Performing research and developing new technology are lengthy processes, and several years may elapse after the start of R&D for any specific technology. Support for R&D must be robust and continuous over the long term to encourage companies to invest in the personnel and equipment needed to drive innovation.

To help guide funding priorities, the government should involve the private sector, which can bring crucial expertise regarding the technologies, markets, scalability, and technical challenges associated with early-stage technologies. Bringing this experience to bear on funding decisions can help ensure that government R&D dollars are spent wisely.

Because R&D is inherently risky and can involve a lot of time and resources, it is useful for firms or governments funding R&D to review projects periodically and ensure they continue to be worth investing in. Stage-gating is the process of establishing certain milestones that projects must hit before they are given additional funding. Projects that fail to meet critical milestones are defunded, allowing resources to be spent elsewhere on more promising research.

An efficient way for the government to fund and support R&D is to concentrate funding on a specific topic in more focused, granular institutions, possibly co-located with one another. This allows researchers working on similar technologies to share information and work together while avoiding the inefficiencies that can arise from spreading funding for similar research across many different institutions. Done well, this approach also helps establish “innovation hubs,” such as Silicon Valley in California, which has become the premier global location for software and information technology innovation.

Many countries have already invested in expensive, high-tech equipment for R&D purposes, often owned by the government. One way to improve government and private sector R&D is to allow businesses to partner with government-owned labs to conduct research together. Partnering with private companies can help overcome some of the cost barriers that prevent companies from buying their own equipment and conducting advanced R&D.

A strong intellectual property (IP) foundation is critical for encouraging R&D investment by private firms. If patents are not protected, then any firm can make use of research results in its own products, reducing or eliminating the incentive for firms to engage in R&D in the first place. Policymakers should ensure that patent systems are sufficiently strong and enforced at a level that encourages innovation while also taking care not to provide overly broad IP protections that encourage unnecessary litigation and stifle innovation

A highly educated labor force is a key element for successful R&D. Ideally, companies and government-owned research facilities will have a large pool of researchers to draw on with strong backgrounds in science, technology, engineering, and mathematics (STEM). To attract this talent, policymakers can establish top-quality education programs and ensure immigration laws allow companies to hire STEM talent from other countries.