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President Barack Obama must now show that he is ready to set the technology policy agenda of the United States for the next four years because our national technology policy will have a large effect across all areas of national policy.

Spurring technological innovation is becoming an increasingly important tool for policymakers. Government has traditionally relied on three mechanisms to shape public policy: tax policy, government programs, and regulation. However, innovation has become an important component because success in many policy areas, including health care, national defense, homeland security, transportation, energy, environment, law enforcement, and, of course, the economy, may largely be determined by our ability to develop and deploy information technology (IT). For example, solving our nation’s surface transportation challenges will be difficult without the widespread use of IT, whether to implement congestion pricing and tolling with intelligent transportation systems or to provide real-time information on traffic conditions. Likewise, fixing health care requires a massive infusion of IT, including the deployment of electronic health records and the creation of a sustainable national health information network.

This essay lays out a framework for the new administration’s technology policy to help spur growth and progress throughout the economy and government. Each of these policy changes satisfies at least one of two primary goals: 1) promoting competitiveness and innovation; and 2) fostering a more robust digital economy. Given the importance of IT to solving pressing societal problems, it is crucial that the new administration see IT not as a sideline issue, but as a key component of its domestic and foreign policy. This means putting issues of digital transformation at the front and center of a wide array of public policy issues. For example, any economic stimulus package should invest not only in physical infrastructure, but also in our digital infrastructure. It also means that IT transformation needs to be a key component of every government agency, not just the commerce or telecommunications agencies.

Promote Competitiveness and Innovation

In the last decade, an increasing number of economists have come to see technological innovation as the key to higher standards of living. The United States has led the world in innovation since World War II, yet there is disturbing evidence (e.g. declining shares of global patents, R&D, technology exports, etc.) that our lead is beginning to shrink and may well disappear.1 To meet the economic challenges of the future and keep America competitive in the global economy, the new administration will need to make the promotion of innovation a key part of its economic agenda. The administration needs to establish robust policies that encourage innovation both on the supply side, by supporting science, technology, engineering, and mathematics (STEM) education and research, and on the demand side, by creating the conditions and incentives to spur more innovation. release of intellectual property rights; and blocking or limiting access of foreign companies to markets through standards, government procurement, data privacy, and other policies.

The new administration should take active steps to combat these unfair trade practices. One strategy would be to appoint a U.S. Trade Representative who is focused on and capable of vigorously challenging violations of other nations’ IT trade agreements under the World Trade Organization (WTO).4 In addition, the administration should ask Congress for additional funds for the Office of the U.S. Trade Representative (USTR) to use to enforce existing trade commitments.

Even if Congress gives the USTR more resources, government alone cannot investigate all potential WTO cases. Companies that do bring cases to the WTO are acting on behalf of the U.S. government. To encourage companies to build these cases, the new administration should consider working with Congress to create a twenty-five percent tax credit for expenditures related to the cost of litigation.

As Hedlund and Atkinson assert in The Rise of the New Mercantilists: Unfair Trade Practices in the Innovation Economy, the current debate over trade is characterized by laissez-faire Panglossian support on the one side and protectionist opposition on the other.2 The new administration needs to chart a new course in trade policy that starts with recognizing that globalization will work effectively — producing the largest increase in wealth that benefits the most people — only if all nations play by the agreed upon rules.

Unfortunately, as Hedlund and Atkinson argue, in the international competition for high-tech jobs, many countries have erected “a host of unfair and protectionist policies focused on systematically disadvantaging foreign and American companies in global competition.”3 These policies include raising the relative price of foreign IT products and services through tariffs, taxes, subsidies, and excessive antitrust enforcement; acquiring foreign IT products and services through digital theft and the forced In addition, when WTO rules do not go far enough in limiting mercantilist actions, the new administration needs to make sure that market-based IT trade is a high priority when it negotiates bilateral trade agreements.

Fight Mercantilist Trade Practices

As Hedlund and Atkinson assert in The Rise of the New Mercantilists: Unfair Trade Practices in the Innovation Economy, the current debate over trade is characterized by laissez-faire Panglossian support on the one side and protectionist opposition on the other.2 The new administration needs to chart a new course in trade policy that starts with recognizing that globalization will work effectively — producing the largest increase in wealth that benefits the most people — only if all nations play by the agreed upon rules.

Unfortunately, as Hedlund and Atkinson argue, in the international competition for high-tech jobs, many countries have erected “a host of unfair and protectionist policies focused on systematically disadvantaging foreign and American companies in global competition.”3 These policies include raising the relative price of foreign IT products and services through tariffs, taxes, subsidies, and excessive antitrust enforcement; acquiring foreign IT products and services through digital theft and the forced In addition, when WTO rules do not go far enough in limiting mercantilist actions, the new administration needs to make sure that market-based IT trade is a high priority when it negotiates bilateral trade agreements.