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The Economics of Crisis Innovation Policy: A Historical Perspective

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  • Daniel P. Gross
  • Bhaven N. Sampat

Abstract

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.

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  • Daniel P. Gross & Bhaven N. Sampat, 2021. "The Economics of Crisis Innovation Policy: A Historical Perspective," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 346-350, May.
    • Handle: RePEc:aea:apandp:v:111:y:2021:p:346-50
    DOI: 10.1257/pandp.20211106
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    1. Michael Kremer & Jonathan Levin & Christopher M. Snyder, 2020. "Advance Market Commitments: Insights from Theory and Experience," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 269-273, May.
    2. Daniel P. Gross & Bhaven N. Sampat, 2023. "America, Jump-Started: World War II R&D and the Takeoff of the US Innovation System," American Economic Review, American Economic Association, vol. 113(12), pages 3323-3356, December.
    3. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    4. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
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    Cited by:

    1. Dosi, Giovanni & Palagi, Elisa & Roventini, Andrea & Russo, Emanuele, 2023. "Do patents really foster innovation in the pharmaceutical sector? Results from an evolutionary, agent-based model," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 564-589.
    2. Dominique Foray, 2022. "The Economics of Incomplete Plan -on Conditions, Procedures and Design of Future Mission- Oriented Innovation Policies," Hacienda Pública Española / Review of Public Economics, IEF, vol. 243(4), pages 123-146, December.
    3. Dosi, Giovanni & Lamperti, Francesco & Mazzucato, Mariana & Napoletano, Mauro & Roventini, Andrea, 2023. "Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 151(C).
    4. Giorgio Tripodi & Francesco Lamperti & Roberto Mavilia & Andrea Mina & Francesca Chiaromonte & Fabrizio Lillo, 2022. "Quantifying knowledge spillovers from advances in negative emissions technologies," LEM Papers Series 2022/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. repec:hal:spmain:info:hdl:2441/401t6job098n79ch91o9giov9d is not listed on IDEAS
    6. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Papers 2212.14159, arXiv.org.
    7. Agarwal, Ruchir & Gaule, Patrick, 2022. "What drives innovation? Lessons from COVID-19 R&D," Journal of Health Economics, Elsevier, vol. 82(C).
    8. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Chemnitz Economic Papers 058, Department of Economics, Chemnitz University of Technology.
    9. Heinrich, Torsten & Yang, Jangho, 2022. "Innovation in times of Covid-19," MPRA Paper 115809, University Library of Munich, Germany.
    10. Giovanni Dosi, 2021. "Policy Lessons From Medical Responses to the COVID-19 Crisis," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(6), pages 337-340, November.
    11. Giovanni Dosi, 2021. "Some policy lessons from medical/therapeutic responses to the COVID-19 Crisis: A rich research system for knowledge generation and dysfunctional institutions for its exploitation," LEM Papers Series 2021/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    12. Klaus Gründler & Armin Hackenberger & Anina Harter & Niklas Potrafke, 2021. "Covid-19 Vaccination: The Role of Crisis Experience," CESifo Working Paper Series 9096, CESifo.

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    More about this item

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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