It should boost R&D spending, improve the education system, and lure the brightest immigrants.
Economists haven't arrived at the perfect policy formula to spark innovation-led growth. But many of them support a multipart strategy that includes encouragement for investment and research, improved education, and a focus on enhancing the general climate for business.
"It's simply wrong that entrepreneurs are born. People can be educated about it," says Mauro Guillen, an expert on entrepreneurship at the University of Pennsylvania's Wharton School. "Giving people the tools ... is very important."
Here are proposals favored by many innovation-oriented economists:
•Boost investment. This could be done by expanding tax incentives for companies that invest in research or capital equipment.
•Improve education. Teaching business and problem-solving skills to a wider range of students is one answer. Mr. Guillen adds that the United States has world-leading universities, but has a primary education system that lags far behind other developed nations.
•Upgrade the nation's toolbox. In addition to policies that support the "supply" of innovation, such as R&D tax credits, the US government can fuel demand for innovation by investing in 21st-century infrastructure, says Rob Atkinson of the Information Technology and Innovation Foundation. Smart power grids are one example. Such improvements can be a "platform technology" on which private-sector entrepreneurs can build their own new creations.