Much of the Washington debate over promoting technological innovation has focused on long-term public investment in basic scientific research and development. But at the same time, the federal government has been erecting new regulatory roadblocks that slow innovation in the short run. This self-defeating pattern is particularly evident in the dynamic hi-tech sectors of our economy.
This morning, PPI will host a policy forum to engage top tech executives and investors in this debate. We will also discuss our latest policy memo, which shines new light on the impact of misguided regulations on innovation.
In this new memo, Innovation by Acquisition: New Dynamics of High-Tech Competition, PPI argues that U.S. antitrust policies have not kept pace with changes in these tech sectors, where business acquisitions have played a key role over the last decade in the emergence of innovation “ecosystems,” or platforms on which many different companies can build products and provide services. By slowing down or blocking acquisitions, regulators can limit the exit routes for startups, potentially reducing their value and making it less attractive for investors to put their money into the next round of innovative new companies.
The report's authors, Michael Mandel and Diana G. Carew, find that acquisitions and innovation in the technology sector are positively associated with economic growth and job creation, an important consideration as we struggle to devise new, cost-effective ways to stimulate the economy and create jobs. "When done correctly, acquisitions in the technology sector encourage innovation by bringing new products to market faster and more effectively," they conclude.
Rather than take sides in today's witless "regulation, good or bad?" debate, progressives need to embrace smart regulatory policies that help America recover its economic dynamism and reverse its economic slide. This new PPI report points in this direction.
I hope you'll take a look.
President, Progressive Policy Institute