Once nations create an adequate base in science and engineering, they argue, foreign innovation is easily appropriable.

The value of the historical legacy for present socio-economic development is similar to the 'appropriable social capital' theorized by Coleman (1990 ) at the individual level.

Such projects typically have immediate commercial potential, they argue, but the results are so easily appropriable by competitors that corporations have little incentive to pursue them.

Innovation economists believe that what primarily drives economic growth in today's knowledge-based economy is not capital accumulation, as claimed by neoclassicalism asserts, but innovative capacity spurred by appropriable knowledge and technological externalities.

But many of the best researchers also have jobs that require them to work for industry, where the protection of innovation via trade secrets and patents is the norm, and for equally good reason: Business cannot turn a profit if all its improvements are instantly appropriable by others.

More specifically, economists suggest, it pays to put a disproportionate amount of the Federal effort into basic research, where there is little chance of an appropriable commercial payoff and the difference between the social rate of return and the return to a private business is likely to be greatest.