Robert E. Litan

The Promise of Prediction Markets

The ability of groups of people to make predictions is a potent research tool that should be freed of unnecessary government restrictions.

Projecting the Economic Impact of the Internet

In this paper we analyze the impact of the Internet on the performance of the economy and the standard of living of average Americans. Our analyses illustrate that even though the stock market’s speculative bubble has burst, the Internet will continue to have a significant impact on old economy industries and as a result generate real benefits for the overall economy.

Financial Regulation in the Global Economy.

In recent years, the major industrialized nations have developed co-operative procedures for supervising banks, harmonized their standards for bank capital requirements, and initiated co-operative understanding about securities-market supervision. This book assesses what further co-ordination and harmonization will be required in an era of increased globalization. This work is part of the Integrating National Economies series. As global markets for goods, services and financial assets have become increasingly integrated, national governments no longer have as much control over economic markets. With the completion of the Uruguay Round of the GATT talks, the world economy has entered a fresh phase requiring different rules and different levels of international cooperation. Policies once thought to be entirely domestic and appropriately determined by national political institutions, are now subject to international constraints. Cogent analysis of this deeper integration of the world economy, and guidelines for government policies, are urgent priorities. This series aims to meet these needs over a range of 21 books by some of the worlds leading economists, political scientists, foreign policy specialists and government officials. All the books in the series are offered at the same price: #22.50 for hardbacks and #8.50 for paperbacks.

Commercializing University Innovations: Alternative Approaches

For much of the past century, universities and university-based researchers have played a critical role in driving technological progress, from the fortification of Vitamin D in the 1920s to the creation of Google in the 1990s. In the process, universities have been a strong catalyst for U.S. economic growth. But a perennial challenge related to university-driven innovation has been ensuring that university structures help - not hinder - innovation and the commercialization of innovations. Multiple pathways for university transfer exist and can be codified to provide broader access to innovation, allow a greater volume of deal flow, support standardization, and decrease the redundancy of innovation and the cycle time for commercialization. The proposed changes focus on creating incentives that will maximize social benefit from the existing investments being made in R&D and commercialization on university campuses.

Sustaining Entrepreneurial Capitalism

The conventional wisdom is that the surge in productivity growth which has surged in the United States over the past 15 years has been attributed almost wholly to advances in the production and use of information technology. While this is certainly evident from the statistics, a driving force behind the IT revolution has been the development and growth of new firms. Indeed, the U.S. economy has achieved a remarkable transformation over the last several decades from an economy characterized by large, bureaucratic firms into one increasingly powered by entrepreneurial innovation. The challenge ahead therefore is to cement and strengthen the entrepreneurial form of capitalism. In this paper, we provide a framework for policymaking to achieve this objective.

The case for entrepreneurship in R&D in the pharmaceutical industry

A lack of entrepreneurial behaviour has often been highlighted as a contributor to the decline in the research and development (R&D) productivity of the pharmaceutical industry. Here, we present an assessment of entrepreneurship in the industry, based on interviews with 26 former and current leaders of R&D departments at major pharmaceutical and biotechnology companies. Factors are highlighted that could be important in promoting entrepreneurial behaviour, which might serve as a catalyst for revitalizing R&D productivity.

The Liability maze : the impact of liability law on safety and innovation

With an ever-increasing number of liability lawsuits, are corporations electing to play it safe rather than risk the uncertainties accompanying innovation? In The Liability Maze experts address the issues surrounding safety and innovation and present the most detailed and comprehensive study to date on the actual impact of U.S. liability law. In recent decades it has been widely assumed that liability laws promote safety by significantly raising the price companies must pay for negligence, product defects and accidents. More recently, others have suggested that the broad and unpredictable sweep of these laws actually deters innovation. The risks of lawsuits are so great that corporations are showing more caution in product innovation than ever before. The contributors focus on five sectors of the economy where the liability system appears to have had the greatest effects, positive or negative: the private aircraft, automobile, chemical, and pharmaceutical industries, and the medical profession. They suggest that in many sectors liability law has hampered innovation. In others it has stimulated safety improvements, although perhaps not so much as vigilant safety regulations.

Financial Regulation in a Global Marketplace

RAPID TECHNOLOGICAL CHANGE, conglomeration, mergers, and globalization are rocking the financial industry here and abroad. In this paper we primarily address the implications of globalization for prudential regulation of firms in the financial industry. However, given the importance of the other three forces—and the extent to which they reinforce or are by-products of the trend toward globalization—we address them as well. Our bottom line is that regulators at both the national and international level will have to respond increasingly to market-driven changes. In particular, as financial institutions delve into a wider range of products and activities, policymakers almost certainly will have to decide whether they want to establish a single regulator to oversee all types of financial activity or whether they will be content with the segmented regulatory system long in place in some countries, such as the United States. We note that a trend outside the United States seems to be under way toward creation of a single national financial regulator, independent of the central bank, a development we cautiously support.

American living standards : threats and challenges

American Living Standards contends that the central problem of the U.S. economy has been for some years now, and for the foreseeable future will continue to be, the slowdown in the growth of living standards. This decline began in the early 1970s, was masked by a resort to overseas borrowing in the early 1980s, and now threatens to get worse in the years immediately ahead as the foreign debt bills come due. The editors and contributes to this volume seek to advance our understanding of the causes and consequences of this potential slowdown in the growth of living standards. Equally important, the book examines what policy measure holds out the best hope for presenting, or at the very least, minimizing this slowdown. Various chapters explore the changes in the level and distribution of incomes that have occurred in recent years; changes in the quality and distribution of jobs among industries and regions; what economists do and do not know about recent trends in productivity growth and in the quality of education; and what events could trigger a recession.

Finding Business 'Idols': A New Model to Accelerate Start-Ups

Just as Simon Cowell is revolutionizing the music business with his American Idol television series, a group of new entrepreneurs is quietly changing the face of the venture capital industry and entrepreneurship. American Idol has proved to be a major success in identifying and establishing entertainment stars. A similar Idol formula is emerging among a new wave of entrepreneurs and venture capitalists who are radically transforming the way high-tech entrepreneurs are identified, their businesses are launched, and the growth of their operations accelerated. We believe this is a highly significant development that has important implications for the way many other early stage companies may be launched and financed in the future.