Government Approaches to Encouraging Innovation
What are some Government Approaches to Encouraging Innovation?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What are some Government Approaches to Encouraging Innovation?
The primary government approaches to encouraging innovation include:
- Intellectual property - Granting intellectual property rights, a firm is able to earn monopoly profits on its product for a period of time—which offers an incentive for research and development.
- Government Spending on Research & Development - Government spending can provide direct financial support for research and development (R&D) conducted at colleges and universities, nonprofit research entities, and sometimes by private firms, as well as at government-run laboratories.
- Tax Breaks for Research & Development - The federal government refers to this policy as the research and experimentation (R&E) tax credit aimed at stimulating additional private sector investment.
- Cooperative Research - State and federal governments support research in a variety of ways. Cooperation between government-funded universities, academies, and the private sector can spur product innovation and create whole new industries.
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