Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected ten years ago.

If the project had met its expectations says Mandel we might be looking at spending much less money on treating incurable diseases like cancer and diabetes; we would have created a lot more great jobs in the pharma industry; and the US would have a trade surplus in pharmaceuticals rather than a trade deficit of more than $30 billion.

Still hope springs eternal for Mandel at least:

Here s how I see it: The U.S and more broadly the advanced countries did what they were supposed to. They invested heavily in the cutting-edge new technology biotech which promised to make the biggest difference in the most important areas health food energy. The research has gone great tremendous progress has been made. Commercialization thus far has sporadic but the gap between research and commercialization is one which has been repeatedly bridged in the past. So I d say that the odds are good that the Human Genome Project will have a significant economic impact over the next 5-10 years.

Mandel does worry whether a misguided patent system is a structural impediment in the U.S. innovation system; Id be interested in that too. But the big picture is that the US made a multi-billion-dollar bet on genomics and so far that bet has failed to pay off. That doesnt mean it was a bad decision but its still worth thinking about what might have been. Maybe we were just unlucky.

Thats very interesting. I wonder if this bolsters or hurts the case for big mega-projects that require enormous sums of money to get started. Certainly all the investment in internet infrastructure paid off in the long run even after the tech bubble burst in 2000. Maybe the commercial medical revolution is another decade away.

Re: the patent thing: I found Against Intellectual Monopoly a very interesting read (see e.g. http://www.goodreads.com/review/show/758 31672 for a decent synopsis of the main points made by the authors).

Anyway the US is never going to export lots of drugs (and genetic fixes) at the current prices and the current prices are so high in part because of the low competition due to patent pools etc. All of that stifles innovation and makes it unlikely that other countries will be willing (or able!) to buy the drugs in sufficient quantities to close the US trade balance deficit.

It probably didnt help at least in the United States that research on human stem cells was curtailed for much of the last ten years. Europe also has issues although theirs are with the use of genetically-modified organisms not with the basic research.

10 years is a pretty short time to expect widespread commercial returns from basic research. It can take that long to bring a treatment to market let alone develop the treatment in the first place based on the research. Also you can expect the pace of commercialisation to accelerate. It took ten years and millions of dollars to come up with the first draft of the human genome. Now a human genome can be sequenced in less than a day with costs that are lower by several orders of magnitude.