WASHINGTON—The Information Technology and Innovation Foundation (ITIF), the top-ranked U.S. think tank for science and technology policy, today issued a new report calling on policymakers to close the gap between the rapid pace of technology innovation and lackluster productivity trends by spurring public and private investment in the underpinnings of a dynamic, innovation-oriented economy.
“In the past decade, we have seen a tale of two cities: Technology has evolved rapidly, while productivity has sputtered,” said ITIF’s founder and president, Robert D. Atkinson, who authored the new report. “If we want to raise living standards, then we have to accelerate productivity. Boosting investment is a critical part of the solution—but recent trends in the United States are troubling, to say the least. So a key challenge for policymakers in the years ahead will be enacting an agenda that reinvigorates the kind of public and private investments that the economy needs most.”
The report frames a conference on “Restoring Investment in America’s Economy,” which ITIF will host on June 14 in Washington, DC, to mark the 10-year anniversary of its founding. The event will feature remarks from leading members of the U.S. House and Senate plus a series of expert panel discussions on issues related to long-term productivity growth, emerging technologies, and the politics and policy options available to spur investment in economic building blocks such as capital equipment, workforce training, and research and development.
The report examines recent declines in a range of important public and private investment areas. For example:
- Net private investment in equipment and software averaged around 2.0 percent of GDP in the 1990s, but it fell to less than 1.2 percent in the 2000s and then slid further to 1.1 percent in the 2010s.
- The “tools” available to the average U.S. worker are worth significantly less today than they were 15 years ago. In fact, the stock of equipment assets per worker declined from an average value of $42,000 in 1995 to around $32,000 in 2014 (in constant 2009 dollars).
- Business investment in risky, long-term basic and applied research has fallen from around 30 percent of total business R&D in the 1990s to approximately 26 percent today.
- Federal investment in transportation and water infrastructure capital has fallen from $96 billion in 2002 to $69 billion in 2014 (in constant 2014 dollars), an astounding 29 percent.
- Federal funding for employment and training has fallen by about half as a share of GDP from the mid-1980s to present.
To reverse those declines, the report offers a series of recommendations, including:
- Developing a broadly shared political consensus that society has a stake in the investment decisions of industry, and a similar consensus supporting increased public-sector investment;
- Implementing targeted tax policies to spur private investment;
- Countering an institutional culture of short-termism in corporate America;
- Spurring technological innovation in capital goods; and
- Putting the country’s long-term national interest ahead of self-interested consumption in the near term.