With little fanfare, we recently passed a major technological milestone: the sale of the one-billionth Internet-enabled smartphone worldwide. About one in seven humans on earth hold the Internet in their hands – not bad for a technology that hardly existed 10 years ago. Worldwide sales of smart tablets, a technology barely three years old, exceeded 100 million units in 2012 and are set to surpass 600 million in the next few years.
This isn't just good news for web lovers and email addicts – these exploding markets represent tremendous sources of economic growth and job creation across the entire value chain, from manufacture, to infrastructure, to retail, to app development. The global smartphone market was estimated to be worth $219 billion last year, while the iPhone 5 alone was thought to have added as much as 0.5 percent to the GDP of the United States in the fourth quarter of 2012. These billions of dollars translate into millions of jobs.
The idea that new technological innovations are major drivers of economic growth is not new. In fact, economist Robert Solow won the Nobel Prize for his observation that roughly half of the U.S.'s economic growth since the 1950s could be attributed to technological advancement.
This inextricable relationship between technology and prosperity is why it's particularly troubling to see the severe cuts to federal science and technology programs continuing under the sequester. After all, it has often been public investments in science and engineering research that have paved the way for robust private sector growth in new American industries.
Of course, Apple and its competitors created this new industry. But the technologies that make smart phones and tablets possible came from discoveries made through federally funded research. According to one analysis by Research Trends, the technologies used in LCD screens, lithium-ion batteries, digital hard drive storage and Internet protocols – all critical to these success of these devices – were enabled by key research discoveries funded by the National Science Foundation, National Institutes of Health and the Departments of Energy and Defense.
None of this research was carried out with a smartphone or tablet in mind. It is simply not possible to say in advance where fundamental research will lead – but without the research, revolutions like this one won't happen.
Beyond tablets and smartphones, some of the United States' most economically important industries, from aerospace to biotechnology to software, can be traced to an alphabet soup of federal research programs – NASA, DARPA, NIST, DoD, NSF, NIH, DoE, and others. One analysis drew a direct connection from the United States' $750 billion biotechnology industry to a $3.6 billion investment in the Human Genome Project, which had the support of four presidents. Another showed that each year the National Institutes of Health generates twice as much economic benefit as it costs to run.
When I served as President Clinton's chief advisor for science and technology, I saw both Republicans and Democrats rally around a number of bipartisan innovation initiatives, such as funding for the National Nanotechnology Initiative and the completion of the first draft sequence of the human genome. Though it was a time of deep partisan division on many issues, we found we could agree that government investments in research were critically important to the future of the economy.
America is at an economic crossroads. The current path of austerity leads to ever diminishing returns – cutbacks on research and training of future scientists and engineers, slowdowns in technological innovation and fewer high quality jobs for Americans down the road. The right path for the country is increased investment in research and innovation, which history has shown reliably yields a high return.