The Economics of Crisis Innovation Policy: A Historical Perspective
11 Pages Posted: 12 Jan 2021 Last revised: 20 Jul 2021
Date Written: January 2021
Since the beginning of the COVID-19 pandemic, policymakers, researchers, and journalists have made comparisons to World War II. In 1940, a group of top U.S. science administrators organized a major coordinated research effort to support the Allied war effort, including significant investments in medical research which yielded innovations like mass-produced penicillin, antimalarials, and a flu vaccine. We draw on this episode to discuss the economics of crisis innovation. Since the objectives of crisis R&D are different than ordinary R&D (prioritizing speed, coordination, redundancy, and more), we argue that appropriate R&D policy in a crisis requires going beyond the standard Nelson-Arrow framework for research policy.
Suggested Citation: Suggested Citation