Thursday, February 26, 2009

In innovation, U.S. said to be losing competitive edge, as Singapore takes lead

By Steve Lohr - International Herald Tribune - Wednesday, February 25, 2009

NEW YORK: The competitive edge of the European Union's economy has risen over the past decade while that of the United States has eroded, according to a new study by a nonpartisan research group published Wednesday.

The report by the Information Technology and Innovation Foundation found that the United States ranked sixth among 40 countries and regions, based on 16 indicators of innovation and competitiveness.

The EU minus Bulgaria and Romania, which joined the bloc in 2007, ranked 20th, but its score improved by 9.4 since 1999, while the American economy placed last in terms of improvement.

"The trend is very troubling," said Robert Atkinson, president of the foundation.

Indicators included venture-capital investment, scientific researchers, spending on research and educational achievement

The study rated the most competitive nation as Singapore, which embarked on a national innovation strategy years ago, investing heavily and recruiting leading scientists and technologists from around the world.

Sweden, on the strength of its government and corporate investment in research and development, among other factors, Luxembourg and Denmark ranked second, third and fourth.

The report said while the EU had made progress, it - like the United States - had been superseded in advances by Asia. South Korea is rated fifth on the list, while China, Singapore and Japan were in the top 10 most improved countries.

"These trends suggest that absent concerted public sector efforts by the United States and Europe to boost innovation and competitiveness, that this century will not be the Atlantic century, but rather the Pacific Century, or perhaps more accurately the Southeast Asian century," the report said.

Measuring national competitiveness and the capacity for innovation is tricky. Definitions and methods differ, and so do the outcomes. For example, the recent global competitiveness report by the World Economic Forum ranked the United States first. Much of the forum's report is based on opinion surveys.

A report last year by RAND concluded that the United States was in "no imminent danger" of losing its competitive advantage in science and technology.

The new report, published Wednesday, offers a more pessimistic portrait. Its assessment is in line with a landmark study in late 2005, "Rising Above the Gathering Storm," by the National Academies, the leading science advisory group in the United States.

It warned that America's lead in science and technology was "eroding at a time when many other nations are gathering strength."

Some countries, including Singapore, Taiwan, Finland and China, are pursuing policies that are explicitly designed to spur innovation.

These policies typically try to nurture a broader "ecology of innovation," which often includes education, training, intellectual property protection and immigration.

This is in contrast with the industrial policy of the 1980s, in which governments helped pick winners among domestic industries.

The foundation study, according to John Kao, a former professor at the Harvard business school and an innovation consultant for governments and corporations, is an ambitious effort at measurement.

He called its conclusions "a wake-up call."

In the foundation report, unlike some competitiveness studies, results were adjusted for the size of each economy and its population.

Consequently, the United States ranked sixth in venture capital investment while Sweden was first. It was fifth in corporate research and development spending, with Japan.