Is America losing its innovation edge? For decades, the country has debated this question whether the United States was losing its economic advantage. Pessimists point to startling statistics, such as the rise in the number of patents filed by foreign inventors or the growing corps of engineers graduating overseas. These statistics are indeed alarming. Yet despite the historical challenges, the United States has remained the home of innovation. From the Internet to mainframe servers to pharmaceuticals, major innovations are still “Made in the USA.” So what is the disconnect? Is America’s innovation advantage simply too large to overcome? Are numbers of patents and engineers no longer relevant metrics in a digital world? Perhaps. However, looking solely at innovation and leadership in basic research is far too narrow. The key question is whether the United States has been losing its ability to translate innovation into economic leadership.
Innovation may create profits and headlines, but it is only part of the economic engine. Intel’s Andy Grove writes that the United States has “misplaced faith in the power of start-ups.” German research labs may have created the MP3, but it was the scale-up capabilities of American technology firms that took this innovation and unlocked its value, from Apple’s iPod to file sharing to digital-media vendors like the iTunes store, and beyond. This ability to take basic innovation, deliver it at scale, and refine it with second- and third-order innovations plays a critical role in driving growth and jobs. To do all this, a country must be at the center of cutting-edge technologies, market demand, talent, and entrepreneurial spirit.
Is the United States truly behind? From one angle, it’s hard to see anything but positives. The country has a business culture and a legal and capital market system that encourage and reward risk taking and entrepreneurship. It continues to attract top students and teachers from around the globe and remains the dominant investor in research and development, with total spending more than that of the next four nations—Japan, China, Germany, and South Korea—combined.
However, there are clear warning signs.
1. Cutting-edge technology: In leading industrial technologies, United States finds itself competing against or even catching up with foreign companies and engineers.
2. Demand: The composition of global demand has changed dramatically over the past few decades. For the first time in recent history, more than 50 percent of the global middle class lives outside North America. Meanwhile, many next-generation engineered products are in high demand not by US or European customers but by those in Asia, Latin America, and the Middle East. From airplanes to offshore wind turbines to nuclear technology, these foreign customers are creating markets and dictating preferences, often with local-content requirements. US companies can no longer build products just for the US market and expect to export them readily without modification.
3. Talent: Partly as a result of the declining prestige of the US engineering profession and the lagging effectiveness of the education system, scientific talent is building outside the United States. Almost one-third of US manufacturing companies responding to a recent survey say they are suffering from some level of skill shortage. Foreign labs are becoming more ambitious, leading cutting-edge research that used to be the exclusive domain of US companies and universities.
4. Entrepreneurial spirit: Entrepreneurship is the magic that binds all these elements, yet we see an increasing risk aversion toward new ventures in the United States.
How should the United States respond?
Whatever the cause, the United States faces a future in which the key elements of economic leadership are moving abroad. Action is imperative.
1. Clear the way for the cutting-edge industrial technologies of the future. policy makers must ramp up public-sector procurement targets and set standards for next-generation technologies.
2. Rebuild infrastructure
3. Attract and retain talent
4. Reenergize the entrepreneurial spirit in large US companies
No comments:
Post a Comment