The Seeds That Federal Money Can Plant

LUIS VON AHN, a computer scientist at Carnegie Mellon University, sold one Internet start-up to Google in 2009, and is now on to another.

With the new company, Duolingo, he hopes to tap the millions of people learning languages online to create a crowdsourced engine of translation. “We want to translate the whole Web into every major language,” Mr. von Ahn says.

Ambitious, sure, but Duolingo recently attracted $15 million of venture capital. The investors are betting on Mr. von Ahn, his idea and his growing team of 18 engineers, language experts and Web designers.

Mr. von Ahn, 33, personifies some of the essential ingredients of America’s innovation culture, when it works well. An immigrant from Guatemala, he has intelligence and entrepreneurial energy to spare. And he has received a helping hand from the federal government. Duolingo began as a university research project financed by the National Science Foundation.

That pattern has been repeated countless times over the years. Government support plays a vital role in incubating new ideas that are harvested by the private sector, sometimes many years later, creating companies and jobs. A report published this year by the National Research Council, a government advisory group, looked at eight computing technologies, including digital communications, databases, computer architectures and artificial intelligence, tracing government-financed research to commercialization. It calculated the portion of revenue at 30 well-known corporations that could be traced back to the seed research backed by government agencies. The total was nearly $500 billion a year.

“If you take any major information technology company today, from Google to Intel to Qualcomm to Apple to Microsoft and beyond, you can trace the core technologies to the rich synergy between federally funded universities and industry research and development,” says Peter Lee, a corporate vice president of Microsoft Research. Dr. Lee headed the National Research Council committee that produced the report, titled “Continuing Innovation in Information Technology.”

The long-term importance of government-supported research may loom small in the current debate over how to reduce the federal deficit. But it is an economic issue worth keeping in mind, and one that points to the kinds of tough choices and trade-offs facing policy makers.

The Budget Control Act, which is scheduled to take effect next January unless Congress shifts course, calls for across-the-board cuts in discretionary spending — for programs other than entitlements like Social Security and Medicare. A new study by the American Association for the Advancement of Science estimates that federal spending on research and development would be trimmed by more than $12 billion in 2013. The National Science Foundation, which finances most government-supported computer science research at universities, would have its budget cut by more than $450 million.

Last week, Senate leaders were trying to negotiate a deficit-reduction deal that would avoid the automatic cuts, but programs like those that finance research are likely to receive rigorous scrutiny from budget-cutters for years into the future. Already, the Advancement of Science report says, government spending on research and development has declined by 10 percent since 2010, when adjusted for inflation.

YET why should government support for scientific research and technology development be spared from the belt-tightening? Unless society benefits inordinately from such spending, there is no case for special treatment. In a new book, “Innovation Economics: The Race for Global Advantage” (Yale University Press), Robert D. Atkinson and Stephen J. Ezell forcefully present the argument for the exceptional role that science and technology play in the economy.

Cutting funding for research and development, Mr. Atkinson said in an interview, is “completely shortsighted.” Spending on science and technology, he said, is an investment that produces a larger economy in the future — generating wealth, jobs and tax revenue. Besides, he said, the bill is not very high in the United States. America ranks 22nd among 30 nations in university funding and research and development funding as a share of the economy’s gross domestic product.

In their book, Mr. Atkinson, president of the Information Technology and Innovation Foundation, a nonprofit policy research group, and Mr. Ezell, a senior analyst at the foundation, define innovation as not only the generation of new ideas but also as their adoption in new products, processes, services and organizational models. In their view, the goal of policy should be to invest in and nurture the development of the innovation pipeline, from basic science to commercialization.

That would call for a more hands-on role for government than is embraced by the mainstream of economic thought, certainly in the United States. The consensus of most economists is that basic science is a “public good,” with the benefits widely shared by society, and thus a worthwhile recipient of government financing. But technology — the application of science to real-world problems — is regarded as a “private good,” with its development best left to the marketplace.

Mr. Atkinson, whose Ph.D. is in city and regional planning, says he is presenting the case for loosening the grip of “neoclassical economists” on policy. He has held economic and technology policy jobs in Rhode Island and for Congress, and has served in advisory groups in the administrations of President Obama, Bill Clinton and George W. Bush. Mr. Atkinson’s nonprofit policy research organization receives financial support from groups including the Alfred P. Sloan Foundation and the Ewing Marion Kauffman Foundation, and from corporations including Intel and I.B.M.

A linchpin of innovation policy, according to Mr. Atkinson, is collaboration between government and industry. As a prime example, he points to Germany and its network of 60 Fraunhofer Institutes, financed 70 percent by business and 30 percent by federal and state government. The institutes, he says, perform applied research intended to translate promising technologies, from polymer research to nanotechnology, into products. These tech-transfer clusters, Mr. Atkinson says, are an important reason for the strength of Germany’s manufacturing sector, even though wages for its factory workers are 40 percent higher than those for American workers.

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Taking a page from the German model, the Obama administration announced this year plans for up to 15 manufacturing innovation institutes, public-private collaborations called the National Network of Manufacturing Innovation. The first will be in Youngstown, Ohio, specializing in custom manufacturing using 3-D printing technology. Mr. Atkinson says that while this is a good step, what is needed is a long-term commitment. He noted that Germany’s Fraunhofer initiative began nearly four decades ago, and has grown steadily.