Strengthening the Connections: 

Research, Innovation, and Economic GrowthPatrick Gallagher DirectorNational Institute of Standards and Technology (NIST)Department of Commercewww.nist.gov
NIST at a Glance

Major assets~ 2,800 employees~ 2,600 associates and facilities users~ 1,600 field staff in more than 400 

partner organizations (Hollings Manufacturing Extension Partnership)

Major progra NIST Labo Baldrige Pe

Excellence 

 Hollings Ma

Extension 

 Technology 

Program

R. Rathe
Importance of Innovation

 Half of economic growth due to 

technology in most industrialized nations1

 U.S. productivity advantage = 75% of 

positive difference in per capita income

2

 R&D investment accounts for half of 

output growth and 75% of productivity growth

3

 70 of 71 of technology-oriented 

occupations exceed median earnings for all workers

4

 For half these occupations, incomes are 

2x to 3x higher

 84% of companies say innovation is 

“extremely important” or “very important” to their growth strategy
Problem: Employment recovery inc

Source: Bureau of Labor Statistics and NBER
Innovation and business Innovation and business

New o

New or significantly improved product

Man

/ pr

m

Any good/ 

service

Any 

process

Companies 

(thousands)

Goods Services

Company type Yes No Yes No Yes No Yes No Yes 

All companiesa 1,545.1

9 86

5 91

7 88

9 86

4 

With R&D activityb 46.8 66 30 52 45 38 58 51 44 34 

< $10 million 44.8 66 31 51 45 38 58 51 45 33 ≥ $10 but < $50 million 1.3 70 25 64 31 42 52 56 38 44 ≥ $50 but < $100 million 0.3 76 18 71 24 51 43 69 25 57 ≥ $100 million 0.4 81 15 77 19 56 37 71 22 60 

Without R&D activity 1,498.3

7 88

3 92

6 89

8 87

3 

a Weighted totals for companies that reported on the 2008 Business R&D and Innovation Survey whether they did or did not perform/fund R&D

non-responding companies for whom an R&D status was not reported.

b Dollar ranges determined by total worldwide R&D expense plus total worldwide R&D cost funded by others.

NOTES: Survey asked companies to identify innovations introduced in 2006–08. Sum of yes and no percentages may not add to 100% due to 

Figures are preliminary and may later be revised.SOURCE: National Science Foundation/Division of Science Resources Statistics, Business R&D and Innovation Survey, 2008.
Innovation models

Public

R&D

Innovation

process
Basic models of innovation

Linear model... (circa 1945)

Basic Applied Developme

nt Production 

Public 
Elements of Innovation Systems

By performer Government Universities Industry Consortia Investors

By stag Discov Tech t Comm Entrep Manuf Distrib Marke
U.S. R&D Intensity: Funding as a ShGDP, 1953-2008

Source: National Science Foundation

Total R&D/GDP

Federal R&D/GDP

Industry R&D/GDP
Source: OECD, Main Science and Technology Indicators, 2010. 

National R&D Intensities, 2008 Gross R&D Expenditures as a Percentage of GDP
Changes in National R&D Intensity, 1995-2008

Sources: OECD, Main Science and Technology Indicators, 2010/1
Source: OMB Historical Table 9.7

Federal R&D Spending as a Percent o1949-2009
Policy responses

• American Recovery • Strategy for America• COMPETES reauth
University/college S&E expenditures University/college S&E expenditures 

FY 2004–09(Millions of current dollars)Source of funds and character of work 2004 2005 2006 2007 2008 All R&D expenditures 43,258 45,799 47,751 49,493 51,93

Source of funds

Federal government 27,644 29,209 30,128 30,443 31,28State and local government 2,879 2,940 2,962 3,143 3,452 Industry 2,129 2,291 2,402 2,670 2,865 Institutional funds 7,753 8,266 9,062 9,705 10,40Other 2,852 3,093 3,196 3,533 3,928 

Character of work

Basic research 31,968 34,367 36,076 37,725 39,40Applied research and development 11,290 11,432 11,674 11,768 12,52

S&E = science and engineering.NOTE: Because of rounding, detail may not add to total.

SOURCE: National Science Foundation/Division of Science Resources Statistics, Survey of Resea

Expenditures at Universities and Colleges: FY 2009.
University Roles in Innovation

Education of the Future Workforce Best university system in the world attracts many of the best a

around the globe.1

 7 U.S. universities in the top 10 27 in the top 50 72 in the top 200

 But, the U.S. ranks 7th in the world in proportion of the national 

college degree; 16th in college completion rate; and 27th in the 

undergraduates receiving degrees in science or engineering.

2

Primary Performer of Basic Research Universities perform over 40% of federally funded research Knowledge spillovers Increase national and regional capacity to absorb and apply neEconomic Returns High rates of return: Average of 28% annually

3

 More than 70% of “R&D 100” award winners (2006) based on 

publically supported research (full or partial funding)

 Hubs of regional innovation networks
C

Overcoming the Innovation Risk Sp(“Valley of Death”)

Risk

Basic 

Research

Generic Technology 

Research

Applied Research 

and Development

10 years 6 years Commercializ

R0 Science Base

Source: G. Tassey, “Underinvestment in Public Good Technologies,” Journal of Technology Transfer 30: 1/2 (Ja

the Economic Roles of Technology Infrastructure,” Economics of Innovation and New Technology 17 (October 2

Measurement & 

Standards Infrastructure

“Valley of Death”

Risk 

Spike
Universities and Entrepreneurship

 Universities conducted more than 

$30 billion in federally supported R&D in FY 2008

 University Innovation Forums

 Hosted by Secretary Locke, 

additional high-level participation by WH, DOE, NIH, NSF, etc.

 D.C., Boston, L.A., Ann Arbor, 

Atlanta

 Nearly 400 university leaders participated How do we maximize the economic impact from fe

university research?

 Areas identified for action:

 Process improvements Celebrating entrepreneurship Expanded ecosystems
Case for a Domestic Manufacturing 

Strategy

 Manufacturing contributes $1.6 

trillion to GDP and employs 11 million workers

 High-tech service jobs are 

increasingly ‘‘tradeable’’ and 30 economies have policies in place to promote service exports

 Manufacturing ac

U.S. industry R&scientists/engine

 High-tech worke

more and some ointensive industrmanufacturing

 Majority of trade 

products A. Pidjass
All Manufactured 

Products

Advanced Technolog

$ billions

Source: Census Bureau, Foreign Trade Division

U.S. Trade Balances for High-Tech Manufactured Products, 1988-2009
R&D Intensive Industries Grow FastRelationship Between R&D Intensity and Real Out

Industry (NAICS Code)

Average R&D 

Intensity 1999-2007

Perce

Ou

R&D Intensive:

Pharmaceuticals (3254) 10.5 Semiconductors (3344) 10.1 

Medical Equipment (3391) 7.5 

Computers (3341) 6.1 Communications Equip 

(3342) 13.0 

Group Ave: 9.5 Grou

Non-R&D Intensive:

Basic Chemicals (3215) 2.2 

Machinery (333) 3.8 

Electrical Equipment (335) 2.5 Plastics & Rubber (326) 2.3 Fabricated Metals (332) 1.4 

Group Ave: 2.5 Grou

Sources: NSF for R&D intensity and BLS for real output.
The “Valley of Death” is Getting WidTrends in Short-Term vs. Long-Term US Industry 

Source: Industrial Research Institute’s annual surveys and calculation of “Sea Change Indices". A Sea Chang

percent of respondents reporting a planned decrease in the particular category of R&D spending from the per

percent. Sample size and respondents vary from year to year.
Innovation models

Public

R&D

Innovation

process
g

Production Production Market Development Market Development V

A

V

A

Entrepreneurial

Activity

Risk

Reduction

Risk

Reduction

Proprietary

Technologies

Proprietary

Technologies

Generic

Technologies

Generic

Technologies

Science Base

Economic Model of a Technology-Based 

Gregory Tassey, The Technology Imperative, 2007; and, “The Disaggregated Technology Pr

Model of Corporate and University Research”, Research Policy, 2005.

Strategic 

Planning
Strategic

Planning Production Market Developmen

Entrepreneurial

Activity

Ris

Redu

Proprietary

Technologies

Generic

Technologies

Science Base

Joint IndustryGovernment Planning

Market PlanniAssistance (DBLS, SBA)

Interface Standards (consortia, standards groups)

Technology Transfer 

(MEP)

Intellectual Property 

Rights (DoC)

National Labs

Direct Funding of 

Firms, Universities, 

Consortia (DARPA, 

ARPA-E, TIP)

Tax Incentives 

(federal, state)

Incubators 

(states)

Science, Technology, Innovation, Diffusion (STI
C

Overcoming the Innovation Risk Sp(“Valley of Death”)

Risk

Basic 

Research

Generic Technology 

Research

Applied Research 

and Development

10 years 6 years Commercializ

R0 Science Base

Source: G. Tassey, “Underinvestment in Public Good Technologies,” Journal of Technology Transfer 30: 1/2 (Ja

the Economic Roles of Technology Infrastructure,” Economics of Innovation and New Technology 17 (October 2

Measurement & 

Standards Infrastructure

“Valley of Death”

Risk 

Spike
Pilot Program with Nanoelectronics 

Initiative (NRI) Initiated in 2007

For pilot, NIST sought public-private partnerships to accelerate thand innovation in nanoelectronics, an emerging area that exploits 

nanometer-scale materialsCompetition announced in Federal Register May 4, 2007NIST/NRI partnership announced September 13, 2007

 The NRI is a collaborative effort between industry, govern

support world-class research in nanoelectronics. 

 NRI is part of the Semiconductor Research Corporation (

the Semiconductor Industry Association (SIA)

 NRI goal: Demonstrate novel yet practical computing dev

replacing conventional chip technology by 2020 

Cooperative agreement, renewable for up to five years

NIST provides funds combined and competitively awarded for resuniversities to meet industry’s long term needs

$2.76 million per year; six NRI partners match with at least 25% e
NIST/NRI Funding

S

University-Based Research

Research Results

• INDEX: Institute for Nanolectronics 

Discovery and Exploration

• MIND: Midwest Institute for 

Nanoelectronics Discovery

• SWAN: South West Academy of 

Nanoelectronics

• WIN: Western Institute of 

Nanoelectronics

RegionalGovernmeContributio• Grants• Tax

Incentives

Business Sand Comm

$2.75M 

per 

year

NIST

$5M

per 

year 

Industry 

Partners

$15M 

per

year

States

Strategic Planning and Evaluation

International Technology Roadmap for Semicondu

POST-CMOS: NRI Defined 13 Research Vectors of primary importance for 
4 Centers, 35 Universities, 

20 States

UC Los Angeles

UC Berkeley

UC Irvine

UC Santa Barbara

Stanford

U Denver

Portland State

U Iowa

Notre Dame Purdue

Illinois-UC Penn State

Michigan UT-Dallas

UT-Austin Rice Texas A&M

UT-Dallas ASU Notre Dame

U. Maryland NCSU Illinois UC

S

Pu

C
NRI Research Centers and Collabor

Spintronics Post-CMOS Switches Novel structures 

architecture

Magnetic Dot Logic Graphene-based 

Quantum Devices

NanoPlasmo

Sample General ProjectSample IndividualProject

NRI 

Center INSTITUTE FOR NANOELECTRONICS INSTITUTE FOR NANOELECTRONICS DISCOVERY AND EXPLORATION DISCOVERY AND EXPLORATION

NIST-Georgia TechMeasurements of electrical conductivity in grapheneNIST/Notre Dame and NIST/UTDallasCharacterizing the interface between III-V substrates and gate electrode in next generation high-mobility transistors

Credits (left to right): Rutter et al., Georgia Tech/NIST; UT-Austin

Credits (left to right): J. Bokor/Berkeley et al.; C. Marcus/Harvard et al.; Y. Massoud, Rice et al.; Chen et al., Purdue/NML
Innovation Cluster: NIST/NRI Partne

2009

NIST/NRI supports PIs from over 30 universitie

to work at 4 regional centers

Supports 128 graduate students, 24 post docsProduced 239 publications in last two yearsApplied for 13 patents

Regional centers Graduate 

Students

P

Western Institute of Nanoelectronics (WIN) 38Institute for Nanoelectronics Discovery and Exploration (INDEX) 24Southwest Academy of Nanoelectronics (SWAN) 26 Midwest Institute for Nanoelectronics Discovery (MIND) 40
A call to action In 2009, 51% of US patents were awarded to 

non-US companies

 There are 16 energy companies with larger 

reserves than the largest US company

 Manufacturing in the US computer industry is 

now lower than when the first PC was made in 

1975

 China has now surpassed the US as the world’s 

number one high technology exporter.

 Survey of global firms planning to build new R&D 

facilities say 77% plan to build in China or India 

 The US ranks 27th among developed nations in 

the proportion of college students receiving undergraduate degrees in science or engineering.

 Over past 15 years, China has moved from 14thto 2nd place, behind the US, in the number of 

published research papers
Moving forward

“The unanimous view of the committee members participating in the preparation of this report is that our nation’s outlook has worsened.”“The only promising avenue for achieving [American prosperity]... is through innovation.”