FEW DOUBT THE LINKAGE BETWEEN BASIC RESEARCH and technological innovation. Historically the US government has funded the majority of basic research done in the US. However, government spending on basic research as a percentage of GDP has been declining for the last 20 years. What is the future of innovation in America?

We're all familiar with the term research and development (R&D). It’s a phrase measuring the amount of money a corporation invests in gathering new knowledge or creating new products. Investors use a corporation’s expenditures on R&D as one factor in determining its potential for growth and competitiveness. But let's dig a little deeper into the macroeconomic view of R&D.