Measuring ATP Impact
2004 Report
on Economic Progress
 Executive Summary
Technological ingenuity
and innovation propelled the United States into a position of world
economic leadership in the late nineteenth century. The capacity
to unite innovation and opportunity has sustained U.S. economic growth
into the twenty-first century and enabled our nation to rebound successfully
from fiscal crises throughout our history.
During the great stagflation
of the 1970s, businesses struggled to maximize profits in the short term,
and many companies refrained from conducting long-term research and development
(R&D). Other countries, including Japan, stepped up their investments
in industrial R&D. These nations focused on bringing research results
to the marketplace, which led to dramatic increases in the ability of
Japanese firms to compete with the United States. In response, the U.S.
Congress charged the Department of Commerce with creating and overseeing
the Advanced Technology Program (ATP) to stimulate innovation in the
United States.
Housed in the National
Institute of Standards and Technology, the mission of ATP is
to accelerate the development of innovative technologies for broad
national benefit through partnerships with the private sector. ATP
accomplishes this mission by providing cost-shared funding to industry
for fledgling technologies that are high risk in nature, but which
could lead to positive spillovers for other companies and industries,
thereby boosting the U.S. economy and enhancing the quality of life
of Americans.
Projects funded by ATP
must meet the following selection criteria:
- Is the proposed technology
highly innovative and high risk?
- Does the R&D
plan feature feasible means of overcoming the high technical risk?
- Is it likely that
sufficient equity or debt financing will not be available and/or
that the scope, scale, or timing to meet a window of opportunity
make federal government investment appropriate?
- Will the technology
provide broad-based economic benefits for the United States?
- Is there a clear
commercial pathway to economic benefits?
Another way to look at
the issue of broad public benefits is to consider the appropriability of
the benefits of a technology. ATP seeks to fund R&D where the resulting
knowledge and technologies are not fully appropriable; that is, innovators
cannot fully capture the financial returns to their investment. Instead,
the benefits flow to other firms, industries, consumers, and the general
public.
Through a competitive,
merit-review process, ATP invests in projects that meet these criteria.
Over 14 years, through 43 competitions and 6,054 submitted proposals
to develop new technologies, ATP has made 736 awards which include 1,468
participants. Technology areas funded include manufacturing, information
technology, biotechnology, electronics/photonics, and advanced materials
and chemistry, covering a broad range of research topics. A total of
$4.2 billion has been invested in ATP-funded projects, half of which
represents industry contributions.
Since the inception of
the program, ATP has performed rigorous and multifaceted evaluations
to determine returns to the taxpayer. To assess whether the program is
meeting its stated objectives, ATP’s Economic Assessment Office
(EAO) employs statistical analyses, case studies, surveys, benefit-cost
analyses, and other methodological approaches to measure program effectiveness
in terms of:
- Inputs (the funding
and staff necessary to move the R&D effort forward)
- Outputs (project
research results)
- Outcomes (products,
processes, and services resulting from the innovation)
- Longer-term impacts
(on industries, society, and the economy)
Key features of ATP’s
evaluation program include:
- The Business Reporting
System, a unique online survey of participants, that gathers data
on an annual basis on the business progress and indicators of future
economic impact of funded projects.
- Status reports, which
assess projects on a portfolio basis by rating completed projects
three to five years out on a scale from zero to four stars, representing
a range of performance from poor to outstanding. Rating criteria
include solving challenging technical problems, producing patents
or publications that could lead to further breakthroughs later on,
making new technical knowledge available to others, accelerating
the commercial use of new technologies, and assessing the future
outlook for the project.
- Benefit-cost analyses,
which identify, assess, and quantify the net private, public, and
social benefits of ATP project outcomes.
- Economic and policy
studies prepared by staff and external researchers that evaluate
particular impacts of the program, including the effect of collaboration
on the research productivity of participating organizations and the
role of the program in the U.S. innovation system.
Returns for the
American people, as measured from 41 of the 736 projects (just
6 percent of the portfolio), have exceeded $17 billion in economic
benefits—more than eight
times the amount invested by ATP. Resulting technologies have been delivered
to the nation in new or improved industrial processes, products, and
services, ranging from more efficient energy sources to improved medical
tests.
EAO surveys have revealed
the existence of a “halo effect” for
participating firm—the ATP award establishes or enhances their expected
value in the eyes of potential investors. Such validation is especially important
for small companies with little or no market presence and limited financial
resources—the type of firm ATP has most frequently funded. From 1990
through 2004, 66 percent of all ATP award recipients were small businesses;
a large percentage had fewer than 50 employees.
ATP stresses the importance
of partnerships and collaborations in its projects. A recent analysis
of data showed that 86 percent of participants had collaborated with
others in research on their ATP projects, with 69 percent of these companies
stating that ATP brought about the collaboration “to a large extent.” Company
applicants are encouraged to propose projects that feature collaborations
with other businesses, with federal laboratories, and with universities. Nearly
70 percent of joint ventures and more than 50 percent of single-company projects
involve universities either as formal participants or subcontractors, which
offers access to eminent researchers and open possibilities for further diffusion
of knowledge created by the projects.
Several surveys confirm the
fact that ATP involvement accelerates the development and commercialization
of new technologies:
- Time to market
was reduced by one year in 10 percent of projects; by two years in 22
percent of projects; and by three years in 26 percent of projects.
- Sixteen percent
of funded projects would not have proceeded without ATP.
- In a control group
of non-ATP winners, less than 40 percent had begun any aspect of their
projects.
Success of ATP-supported
R&D
efforts can also be measured by:
- Increases in the
number of patents granted—one
study estimates an average increase of between 5 and 30 patents
per firm per year of participation, attributable to ATP.
- The number of new
products or processe—a
study of the first 100 completed ATP projects shows that 122
new products or processes resulted from 64 of these projects.
- Changes in the size
of participating companies—employment
changes were profound for the small companies involved (59 companies
at least doubled in size; 11 companies grew by more than 1,000 percent).
ATP’s $2.2 billion
investment has yielded substantial and measurable innovations for American
businesses, industries, and the consumers of today—and
tomorrow.
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Date created: March
15, 2004
Last updated:
August 15, 2005
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