Ben Bernanke Speaks on "Promoting Research and Development: The Government's Role". (May 26, 2011)

Ten days ago the chairman of the board of governors of the US Federal Reserve, Ben Bernanke, addressed the conference on "New Building Blocks for Jobs and Economic Growth" on the topic of "Promoting Research and Development: The Government's Role". The full text of his address is available here.

One of Dr Bernanke's key points: "The Internet revolution of the 1990s was based on scientific investments made in the 1970s and 1980s, and today's widespread commercialization of biotechnology was based in part on key research findings developed in the 1950s. Governments that choose to provide support for R&D are likely to get better results if that support is stable and long-term oriented, avoiding a pattern of 'feast and famine.'"

In concluding his address the Federal Reserve chairman said:

In the abstract, economists have identified some persuasive justifications for government policies to promote R&D activities, especially those related to basic research. In practice, we know less than we would like about which policies work best. A reasonable strategy for now may be to continue to use a mix of policies to support R&D while taking pains to encourage diverse and even competing approaches by the scientists and engineers receiving support.

We should also keep in mind that funding R&D activity is only part of what the government can do to foster innovation. As I noted, ensuring a sufficient supply of individuals with science and engineering skills is important for promoting innovation, and this need raises questions about education policy as well as immigration policy. Other key policy issues include the definition and enforcement of intellectual property rights and the setting of technical standards. Finally, as someone who spends a lot of time monitoring the economy, let me put in a plug for more work on finding better ways to measure innovation, R&D activity, and intangible capital. We will be more likely to promote innovative activity if we are able to measure it more effectively and document its role in economic growth.