U.S. Falling Behind in Innovation–Part I

It was bad enough that the U.S. traded its manufacturing might for quick profits by outsourcing outside the country, but now it looks like our knowledge-based economy is faltering under global competition as well.

A report just released by the nonprofit, nonpartisan, public think tank, Information Technology and Innovation Foundation (ITIF) indicates that innovation in the U.S. is rapidly falling behind the rest of the world. The study currently places the U.S. in sixth place in the world, and running at a pace that will place it even lower over the next decade.

There have been many studies made over time, as well as more recently, that place the U.S. as the world leader in innovation. However, those studies have been based on opinions, interviews, and surveys. This report by the ITIF is the first to approach innovation from a scientific perspective, using 16 indicators to study innovation and competitiveness. These indicators fall into six broad categories:

  • Human capital
  • Innovation capacity
  • Entrepreneurship
  • IT infrastructure
  • Economic policy
  • Economic performance

Not only did the ITIF study place the U.S. in sixth place in the world for innovation and competitiveness, but the study also determined that all of the other 39 nations/regions studied have made faster progress toward the new knowledge-based innovation economy in recent years than did the U.S. The study shows that the U.S. has made the least progress of the 40 nations/regions in improvement in international competitiveness and innovation over the last decade. The U.S. is dead last in this category.

This should come as no surprise, since the National Academies published their landmark study, “Rising Above the Gathering Storm,” back in 2005. It warned then that America’s lead in science and technology was “…eroding at a time when many other nations are gathering strength.” It appears their warning has come to pass.

What is happening to the greatest industrial nation in the world? Have we allowed greed and avarice to cloud our minds, so we can’t see beyond the next payday? Are IPO’s more important than innovation? Is shareholder value more important than spending profits and dividends on R&D and innovation? Are our industrial leaders so intent on filling their pockets, they have lost their way? Has our government (under the guise of public interest) regulated the heart out of those companies that could best put the U.S. back in the role of world leader?

The ITIF study presents six things that need to be done by the U.S. (or any nation/region) to improve their innovation and competitiveness. I will present these six things as part II in my next post. Watch for it.

16 thoughts on “U.S. Falling Behind in Innovation–Part I”

  1. No surprise here. We’ve rapidly fallen behind the rest of the world in education, science and technology. Along with the decline of our lead as the industrial leader, we’ve seen our science and tech jobs outsourced overseas in exchange for higher profit margins of big corporations.

    Which brings up a question… how many small businesses (other than importers/resellers) in the US are now outsourcing their workforce? Their product manufacturing? Their design/research?

  2. Jeff – You bring up an interesting point. America is producing fewer and fewer scientists and engineers, and we have been importing people from other countries with these capabilities. Now we are insisting that these same people go back to their own country, thus leaving an even bigger hole in our knowledge base.

    Consequently, small businesses (and large) have to outsource the work that can no longer be done in the U.S. It’s a fine mess indeed.

    Bob Foster’s last blog post..U.S. Falling Behind in Innovation–Part I

  3. Bob – Thanks a lot for this post. I can always count of thoughtfulness, facts, and a great perspective. Again, thanks.

    This is not surprising—sad but not surprising, considering our education system in so many states is in such bad shape.

    Until we begin to really address our schools that receive more money than many others globally with such poor results, we will lag behind and not produce great innovators, nor the human capital needed to power innovation.

    I have four nieces who are freshmen in college: Two attend the University of Michigan Ann Arbor, my alma mater — GO BLUE! One attends Oakland University and the other Bowling Green.

    One is a science major, one is studying architecture major, and the other two are majoring in communications. They all went to suburban schools and were encouraged to take math and science up until their senior year. Most of their friends were not encouraged to do so and did not.

    I shudder to think of what is required of young people in urban areas and how far they lag behind the lagger behinders. (Yeah, I know. I just made up some words :-)) Ugh!

    Judith Ellis’s last blog post..Being a Smiler

  4. Judith – Thank you for your kind words and insightful comment. I think both you and Jeff hit the nail on the head about education. The U.S. spends more per student than any other country, yet we have to either hire better educated people from those other countries, or outsource a large portion of our work to them.

    Our education system is broken–is there any way, or anyone to fix it? Or is it more systemic, and really a problem with our society?

    Bob Foster’s last blog post..U.S. Falling Behind in Innovation–Part I

  5. Yes, Bob. I think it can be fixed. We have to do it! But what we have been doing is by definition called insanity, “doing the same thing over and over again and expecting a different result.” I think the issue with the teachers’ union needs to be addressed as well as a pay scale based on performance would be a good start.

    It appears the President addressed the issues of teachers’ pay base teachers’ pay based on students’ performance and expanding charter schools that are innovative in their approach. The union, big backers of the President, doesn’t seem to like this idea. Oh, well!

    This problem is also closely aligned to what’s occurring in the culture en masse. It really does “take a village to raise a child” and it matters not where this saying was derived or who made it popular in the States. Truth is truth no matter who says it or from where it comes.

    Judith Ellis’s last blog post..Being a Pundit, Newscaster and Analyst II

  6. Judith – I remember some years ago reading an article by Tom Peters about the large number of “administrators” the school systems have. I wonder what the ratio of teacher to administrator is today?

    Somehow we must raise the status and respect for teachers so more qualified people go into the teaching profession. I read in “The Hill’s” blog roundup today that Congress is talking about eliminating the “Opportunity Scholarship Program.” I really wonder how Congress looks at education in the U.S.

    Bob Foster’s last blog post..U.S. Falling Behind in Innovation–Part I

  7. What a terrific discussion. I agree with Judith that the situation in our public schools is “fixable”. It will however require new approaches and strategies to get it done. Having funding is one thing. Spending it on the same programs and policies that have produced the mess we are in seems kind of “insanity”. I live in Little Rock where there are three school districts hence triplicated administrative costs. The real challenge however is on how little of the funding actually makes it to the school level. In one of these districts average per pupil spending is over 6500.00 per child. In this district, only 57.00 per year makes it to the school level’s instructional budget. Things need to be changed and the district level administrators and elected School Board members need to be made accountable.

    Each school is a unique community with it’s own strengths, opportunities, challenges and threats. Conceptually I agree with pay for performance or merit pay systems if somehow the formula for awarding them takes the “unlevel” playing field into account. Schools are not equipped, trained, have the resources, or are prepared to deal with the socio-economic changes of the past decades. It’s tough for a child to do homework when they have no electricity. It’s tough for a single working parent to be involved and engaged in their child’s learning if their employers don’t have flexible schedules yet parental involvement is a critical success factor. The list could be endless…things need to be changed, folks need to be made accountable, and the only people who can get this done is us…one student, one family, one school, one neighborhood at a time!

    Dave Wheeler’s last blog post..Just Because It’s One of Those Days…

  8. Dave Wheeler – Thank you for your insightful comment. This seems to be something you have thought about for some time. This is one of the most cogent views on American education I have seen in a long time. I especially liked this:

    “…things need to be changed, folks need to be made accountable, and the only people who can get this done is us…one student, one family, one school, one neighborhood at a time!”

    How true, and yet how difficult. Too many people want someone else to fix their problems. However, that is not the way it is going to happen—we need to do it ourselves. Your words hit the nail squarely on the head.

    Thanks again for the comment.

    Bob Foster’s last blog post..U.S. Falling Behind in Innovation–Part I

  9. Great commentary, I’ll be the rookie and foreign influence on this talk. It’s an interesting perspective I have being from Canada. I’m doing a big case study on a Northern Alberta school district, Northern Lights School District if you are interested. They are losing enrollments to another school district.

    I can’t help but think it is a cultural and socioeconomic factor that perpetuates the problem. The fact you offer such a large portion of GDP towards education, but less graduate high school than in most developed countries makes me question the foundations of the value structure.

    I’ve been to the states for short and long visits and some areas seem to worry so much about crime and just surviving another day. I’ve not seen scary streets in Canada like some in Buffalo and Houston.

    It’s like HIV awareness campaigns in Africa, people realize they aren’t going to live far enough into the future to make long-term decisions about health. It reflects Maslow’s hierarchy of needs; they may need to satisfy those initial needs before they can move onto self-esteem and self-actualization. I think the growing gap between rich and poor perpetuates the culture and lowers people on Maslow’s hierarchy.

    William Yatscoff’s last blog post..Lead by Example

  10. William Yatscoff – Thank you for your comment. It is always helpful to have the views of someone who is a step away from the problem. I think you hit the heart of the matter when you said:

    “I can’t help but think it is a cultural and socioeconomic factor that perpetuates the problem.”

    I am sure this is the foundation of our educational problem. With some schools having a 50% dropout rate, it has to be more than just poor school systems. However, I believe the problem of the U.S. losing its way in Innovation is much broader than just the education system. I think this too is a cultural and socioeconomic problem.

    I will be posting Part II of my Innovation series tonight, which will capsulize the opinion of the Information Technology & Innovation Foundation (ITIF), on how to improve our situation. Then, on Monday, I intend to post Part III, where I will share my views, as well as the views of others, on why the U.S. is no longer a leader in the world’s knowledge economy.

    Thanks again for the comment, and feel free to come back often.

    Bob Foster’s last blog post..U.S. Falling Behind in Innovation–Part I

  11. Dave – Thank you so much for your words. How often do we leave out these kids and how disrespectful and ultimately self-defeating of us not to give these kids the very best. But it is not the fault of the school systems alone; parents and the community at large have to step.

    I agree wholeheartedly with Bob’s statement: “Too many people want someone else to fix their problems. However, that is not the way it is going to happen—we need to do it ourselves.”

    William also made some really fine observations, eh? The analogy of the attitudes of many with AIDS in Africa and many students in public schools in the U.S. was provocative, but most relevant. Thank you for that William.

    Bob – I’m looking forward to Part II!

    Judith Ellis’s last blog post..Being “Deeply Sorry and Ashamed”

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