The Economics of Crisis Innovation Policy: A Historical Perspective
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<jats:p> 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. </jats:p>
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Daniel P. Gross is an Assistant Professor of Business Administration at Duke University’s Fuqua School of Business and a Faculty Research Fellow at the National Bureau of Economic Research. He researches the causes and consequences of technological change. Recurring themes in his work include crisis innovation and its impacts on the innovation system; automation and its effects on firms, workers, and labor markets; and incentives and other tools for managing creative workers within organizations. His work frequently uses historical examples of industries undergoing significant technological change as contexts to investigate recurrent or modern economic questions.
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