The Unintended Consequences of American University Tech Transfer: Does It Facilitate the Offshoring of American R&D?

Abstract:

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on innovation and entrepreneurship, primarily in metro regional economies.

Aggregate national income, which includes both wages of families and profits of corporations, is up as a result of the trade and tax policies, but the distribution of income has not floated all the boats in America. The rising tide of income from profits is not flowing to the wages and salaries of American families, and therefore, the proponents of free trade call upon another branch of economic theory to suggest that the winners (multi national corporations) may need to compensate the losers of global trade (everyone else in the American society that is not plugged into the global supply value chains).

The tax and trade policies enacted in 2002 facilitated the offshoring of American innovation and the foundations of research and development, which are the original engine of economic growth in America. Economists call those original resources the country’s initial factor endowments. Trading goods and services, as described by Ricardo, is not exactly the same thing, economically, as trading away the nation’s factor endowments.

Prior to 2002, the U. S. Congress had implemented a number of laws aimed at boosting university research and technology transfer. The good intentions of Congress were easy to understand. The good intentions of the laws passed by Congress did not anticipate running into the laws of unintended consequences.

The way that the trade and tax policies on global trade were implemented has had the unintended consequence that university tech transfer promotes the offshoring the nation’s research and development.

Thomas E. Vass
President, The Private Capital Market, Inc. [email protected]

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1335802