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Report Says U.S. Still Leader in Innovation but no Room for Complacency

October 09, 1998

A new report issued by the Council on Competitiveness maintains that the U.S. must have a strong, sustained commitment to investment in science and technology to maintain its global competitiveness. In Going Global: The New Shape of American Innovation, the Council focuses on support for basic research, the need for a skilled talent pool, and favorable legal, regulatory and accounting rules to promote U.S. innovation as three key factors for innovation.

The Council looked at several major changes in the global market that have a significant impact on the way companies do business. Those changes include:

  • A new wave of competition from developing economies.
  • The rapid pace of technology churn and development cycle times.
  • Globalization of investment choices.
  • Global availability of talented workers.
  • Globalization of markets and consumer demand.
  • Globalization of research, and
  • A shift of focus away from basic, frontier research and advanced technology with the end of the Cold War.

The Council looked at the impact these changes are having on the innovation capacity of five industry sectors: health services, information technology, advanced materials, automotive and express package transport. They examined each sector for current competitiveness trends, innovation needs and priorities, and strengths and weaknesses in the U.S. environment for innovation.

Major findings cited in the individual sector reports include:

HEATLH: In health care innovation, the U.S. is a clear global leader, but its position is based largely on previous investment. The Council expressed concerns about the future of innovation and continued public support for biomedical research.

INFORMATION TECHNOLOGY: The pace of technology "churn," the emergence of new competitors, and insufficient investment in IT- related research and human talent leave little room for complacency about future leadership.

ADVANCED MATERIALS: The Council found that the challenge is not overseas competition but the possibility that U.S. companies will fail to reach their innovative potential because of insufficient support for the physical sciences and engineering, lack of capital for small start-ups, and an uncompetitive tax structure.

AUTOMOTIVE: The growth of demand offshore and the emergence of new national competitors will continue to drive global investments. Although the U.S. remains the dominant location for research, R&D investments at the margin are flowing overseas, according to the report.

EXPRESS PACKAGE TRANSPORT: Principal concerns for the future are the availability of networking computer science professionals and lack of net-work based university curricula.

Released in conjunction with Going Global is a new report from the U.S. Department of Commerce, The New Innovators: Global Patenting Trends in Five Sectors, that analyzes the competitiveness of the research capabilities of the United States, the European Union, and fourteen other countries including China and Japan.

This analysis, which uses key indicators generated from utility invention patents granted under the U.S. patent system, shows that the United States has a technological edge in each of the five sectors examined. However, according to the patent data, quickening technology cycle times have helped a number of countries emerge as global players within a brief time span. Going Global: The New Shape of American Innovation is available from the Council on Competitiveness at 202/682-4292. 

The opening chapter of the report is posted on the Council website at http://www.compete.org.

The Department of Commerce report is available on-line at http://www.ta.doc.gov/reports/09111998.pdf or by calling 202/482-3037.