When It Comes to Innovation, Is America Becoming a Third World Country?

By Arianna Huffington
Huffington Post
March 29, 2010

Is America turning into a third world country? That was the provocative topic of a panel I took part in last week at a conference sponsored by The Economist entitled "Innovation: Fresh Thinking For The Ideas Economy."

Once upon a time, the United States was the world's dominant innovator -- partly because we didn't have much competition. As a result of the destruction wreaked by WWII, the massive migration of brainpower to the U.S. caused by the war, and huge amounts of government spending, America had the innovation playing field largely to itself. None of these factors exist as we enter the second decade of the 21st century.

America now has plenty of countries it's competing with -- many of which are much more serious about innovation than we are. Just look at the numbers:

A report by the Information Technology and Innovation Foundation looked at the progress made over the last decade in the area of innovation. Out of the 40 countries and regions it examined, the U.S. ranked dead last.

A study on innovation by the Boston Consulting Group concluded that America is "disadvantaged in several key areas, including work force quality and economic, immigration, and infrastructure policies."

In 2009, patents issued to American applicants dropped by 2.3 percent. Those granted to foreign-based applicants increased by over 6 percent.

Why are we falling behind like this? For one thing, we've lost our educational edge. America once led the world in high school graduation rates. We are now ranked 18th out of 24 industrialized countries.

And the percentage of 15-year-olds performing at the highest levels of math is among the lowest. South Korea, Belgium and the Czech Republic, among others, have at least five times the number the U.S. does.

Plus, we are no longer investing in innovation. Until 1979, around 50 percent of all research and development funds were provided by the federal government. That number has fallen to 27 percent. And, during the 1990s, the bottom fell out of U.S. funding for applied science, dropping by 40 percent.

The economic crisis is also taking a toll on innovation. Venture capital investment in the U.S. for the first three quarters of 2009 was $12 billion. Over the first three quarters of 2008, it was $22 billion.

These numbers may not place us in the third world ... yet. But the trend is not a good one.

Adding to the problem is the sense that America's best days may be behind us. Many economists and historians are warning that our current economic downturn has created a new normal. That the country will never be the same. Things are, of course, going to be different. But that doesn't have to mean that they are going to be worse. However, if we don't get serious about innovation, they will be. When it comes to our approach to innovation, we desperately need some innovation.

For starters, we need to kick our high-speed Internet plans into high gear. A robust, broadband-charged, countrywide information superhighway is going to be key to staying ahead of the innovation curve.

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