Understanding the U.S. National Innovation System

November 2, 2020

The United States has no national, coordinated innovation policy system. In fact, its overall innovation system has been deteriorating. The country’s economic future and national security will depend on rising to the challenge of addressing this problem.



  • The U.S. national innovation system is in crisis, and in need of thorough rejuvenation, especially through significant increases in federal funding.
  • A strong national innovation system requires correctly structuring all three sides of the “innovation success triangle”—the business environment, the regulatory environment, and the innovation policy environment.
  • While under threat, the United States still has reasonably good business and regulatory environments, but it has a weak innovation policy environment.
  • Compared to other nations, the United States is trending downward in its funding for universities, federal labs, and other innovation inputs that policymakers have been unwilling to prioritize in the federal budget process.
  • No nation has its innovation system entirely right, but a few come close. The challenge for the United States going forward is whether it can make the changes needed to meet the new global competition, especially vis-à-vis China.