contributions of foreign - born scientists and engineers, both permanent immigrants and those staying in the country only for a time. and, contrary to the notion that highly trained and talented immigrants displace native - born workers in the labor market, scientists and other highly trained professionals who come to the united states tend to enhance the productivity and employment opportunities of those already here, reflecting gains from interaction and cooperation and from the development of critical masses of researchers in technical areas. more generally, technological progress and innovation around the world would be enhanced by lowering national barriers to international scientific cooperation and collaboration. conclusion 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. references arrow, kenneth j. ( 1962 ). “ the economic implications of learning by doing, ” review of economic studies, vol. 29 ( 3 ), pp. 155 – 73. battelle and r & d magazine ( 2010 ). “ 2011 global r & d funding forecast, ” r & d magazine, december, www. battelle. org / aboutus / rd / 2011. pdf. corrado, carol, charles hulten, and daniel sichel ( 2009 ). “ intangible capital and u. s. economic growth, ” the review of income and wealth, vol. 55 ( september ), pp. 661 – 85. corrado, carol, and charles r. hulten ( 2010 ).

and closely studied is the development of hybrid seed corn in the united states during the first half of the 20th century. 4 two other examples of innovations that received critical federal support are gene splicing – federal r & d underwrote the techniques that opened up the field of genetic engineering – and the lithium - ion battery, which was developed by federally sponsored materials research in the 1980s. and recent research on the government ’ s so - called war on cancer, initiated by president nixon in 1971, finds that the effort has produced a very high social rate of return, notwithstanding its failure to achieve its original, ambitious goal of eradicating the disease. 5 what about the present? is government support of r & d today at the “ right ” level? this question is not easily answered ; it involves not only difficult technical assessments, but also a number of value judgments about public priorities. as background, however, a consideration of recent trends in expenditures on r & d in the united states and the rest of the world should be instructive. in the united states, total r & d spending ( both public and private ) has been relatively stable over the past three decades, at roughly 2 – 1 / 2 percent of gross domestic product ( gdp ). 6 however, this apparent stability masks some important underlying trends. first, since the 1970s, r & d spending by the federal government has trended down as a share of gdp, while the share of r & d done by the private sector has correspondingly increased. 7 second, the share of r & d spending targeted to basic research, as opposed to more applied r & d activities, has also been declining. 8 these two trends – the declines in the share of basic research and in the federal share of r & d spending – are related, as government r & d spending tends to be more heavily weighted toward basic research and science. the declining emphasis on basic research is somewhat concerning because fundamental research is ultimately the source of most innovation, albeit often with long lags. indeed, some economists have argued that, because of the potentially high social return to basic research, expanded government support for r & d could, over time, significantly boost economic growth. 9 that said, in a time of fiscal stringency, the congress and the administration will clearly need to carefully weigh competing priorities in their budgetary decisions. another argument sometimes made for expanding government support for r & d is the need to keep pace with technological advances in other countries. r &