|
Keeping
America Competitive
A new report
says the U.S. is holding its own in the global economic race. But
it must take steps now to boost research and education
11/15/2006
By
Jessie Scanlon
"At the beginning of the 21st century,
America stands at the dawn of the conceptual economy, in which insight,
imagination, and ingenuity determine competitive advantage and value
creation. To succeed in this hypercompetitive, fast-paced global
economy, we cannot, nor should we want to, compete on low wages,
commodity products, standard services, and routine science and technology
development."
So declares Deborah Wince-Smith, president
of the Council on Competitiveness, in a report released on Nov.14
titled Competitiveness Index: Where America Stands.
The 111-page report, co-authored by Harvard
Business School Professor Michael Porter, offers a sweeping, thorough
analysis of America's place in the global economy—past, present,
and future. And despite current hand-wringing about the trade deficit,
offshoring, and students' declining math and science skills, not
to mention the seemingly unstoppable rise of China and India, the
report is less pessimistic than one might expect.
In fact, according to the report, the U.S.
has more than held its own. Not only is it the world's largest economy,
the U.S. has grown faster between 1986 and 2005 than any major developed
country and is responsible for one-third of global growth over the
past 15 years. The U.S. remains the world's largest manufacturer
and is still one of the top exporters. That said, as the report
emphasizes, America's position in the global economy is by no means
guaranteed. And to stay competitive, the country must take action
on a number of fronts.
Leveraging for
Future Prosperity
The meat of the report is divided into four sections: the shifting
landscape of the global economy, how Americans rank on a global
prosperity index, where the U.S. stands in the global economy based
on its strengths and weaknesses, and key sources of U.S. competitiveness
and how those can be leveraged for future prosperity. Those sources
are entrepreneurship, education, energy, and innovation.
The report's prescription? In entrepreneurship,
the U.S. still has the edge, supported by increasingly low barriers
to entry, access to capital, and a culture that encourages entrepreneurial
risk. That said, both state and federal politicians need to work
to limit regulations and to focus on regions where capital is in
short supply. In the education arena, America has a track record
of expanding access to high school and college education, and it
needs to return to that tradition, as success in the conceptual
economy depends on the ability to grasp complex connections and
to think creatively. When it comes to energy, the U.S. needs to
create a long-term, sustainable, and diverse portfolio that is less
susceptible to global energy prices and less dependent on foreign
supplies.
Innovation, the report notes, "is probably
the most important area of economic performance for the long-term
prosperity of this country." The government's network of national
laboratories, along with public and private research universities,
lead the world in terms of scientific research. But continued funding
for those institutions is critical. In addition, to remain an innovation
leader, the U.S. needs to look beyond science and technology—the
focus of the report—toward creativity and design thinking.
The Bogeyman
Backed Off
The Council on Competitiveness was established in 1986—a period
characterized by concern over America's future place in the global
economy, given the growing competitive threats from abroad. The
bogeyman then: Japan. Twenty years later, those worries proved unfounded,
and the U.S. remains the largest economy in the world. Still, while
the landscape of the global economy has changed significantly, as
the report details, there is no reason that the U.S. cannot take
the steps required to stay competitive—steps recommended by
the Competititiveness Index: Where America Stands report.
So while the Competitiveness Index inspires
optimism—the U.S. isn't sealed to a fate of being crushed by
a BRIC—the question remains whether the necessary actions will
be taken. Will the broken patent process be fixed? Will Congress
implement the tax incentives to encourage corporate research and
development? Will the National Competitiveness Investment Act—introduced
by Senators Joe Lieberman and John Ensign—be passed?
Can a Democrat-controlled Congress or the
next President give an "F" to the Leave No Child Behind
Act—legislation that has stymied critical efforts to innovate
in education—and actually do something to reverse the declining
math and science scores of American high school students and the
dwindling numbers of college computer science majors, which dropped
by 50% between 2000 and 2005?
The most optimistic answer is "maybe."
If you disagree, count the number of times that you heard the word
"innovation" mentioned in a political ad or debate leading
up to the recent midterm elections. If you guessed zero, you're
right.
Granted, promoting innovation requires a complex,
multipronged effort, which isn't easily addressed in the soundbites
of today's media-political environment. But the issue should be
on the table and in the last election, it wasn't. It is hoped that
reports like the Competitiveness Index will put the issue of innovation
on every congressman's to-do list. As the report concludes: "we
have the capabilities needed to succeed. If we fail, we have only
ourselves to blame."
Scanlon is Innovation & Design editor
for BusinessWeek.com.
|
