New Insights for Innovation Policy
The US economy has been suffering from weak productivity growth, business dynamism, and competition for the past several decades. The loss of a vibrant economy is even more concerning as the economy faces new challenges such as the transition to green energy that call for novel technological advancements. Reduced technological diffusion in the economy has been impairing the competitive environment favoring established market leaders, with patents and inventors being hoarded by these firms, hampering overall innovativeness and dynamism of the economy. We argue that policies to alleviate these concerns and enhance competition can boost overall innovativeness of the economy. Reducing barriers to foreign competition is an effective option to achieve this goal. Similarly, tapping into global talent is a viable policy to improve the level of human capital.