A dynamic system of innovation activities, including invention, the transfer of knowledge, and the introduction of new products and processes, generates outcomes that range from new modes of mobile communication to new vaccines to counter a pandemic. Historically, participation has tended to be limited to higher-income countries, regions, and economies, and within these locations, participation has tended to be limited to higher-income men. These trends are changing.

Intellectual property indicators, such as patenting and trademarks, show where new products and processes are emerging. Patenting and trademark activity by middle-income countries is increasing. This increasing participation of middle-income countries in IP registration and other innovation activities results in both collaboration opportunities and competition challenges. Additionally, with the global supply chain reliant on international S&E capacity, this interconnectedness generates widespread risk in terms of national security, transmission of disease, and disruption in global and domestic economies.

Both international collaboration and collaboration across sectors within and between countries contributes to globally important innovation activity. Domestically, annual statistics on knowledge transfer at universities and federal labs show growth in research collaborations, technology licensing, and support for startups.

Indeed, the process of innovation, from R&D to invention to the release of a new product or process, can be a long one. Thus, introduction of a new product or process in U.S. businesses is assessed over a 3-year period with the most recent data from 2015 to 2017. In this time frame, one in four U.S. firms reported having introduced a product or process innovation. Federal science investments supported many of the industries with higher-than-average innovation intensities, including health-related industries and industries that produce information and communication technologies. These industries are integral parts of the domestic economy, perform high levels of R&D, and compete globally. Thus, federal science investments play an important role in the overall innovation ecosystem in the United States.

The regional and demographic differences in invention activities (patenting) and innovation activities (trademarking) show that these critical activities are unevenly distributed among demographic groups and among geographic regions. Whereas Black or African American firm owners account for only 2% of all firms, and Hispanic or Latino firms account for only 5% of all firms, these firms reported slightly higher-than-average rates of process and product innovations. Women also participate throughout the system, although their numbers are fewer than those for men. Majority-women-owned firms report higher innovation rates than majority-male-owned firms.

Geographically, county data for the United States on patenting and trademark activity show that the intensity of innovation activities takes place unevenly across the country, with more dense activity in urban and metropolitan areas, along the coasts, and in the Northeast. This is consistent with patterns from other countries as well, where R&D, highly skilled workers, and patenting tend to concentrate in metropolitan areas (Planes-Satorra and Paunov 2017). Concentration supports local growth at the same time that other regions, lacking these attributes, grow more slowly. The underparticipation of large sections of the population provides an opportunity to increase innovation in multiple dimensions.

The data highlighted in this report also illustrate shifts in the locations and types of R&D activities and associated outputs. Chief among these shifts is the rise of China as a global contributor to inventive output and to the transformation of new ideas into innovations, recent cautions about both quality and incentives notwithstanding. Another clear shift is the growing role of universities in private-sector innovation. The last decade has seen a 50% increase in the number of university licenses and license options to private-sector entities. This growth is due to university technology transfer to startups and other small companies, a trend somewhat at odds with the long-term decline in share of firms and employment accounted for by these companies in the U.S. economy.

Invention, knowledge transfer, and innovation are indispensable to improving national and global health, well-being, and security. The indicators reviewed in this report suggest that the global S&E enterprise remains healthy and productive and that long-term trends will continue in the direction of greater output and productivity. The federal government funded basic research decades ago that enabled the rapid development of vaccines for the coronavirus pandemic. The decades-long investment in genetic sequencing and vaccine research bore fruit in the 2020 effort to bring effective vaccines to everyone.

The data in this report raise some questions as well. According to U.S. Census data, more than 400,000 new firms (less than one year old) have been created annually in recent years, but technology transfer data shows impacts for just a few thousand startup firms each year. Clearly, there is unmeasured activity here or dark innovation (Martin 2016). Preliminary information in this report on government sharing of OSS and household innovation, and geographic data on new trademarks provides part of the answer, but not all. Taken together with the Indicators 2022 thematic reports, regional variation matters.