New ITIF report finds U.S. ranks last among 40 nations and regions in progress toward an innovation-based economy

By: Information Daily Staff Writer
Published: Thursday, February 26, 2009 - 07:29 GMT Jump to Comments

In a new report, "The Atlantic Century: Benchmarking EU and U.S. Innovation and Competiveness," the Information Technology and Innovation Foundation uses 16 indicators in six key areas—human capital, innovation capacity, entrepreneurship, IT infrastructure, economic policy factors and economic performance—to assess the extent to which nations are able to compete on the basis of innovation.

Unlike several recent studies that find that the U.S. leads in innovation-based competitiveness, this report finds that while the U.S. still leads the EU, it ranks sixth overall, behind Singapore, the world leader. However, the report also assesses nations’ progress on the 16 indicators since the turn of the century. On this measure of progress the U.S. performance is much worse; in fact, the U.S. ranks 40th of the 40 nations and regions examined. The EU-15 region has improved faster than the U.S. (but considerably behind the leader, China) and as a result, ranks 28th among the 40 nations/regions in change. If the EU-15 region as a whole continues to improve at this faster rate than the United States, it would surpass the United States in innovation-based competitiveness by 2020.

The report argues that the prevailing view among many Washington policymakers is that the United States has been number 1 for so long it will continue to be number 1. Given this situation, the thinking goes, there is no real need for the United States to develop and implement a national economic development or competitiveness strategy. But this report finds that not only is the U.S. not number 1, but that its position is slipping rapidly. Absent a coherent national innovation strategy, the U.S. position will likely continue to slip, and with it, relative U.S. living standards.

While the report does not lay out a specific innovation or policy agenda, it does provide an outline of key policies that need to be pursued to turn around the decline in U.S. innovation-based competitiveness:

* Put in place incentives for firms to innovate within their borders.
* Be open to high-skill immigration.
* Foster a digital economy.
* Support the kinds of institutions that are critical to innovation.
* Ensure that regulations and other related government policies support, not retard , innovation.

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