Box 2.4A History of Public Private Partnerships

Public-public-private collaborations have been woven into the fabric of the U.S. economic system from the beginning of the Republic. What became known as the American System of Manufacturing, in which goods from muskets to clocks were made of interchangeable parts, was pioneered in the early 1800s through War Department contracts.286 Congress funded Samuel Morse’s demonstration of the first telegraph with a substantial grant in 1842. America’s aircraft industry was nurtured by the 1925 U.S. Air Mail Act.287 RCA was founded in 1919 at the initiative of the Navy Department, which also held equity and a board seat, so that the U.S. could have a radio communication industry to compete with Britain’s Marconi Co.288 The U.S. Signal Corps funded most of the initial research for transistors and semiconductors, and the military funded the first production lines of Western Electric, General Electric, Raytheon, and Sylvania. It also bought most of the output for weapons and communications systems.289 Admiral Hyman Rickover and his naval reactor group oversaw the design and construction of America’s first civilian light-water nuclear power plant at Shippingport, Penn., in the 1950s. 290 Military research and weapons contracts also have been instrumental in establishing America’s aerospace and computer industries and the forerunner of the Internet.291 Federal programs have been instrumental as well to the U.S. pharmaceutical industry. A recent study found that public-sector research institutions made important contributions to the discovery of up to 21.2 percent al all new FDA-approved drugs from 1990 through 2007.292


See David A. Hounshell, From the American System to Mass Production, 1800–1932: The Development of Manufacturing Technology in the United States, Baltimore, Maryland, USA: Johns Hopkins University Press, 1984.


A stated purpose of the U.S. Air Mail Act of 1925 (also known as the Kelly Act), which authorized the U.S. Postal Service to contract with private aviation companies, was “to encourage commercial aviation.” The federal role in their early airline industry is explained in Roger E. Bilstein, Flight in America: From the Wrights to the Astronauts, Baltimore: Johns Hopkins University Press, 1984, and in Tim Brady, editor, The American Aviation Experience: A History, Southern Illinois University Press, 2001.


An early account of the U.S. Navy’s role in establishing RCA and the U.S. radio communication system is found in The World’s Work, “The March of Events,” Volume XLIV, May 1922.


A concise history of U.S. government involvement in establishment of America’s electronics industry is found in Kenneth Flamm, Mismanaged Trade?: Strategic Policy and the Semiconductor Industry, Washington, DC, Brookings Institution, 1996. pp. 27–38.


Richard Hewlett and Francis Duncan, The Nuclear Navy, Chicago: University of Chicago, 1974.


See National Research Council, Funding a Revolution, Government Support for Computing Research, Washington, DC: National Academy Press, 1999. The extensive NRC review documents the seminal role o federal funding for the information and communications industries of today. See also the presentation by Kenneth Flamm of the University of Texas at Austin in National Research Council, Innovation Policies for the 21st Century, op. cit.


Ashley J. Stevens, Jonathan J. Jensen, Katrine Wyller, Patrick C. Kilgore, Sabarni Chatterjee, and Mark L. Rohrbaugh, “The Role of Public-Sector Research in the Discovery of Drugs and Vaccines,” The New England Journal of Medicine, February 9, 2011, (http:​//healthpolicyandreform​​=13730&query=home).

From: 2, Sustaining Leadership in Innovation

Cover of Rising to the Challenge
Rising to the Challenge: U.S. Innovation Policy for the Global Economy.
National Research Council (US) Committee on Comparative National Innovation Policies: Best Practice for the 21st Century; Wessner CW, Wolff AW, editors.
Washington (DC): National Academies Press (US); 2012.
Copyright © 2012, National Academy of Sciences.

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