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America, Jump-Started: World War II R&D and the Takeoff of the US Innovation System

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  • Daniel P. Gross
  • Bhaven N. Sampat

Abstract

During World War II, the US government's Office of Scientific Research and Development (OSRD) supported one of the largest public investments in applied R&D in US history. Using data on all OSRD-funded invention, we show this shock had a formative impact on the US innovation system, catalyzing technology clusters across the country, with accompanying increases in high-tech entrepreneurship and employment. These effects persist until at least the 1970s and appear to be driven by agglomerative forces and endogenous growth. In addition to creating technology clusters, wartime R&D permanently changed the trajectory of overall US innovation in the direction of OSRD-funded technologies.

Suggested Citation

  • 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.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:12:p:3323-56
    DOI: 10.1257/aer.20221365
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    Cited by:

    1. 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).
    2. Naudé, Wim & Dimitri, Nicola, 2021. "Public Procurement and Innovation for Human-Centered Artificial Intelligence," IZA Discussion Papers 14021, Institute of Labor Economics (IZA).
    3. Andrews, Michael J. & Whalley, Alexander, 2022. "150 years of the geography of innovation," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    4. Filippo Mezzanotti & Timothy Simcoe, 2022. "Innovation and Appropriability: Revisiting the Role of Intellectual Property," Working Papers 22-09, Center for Economic Studies, U.S. Census Bureau.
    5. repec:spo:wpmain:info:hdl:2441/401t6job098n79ch91o9giov9d is not listed on IDEAS
    6. Ina Ganguli & Fabian Waldinger, 2024. "War and Science in Ukraine," Entrepreneurship and Innovation Policy and the Economy, University of Chicago Press, vol. 3(1), pages 165-188.
    7. Martin Beraja & David Y Yang & Noam Yuchtman, 2023. "Data-intensive Innovation and the State: Evidence from AI Firms in China," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(4), pages 1701-1723.
    8. repec:hal:spmain:info:hdl:2441/401t6job098n79ch91o9giov9d is not listed on IDEAS
    9. Bergeaud, Antonin & Verluise, Cyril, 2024. "A new dataset to study a century of innovation in Europe and in the US," Research Policy, Elsevier, vol. 53(1).
    10. 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.
    11. Daniel P. Gross & Bhaven N. Sampat, 2022. "Crisis Innovation Policy from World War II to COVID-19," Entrepreneurship and Innovation Policy and the Economy, University of Chicago Press, vol. 1(1), pages 135-181.
    12. Howell, Sabrina T. & Rathje, Jason & Van Reenen, John & Wong, Jun, 2021. "Opening up Military Innovation: Causal Effects of 'Bottom-up' Reforms to U.S. Defense Research," IZA Discussion Papers 14297, Institute of Labor Economics (IZA).
    13. Gan Jin & Günther G. Schulze, 2024. "The Long-term Effect of Western Customs Institution on Firm Innovation in China," Discussion Paper Series 46 JEL Classification: N7, Department of International Economic Policy, University of Freiburg, revised Feb 2024.
    14. Wei Yang Tham & Joseph Staudt & Elisabeth Ruth Perlman & Stephanie D. Cheng, 2024. "Scientific Talent Leaks Out of Funding Gaps," Papers 2402.07235, arXiv.org.
    15. Howell, Sabrina T. & Rathje, Jason & Van Reenen, John & Wong, Jun, 2021. "Opening up military innovation: causal effects of reforms to US defense research," LSE Research Online Documents on Economics 114430, London School of Economics and Political Science, LSE Library.
    16. Pallante, Gianluca & Russo, Emanuele & Roventini, Andrea, 2023. "Does public R&D funding crowd-in private R&D investment? Evidence from military R&D expenditures for US states," Research Policy, Elsevier, vol. 52(8).
    17. Sofia Patsali, 2021. "University Procurement-led Innovation," GREDEG Working Papers 2021-13, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

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    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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