Is the U.S. Losing Its Competitive Edge?

The United States ranked sixth among 40 countries and regions on 16 indicators of innovation and competitiveness, according to a report by the Information Technology and Innovation Foundation. Of greater concern, perhaps, was that the U.S. finished last in measures of progress over the last decade. “The trend is very troubling,” said Robert D. Atkinson, president of the Foundation, a Washington, D.C., think tank that  promotes “public policies to advance technological innovation and productivity.”

The 16 measures considered in the study included venture capital investment, scientific researchers, spending on research and educational achievement. An article about the research in today’s New York Times notes that “measuring national competitiveness and the capacity for innovation is tricky. Definitions and methods differ, and so do the outcomes.” The Times cited a recent World Economic Forum global competitiveness report, based on opinion surveys, that ranked the United States first. The report issued today by the ITIF found Singapore to be the most competitive nation.

While methods of measuring innovation and competitiveness may vary, there is little debate over their importance to a healthy economy. And hard economic times can provide just the right environment for innovation, especially the sort that can turn an industry on its head, according to Wharton experts interviewed for a recent Knowledge at Wharton article titled, “Why an Economic Crisis Could Be the Right Time for Companies to Engage in ‘Disruptive Innovation.” In that article, Paul J.H. Schoemaker, research director for Wharton’s Mack Center for Technological Innovation, suggested that for some companies, the economic crisis can actually provide an innovation platform. “The crisis has multiple impacts,” Schoemaker said. “Loss of revenue and profit will at first instill a cost cutting mentality, which is not good for innovation. But if the patient is bleeding, you need to stop that first. Then, however, a phase starts where leaders ask which parts of their business model are weak (and perhaps unsustainable) and that, in turn, can lead to restructuring and reinvention.”

The article also noted growing worry about America’s commitment to innovation, citing a 600-page report from the National Academies titled, “Rising Above the Gathering Storm.” That study found that leading scientists, research and development experts, and other leaders had “expressed concern that a weakening of science and technology in the United States would inevitably degrade its social and economic conditions and in particular erode the ability of its citizens to compete for high-quality jobs.”

For more Knowledge at Wharton coverage of innovation, go to our Innovation and Entrepreneurship section. Read about the top 30 innovations of the last 30 years, the result of a survey conducted by the Nightly Business Report and Knowledge at Wharton.