Search for: All records

During World War II, the US government’s Office of Scientific Research and Development (OSRD) supported one of the largest public investments in applied R&D in US history. Using data on all OSRD-funded invention, we show this shock had a formative impact on the US innovation system, catalyzing technology clusters across the country, with accompanying increases in high-tech entrepreneur-ship and employment. These effects persist until at least the 1970s and appear to be driven by agglomerative forces and endogenous growth. In addition to creating technology clusters, wartime R&D permanently changed the trajectory of overall US innovation in the direction of OSRD-funded technologies. 

World War II was one of the most acute emergencies in U.S. history, and the first where mobilizing science and technology was a major part of the government response. The U.S. Office of Scientific Research and Development (OSRD) led a far-ranging research effort to develop technologies and medical treatments that not only helped win the war, but also transformed civilian life. Scholars and policymakers have appealed to the wartime approach as a template for other problems, typically focusing on the Manhattan Project, but overlooking the broader OSRD effort of which atomic fission and dozens of other programs were a part. In this paper we bring OSRD into focus, describe how it worked, and explore what insights its experience offers today. We argue that several aspects of OSRD continue to be relevant, especially in crises, while also cautioning on the limits to generalizing from World War II to other settings. 

Innovation policy can be a crucial component of governments' responses to crises. Because speed is a paramount objective, crisis innovation may also require different policy tools than innovation policy in non-crisis times, raising distinct questions and tradeoffs. In this paper, we survey the U.S. policy response to two crises where innovation was crucial to a resolution: World War II and the COVID-19 pandemic. After providing an overview of the main elements of each of these efforts, we discuss how they compare, and to what degree their differences reflect the nature of the central innovation policy problems and the maturity of the U.S. innovation system. We then explore four key tradeoffs for crisis innovation policy---top-down vs. bottom-up priority setting, concentrated vs. distributed funding, patent policy, and managing disruptions to the innovation system---and provide a logic for policy choices. Finally, we describe the longer-run impacts of the World War II effort and use these lessons to speculate on the potential long-run effects of the COVID-19 crisis on innovation policy and the innovation system. 

Since the beginning of the COVID-19 pandemic, policymakers, researchers, and journalists have made comparisons to World War II. In 1940, a group of top US science administrators organized a major coordinated research effort to support the Allied war effort, including significant investments in medical research that yielded innovations like mass-produced penicillin, antimalarials, and a flu vaccine. We draw on this episode to discuss the economics of crisis innovation. Since the objectives of crisis R&D are different than ordinary R&D, we argue that appropriate R&D policy in a crisis requires going beyond the standard Nelson-Arrow framework for research policy. 

Abstract Current debates about the roles of the public and private sectors in pharmaceutical innovation have a long history. The extent to which, and ways in which, the public sector supports drug innovation has implications for assessments of the returns to public research funding, taxpayer rights in drugs, the argument the high prices are needed to support drug innovation, and the desirability of patenting publicly funded research.