Inadequate investment in innovation is particularly costly in
today's globally competitive environment where continued
technological advancements are critical to sustaining economic
prosperity. The government has a critical role in ensuring that
society's general interest in innovation, and the public good
associated with innovation, is represented in private-sector
decision making. This can be accomplished through a variety of
programs and initiatives that reward innovation at all
levels.
The various activities that make this possible fall into two
general categories: (1) the creation and maintenance of a legal
environment that encourages private sector investment in innovation
(patents and the relaxation of antitrust); and (2) the provision of
incentives to overcome the natural inclination of private parties
to consider only their private benefits when choosing the level of
innovation in which to invest (governmental grants and contracts to
targeted tax incentives).
The role of government, more specifically, can be found in three
key areas: (1) funding of research and development performed in the
private sector; (2) funding of Federal laboratory research
activities and the effective transfer of that knowledge to the
private sector; and (3) encouraging the industry-university
collaboration in research and development. It is these three areas
of research that generate technologies fundamental to increasing
the rate of technological development in the private sector, and it
is these areas that are the focus of this book.
