business sectors and attract current innovation-based industries to their shores."

To enhance the U.S. national innovation system and bring America more in line with the policies being implemented globally, Atkinson present a series of policy recommendations. These include:

  • Corporate tax reform, including increasing the R&D tax credit, to attract further domestic investment in innovation and research.
  • High-skill immigration reform to attract more knowledge workers and entrepreneurs to American shores.
  • Additional investment in and reforms to our domestic STEM education programs, to boost the creation of "home grown" innovation talent.
  • The development of a national manufacturing technology support program, such as the National Network for Manufacturing Innovation.
  • Enhanced support for programs and policies that can attract additional foreign direct investment (FDI), such as the Select USA program.

"As nations compete to win the race for global innovation, the effectiveness of their national innovation systems will be a key factor in deciding which nations win and which nations fall behind," Atkinson adds. "Given this, the often-heard mantra of 'keep the government out and innovation will happen' no longer works. Rather, the question for the U.S. is can we develop a first rate national innovation system that can truly compete globally and drive innovation-based growth? The future health of our nation will depend on the answer."

Read the report.


The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at

Contact: Samantha Greene
Phone: (202) 626 5744