A Toolkit of Policies to Promote Innovation

That is the new Journal of Economic Perspectives article by Nicholas Bloom, John Van Reenen, and Heidi Williams.  Most of all, such articles should be more frequent and receive greater attention and higher status, as Progress Studies would suggest.  Here is one excerpt:

…moonshots may be justified on the basis of political economy considerations. To generate significant extra resources for research, a politically sustainable vision needs to be created. For example, Gruber and Johnson (2019) argue that increasing federal funding of research as a share of GDP by half a percent—from 0.7 percent today to 1.2 percent, still lower than the almost 2 percent share observed in 1964 in Figure 1—would create a $100 billion fund that could jump-start new technology hubs in some of the more educated but less prosperous American cities (such as Rochester, New York, and Pittsburgh, Pennsylvania). They argue that such a fund could generate local spillovers and, by alleviating spatial inequality, be more politically sustainable than having research funds primarily flow to areas with highly concentrated research, such as Palo Alto, California, and Cambridge, Massachusetts.

In general I agree with their points, but would have liked to have seen more on freedom to build, and of course on culture, culture, culture.  At the very least, policy is endogenous to culture, and culture shapes many economic outcomes more directly as well.  I’m fine with tax credits for R&D, but I just don’t see them as in the driver’s seat.