As industries and jobs move overseas, the U.S. has focused on
cutting-edge innovations to stay one step ahead. But if the U.S. is
an economic Energizer Bunny, the rest of the world is determined to
step up the pace.
In July, France announced plans to invest $1.82 billion to
create 67 "competitiveness centers" to fuel research and
innovation, with more to come. China is building a world-class
university system to produce scientists, and now ranks third behind
the U.S. and Japan in nanotechnology patents.
As other countries invest more in R&D, education and
entrepreneurship, business and academic leaders are asking an
uncomfortable question: Is the U.S. losing its innovative edge?
Consider these statistics: American companies now account for just
52 percent of U.S. patents; we rank 13th in household broadband
penetration among 15 highly developed countries; and only 29
percent of papers published in top physics journals in 2004 were by
Americans.
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It doesn't stop there. Only 6 in 100 American undergraduate
degrees are in the natural sciences or engineering. In a December
2004 survey, meanwhile, American teenagers ranked 24th out of 29
industrialized countries in everyday math skills. The problem, says
Robert Boege, executive director of the Alliance for Science and
Technology Research in America, is that Americans aren't aware
of the growing threats to our competitiveness. "Does there
have to be an innovation Pearl Harbor to wake people up?" he
wonders.
Entrepreneurial activity shows troubling signs, too. A survey of
12,000 Americans ages 18 to 74 by the Pino Entrepreneurship Center
at Florida International University in Miami calculated a 20
percent drop in entrepreneurial activity between 2003 and 2004,
with 4 million fewer Americans starting and running new companies.
"I didn't expect this big of a drop," says Paul D.
Reynolds, a lead researcher on the annual study.
Innovation goes beyond bits, bytes and biology; it includes
coming up with unique processes and business models. For
entrepreneurs like Michael Murphy, however, the process of
innovating is getting harder. Murphy is CEO of Gentris Corp., a
4-year-old pharmacogenomics company in Morrisville, North Carolina,
with 30 employees and 2004 sales of $2.3 million. Because of a
re-interpretation of federal rules prohibiting small firms from
qualifying for Small Business Innovative Research grants if the
majority of company shares are owned by private institutions,
Gentris slashed R&D spending by 50 percent this year.
"This is very much going to inhibit people from either
starting companies or being able to compete for those research
dollars that [drive] a lot of innovation," says Murphy,
50.
Stories like Murphy's fuel the Council on Competitiveness, a
175-member nonprofit group comprised of labor leaders, university
presidents and CEOs. In 2003, it launched a 21st Century National
Innovation Agenda that includes the development of "innovation
hot spots" to drive growth; encourages greater investment in
research and education; and calls on the government to issue green
cards to foreign-born, U.S.-educated scientists and engineers.
"Innovation is the most important factor in determining our
country's security and standard of living," says Deborah
Wince-Smith, the council's president.
Alan Ying, founder and CEO of MercuryMD, a 4-year-old Durham,
North Carolina, medical software firm with 75 employees, sees
opportunity in globalization. "I don't think
[entrepreneurs] see [China] as a threat necessarily," he says.
"They see it as a huge opportunity that they don't know
how to take advantage of easily." Ying, 33, believes Americans
must address the underlying issue: Will we be protectionist
regarding global talent, or become open to it? "Having
[foreign talent] here is going to raise the bar of performance for
everyone," he says.
In May, Congressman Frank Wolf (R-VA), chairman of the House
Appropriations Committee Subcommittee on Science, State, Justice,
Commerce and Related Agencies, called on President Bush to triple
spending on basic research. With so many competing priorities,
however, pushing an innovation agenda will be hard work. But the
biggest challenge could be changing how we think. Says Murphy,
"We need to make math and science cool."