Role of Innovation in Determining Long-Term Economic

¶ … role of innovation in determining long-term economic growth and provide three public policies that are likely to encourage innovation. Provide an example of a recent innovation that has the potential to have a significant impact in one or more industries.

The nation needs to experience a situation where its exports are greater than its imports. This causes it to become wealthy and prevents many problems of economic hardship such as unemployment, the output and income in the economy, the price level, and burden of debt, inflation, national discontentment, and market inefficiencies and non-equilibrium that may will be the result of the reverse called a balance of trade deficit. There may also be preference for foreign products as opposed to locally-produced products which results in less of the local products being sold and in increase of their price. Whilst surplus of imports may be good for individual consumers who may end up paying the lower prices of these imparts and who have a section, it may be detrimental for the country in general (Froyen, 1998)

Given the state of global competition where countries are beginning to merge into producing the same kinds of goods and where, given that this is the case, competition then tends to producing increasingly cheaper goods (which may impact quality); one of the best ways that a country can differentiate themselves is by innovating. Innovating not only helps produce a greater interest in their goods (thus stimulating demand for their products), but may also lead to greater profit since people would be willing to pay the price for the item given its originality.

If the country succeeds in boosting its exports, it stands a good chance of becoming wealthier, thereby increasing its GDP. America, therefore, under its Obama administration has recently placed a great deal of onus on innovation in order to overcome the setbacks of the recession where the national debt was highly increased, imports, during some years, outweighed exports, and its domestic market as a result suffered due to the fact that citizens were consuming more foreign goods than they were of their own.

Obama's Strategy for American Innovation is an example of American endeavors to boost innovation. The Government will assist this in at least three ways:

1. As promised in March 2010, by the Office of Management and Budget, the Government will actively help in assisting innovation by offering prizes, tax cuts, and incentives, and margin the route of innovators as inexpensive as possible. In September of that same year, the Government further launched Challenge.gov, a one-stop website where entrepreneurs and citizen solvers can find challenges with prizes for solving them. In its first 4 months alone, Challenge.gov has accumulated nearly 60 challenges from more than 25 agencies asking for original solutions for problems such as childhood obesity, advanced vehicle technologies, financing for small businesses, Type 1 Diabetes, and many other problems.

Congress also issued the America COMPETES Reauthorization Act (2010), providing federal agencies with generous awarding capacities. The Obama Administration works with these agencies to make sure that the venture works

2. Obama signed an Executive Order in January 2011 calling for a government-wide review of regulations to update or revise them to, among other purposes, ensure that they facilitate -- rather than impede -- competition and innovation in addressing valid public policy goals. Effective management of public resources, such as the electromagnetic spectrum, unleashes innovation by opening markets and reducing uncertainty over usage rights and engineering design.

3. The Obama Administration has also determined to "free up wireless spectrum that will facilitate private sector investment and innovation, improve the patent system, train workers for quality jobs, catalyze the private sector to meet national priorities like clean energy, and foster the entrepreneurial spirit that has always driven this country to greater heights." Aside from all of this, Obama has also continued to invest in education and workforce training (Rising to the Challenge; online)

One of the greatest and most promising areas for innovation on the surface that both Obama and Romney are fighting over is energy renovation. Obama wants to transition from fossil fuels to renewable energy sources and is prepared to heavily invest innovation in this field including in deployment as well as basic science. Anyone who can make contributions and breakthroughs in this field will have become a potentially enormously wealthy person as well as achieving wealth for America in the process. Romney's ideas of innovation in this field, however, extend more to research and to demonstration projects of new energy technologies. His aims are to expand domestic oil and natural gas production. In this way, America would be giving less of its money to outsiders and spending it more on its own domestic resources. At the same time, it can sell those locally-produced resources to other countries (The Business Journals, 2012)

In the meantime, whilst researchers are working on innovations in the energy sector, innovations in other fields are occurring all the time. One of the most recent amazing innovations ( produced in 2008) and one that has potential contributions to many other fields is that of a chip that literally restores sight to the blind. People are calling it a bionic eye, and even though the amount of sight restored is miniscule, it restores enough for the formerly blind person to see. The chip turns light into nerve impulses. This is a full neural-electronic interface, which, while it has been done before in various contexts, is becoming more and more effective and miniaturized (Green, 2012).