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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 U.S. science administrators organized a major coordinated research effort to support the Allied war effort, including significant investments in medical research which 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 (prioritizing speed, coordination, redundancy, and more), 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," NBER Working Papers 28335, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28335
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    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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    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Policy responses

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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. 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.
    3. repec:hal:spmain:info:hdl:2441/401t6job098n79ch91o9giov9d is not listed on IDEAS
    4. Agarwal, Ruchir & Gaule, Patrick, 2022. "What drives innovation? Lessons from COVID-19 R&D," Journal of Health Economics, Elsevier, vol. 82(C).
    5. 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.
    6. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Papers 2212.14159, arXiv.org.
    7. repec:spo:wpmain:info:hdl:2441/401t6job098n79ch91o9giov9d is not listed on IDEAS
    8. Heinrich, Torsten & Yang, Jangho, 2022. "Innovation in times of Covid-19," MPRA Paper 115809, University Library of Munich, Germany.
    9. 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.
    10. Klaus Gründler & Armin Hackenberger & Anina Harter & Niklas Potrafke, 2021. "Covid-19 Vaccination: The Role of Crisis Experience," CESifo Working Paper Series 9096, CESifo.
    11. 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.
    12. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Chemnitz Economic Papers 058, Department of Economics, Chemnitz University of Technology.
    13. 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.
    14. 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).

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    More about this item

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • 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
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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