New Economy

Created: 2000-04-26
Last Modified: 2000-5-04
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New Economy Forum Briefing

J. Bradford DeLong

May 2000


Public Funding

  • Information technology is based on more than two generations of formal, scientific research done mostly at our leading research Universities.
  • Clever engineers working in the family garage are standing on the shoulders of fundamental, formal, academic scientists
  • Investment in basic research was critical in the past and remains so now.
    • Basic research creates the next technological frontiers.
    • Being close to basic research--having a constant flow of personnel back and forth--is a powerful aid to firms seeking to live on the technological frontier.
  • Yet, no company could seriously contemplate a business strategy based on the uncertainties of basic discovery.
  • Only governments--or giant, enduring monopolies like the old Bell System that are largely immune from capital market discipline--can be expected to undertake the kind of long-term, open-ended investment program in fundamental research that will generate basic principles
  • Corporate downsizing has led to refocusing industrial research away from basic science toward ever more mission-oriented development.
    • That is fine, and appropriate
    • But the seed corn must be renewed
      • Are institutional changes reducing commitments of large corporate laboratories to basic research?


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Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax

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