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The U.S. is still considered the most innovating country in the world. The national innovation systems (NIS) approach offers improvements over alternative frameworks that conceptualize technological development in terms of inputs (e.g. science funding) and outputs (e.g. publications and patents). Technology is changing at an increasingly rapid pace but not all of that change is dramatic. Incremental improvements in process, inputs or equipment are required to adapt products and processes to the local environment as well as enhance productivity and lower costs.

Political and Legal Environment

This environment can have tremendous influence on the way new value is created. Consider the case of the Bayh-Dole Act in the USA. It is United States legislation dealing with intellectual property arising from federal government-funded research. The Bayh-Dole act which was amended in 1984 and 1986, gave us small business, universities, and non-profit organizations intellectual property rights to any discoveries and inventions made using federal funds. The idea was to give academic researchers an incentive to commercialize and profit from their inventions and discoveries. The Act effectively transferred ownership of discoveries and inventions from the government that sponsored them to the firms that performed the R&D. In 2004, American universities and institutes received $ 1.39 billion in licensing- fee revenues.

Economic Environ.

The USA has one of the most developed economic systems in the world, enabling it to overcome deep global economic crises. Its GDP in 2009 stood at $11.5 trillion. The economy gathers strength from its diversity and its leadership position in the manufacturing and services sectors. It is a forerunner in industries such as automotive, electronics and information technology. Additionally, In 2011, President Obama's budget further proposes to create jobs, help the economy recover and cut back spending on several fronts such as to increase the resources available.

Technological Factor

Some organizations establish strategic alliances with universities or research companies to engage in joint research projects, which allows the companies to keep abreast of new trends. For example, most of the established pharmaceutical firms have partnered with small, innovative biotechnology research firms in order to capture the next generation of biotechdriven product and process technologies. Other organizations simply donate funds to universities for research in exchange for information about finding in the USA

Environmental Factor

USA is particularly important players influencing the global environment and the direction of international environmental protection efforts. Yet, it is pursuing environmental protection with different levels of enthusiasm and with different policy tools. Additionally, the US was among the first countries in the world to introduce pollution control regulations in the 1960s and 1970s. Initally, there was a heavy reliance upon regulatory measures to control pollution. Regulations include emissions standards controlling point sources, ambient standards, and technology standards.

The U.S. government has helped to bring this about by adopting policies and programs designed to encourage networking among the various sectors Healthcare spending in the USA is projected to grow 5.8 percent annually through 2020. The government is uniquely positioned to address healthcare innovation because of its dominant role in healthcare funding and regulation. The government focused on federal programs, regulations and policies that can reduce barriers and foster innovation in healthcare delivery and medical product development in the USA. Federal policies and regulations can support processes and provide incentives that promote the widespread adoption of proven interventions.

Concerns about spurring innovation are not limited to healthcare; the federal government has been engaged in a number of initiatives to promote innovation in energy, education, science and other sectors.

The first component of USA innovation agenda must focus on the research and development tax credit. A generation ago the United States was one of the first nations to encourage private sector R&D through tax credits. Since then, a wide range of economists have agreed that every tax credit dollar stimulates anywhere from $1 to $3 in additional private investment on the part of U.S. companies.

In the United States, a recent federal policy change has intensified interest in how government agencies can most effectively design and apply innovation inducement prizes. Specially, the America COMPETES Reauthorization Act of 2010, signed into law in January 2011, provides all federal agencies with broad authority to offer innovation inducement prizes. While some agencies like NASA had previously offered innovation inducement prizes, this policy change aimed to clarify and simplify a path by which all federal agencies could offer innovation inducement prices.

More recently, new innovation policies have been considered. In 2004, the Bush Administration proposed a program with three major public policy initiatives, focused on hydrogen fuel technology, healthcare information technology, and broadband technology. In 2005 federal R&D investment reached a record $132bn, doubling the funding for nanotechnology to $1bn and increasing information technology funding to $2bn. However, the Administration also proposed to cut science funding for 21 of 24 agencies. The U.S. Government has enacted policies and laws that encourage innovation. The national innovation system is not a formal institution per se, but a set of policies designed to advance science and technology and to commercialize new discoveries.

Innovation has clearly played an important role in securing the economic position of the US. Economists estimate that half of US GDP growth over the past 50 years can be accounted for by the productivity improvements generated by innovation.

In a period of economic turmoil with an aging population, R&D activities are becoming increasingly important in the United States. The research tax credit is available on the federal and state level and has been available since 1954. It is now part of the Economic Recovery Tax Act of 1981 under which the United States Congress created the research credit to encourage businesses to conduct more research.

In general, businesses prefer general tax relief or lower corporate tax rates, rather than targeted incentives to certain types of investments. In addition to lower taxes, corporations also like predictability in a tax regime. For governments, tax incentives are also complex to administer. In the US, for example, the Internal Revenue Service has singled out the federal R&D tax credit as one of the most onerous tax provisions, because it is so difficult to enforce.

Governments try to deal with this issue in various ways. The credit has never been made permanent in the Internal Revenue Code (IRC), but has traditionally been extended with amendments. The temporary provision of the IRC provides a non- refundable credit for qualified research expenditures. While virtually any business taxpayer can claim the credit, the most current data available, for 2005, shows 65% of the research tax credit available was claimed by large corporations. The greatest period of growth in R&D was from 1994 to 2000, when R&D expenditures rose from $ 169.2 billion to $264,4 billion and the USA was the world's top producer of high technology products.

One such incentive is the corporate R&D tax credit, which in most years since 1981 has allowed deduction from U.S. federal taxes of a modest portion of research and experimentation expenses above a previous norm for the firm. On average this has allowed companies using the credit to deduct close to 6% of the cost of R&D before federal taxes are calculated. State R&D tax credits in most U.S. states may double the savings to firms.

The U.S. research enterprise in 2011 is experiencing both challenges and opportunities. Research universities have evolved and adjusted to global changes and national needs. By advocating that research universities become the core of the U.S. system of scientific and technological innovation. . Innovation has become a more integral component of education, and research universities will aid in continuing its legacy as a valued partner with government, industry, and society at large in improving national innovation and entrepreneurial systems.

For example, the movement of trained personnel into industrial and other occupations can be as a powerful mechanism for the diffusion of scientific research, and demands from students and their prospective employers for "relevance" in the curriculum can strengthen links between the academic research agenda and the needs of society.

Although their coverage is limited to U.S. universities and industry, a number of recent studies based on interviews or surveys of senior industrial managers in industries ranging from pharmaceuticals to electrical equipment have examined the influence of university research on industrial innovation, and thereby provide additional insight into the role of universities within the U.S. national innovation system.

University research contributed to technological advances by enhancing knowledge of the fundamental physics and chemistry underlying manufacturing processes and product innovation, an area in which training of scientists and engineers figured prominently, and experimental techniques.

The increased importance of industry in funding university research is reflected in growth in the number of research institutes at U.S. universities seeking to support research on issues of direct interest to industry. .Data from Cohen, Florida and Goe (1994) on university industry research centers in the United States indicate that more than 57% of all university industry research institutes in existence as of 1992 were established during the 1980s.

The United States has one of the largest automotive markets in the world and is home to 13 auto manufacturers. The industry is today one of the most innovative in the U.S. According to the National Science Foundation, R&D spending by the industry in 2006 was the third largest of any industry at $16.5 billion. Thus, the automotive industry produces technically complex consumer products in high volume in a hypercompetitive, highly regulated and extremely volatile economic ecosystem. This means product innovations must be usable without training, always function with a high degree of reliability in any environment, be manufactured extremely cost competitively in high volumes despite the products' rich technical complexity and conform to multiple differing government regulations across the globe. These requirements have also lead to technically innovative design and manufacturing methods, such as global vehicle platforms and flexible manufacturing.

Innovation frequently implies more than changes in products or processes. It often requires major changes in business models that upset expectations about how markets work, and to whom a new set of products is aimed. In the case of the automobile industry, for example, Henry Ford's model T represented a perfect example of melding both process innovation and a business model innovation, perfecting the idea of mass production together with the mold breaking business model of pricing cars for all working households
Technology adoption is occurring at a rapid pace at multiple levels in the automotive industry. This adoption can be seen in such areas as virtual simulation testing of product designs, the continued automation of manufacturing facilities and clearly in vehicle technologies.

In today's auto market, the creative automotive engineer is looking for fuel-saving methods that preserve vehicle size because size allows more seating positions, more leg room, more crush space, more trunk or cargo space, and the ride height that many drivers have come to prefer.

Major technical improvements and innovations are needed to enable the U.S. auto industry to build this next generation of automobiles, which will operate with much higher energy efficiencies and safety levels and lower emissions than today's vehicles, while maintaining present performance, size, and utility standards.

Nanotechnology for green innovation - green nanotechnology - aims for products and processes that are safe, energy efficient, reduce waste and lessen greenhouse gas emissions. Such products and processes are based on renewable materials and/or have a low net impact on the environment.

In Conclusion, The responsibility for improving a nation's level of innovation, with the consequent benefits it brings to global competitiveness, jobs and enhanced productivity, is a task that governments share with private enterprise and all the other players engaged in economic endeavours. The US is the most important source of technology for all OECD countries, and the information technology (IT) cluster of industries is the main source of technology acquired in most countries, rising significantly over the years. It is being increasingly proved that while performed R&D and embodied R&D are important sources of productivity growth, an open trade and investment regime are important elements in technology catch-up that reduced the distance to technological frontiers. Most thriving firms in the US have also realized that business strategies based on throwing new hardware at performance problems are unlikely to work. They have instead learned to integrate technology in their manufacturing and marketing strategies and to link them to organizational changes that promote teamwork, training and continuous learning.

Reference no: EM132079

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