America, Jump-started: World War II R&D and the Takeoff of the U.S. Innovation System

During World War II, the U.S. government's Office of Scientific Research and Development (OSRD) undertook one of the largest public investments in applied R&D in U.S. history, entering into thousands of contracts with firms and universities to perform research essential to the war effort. Using data on all OSRD-funded invention, we show that this shock had a formative impact on the U.S. innovation system, catalyzing technology clusters around the country with accompanying increases in high-tech entrepreneurship and employment. These effects continue growing to at least 1970 and appear to be attributable to agglomeration externalities, rather than sustained public R&D investment, which led to widening disparities in inventive output across the country. In the aggregate, wartime R&D permanently changed the trajectory of U.S. innovation in the direction of funded technologies, including electronics and communications.