APS News

New Report Reviews Primary Economic Driving Factors in U.S

The Council on Competitiveness has released a report, Competitiveness Index: Where America Stands, reviewing the primary factors driving America’s economic success during the last two decades, and and looking ahead to the nation’s competitiveness prospects in the next twenty years. “The context for US competitiveness has changed dramatically over the past two decades,” the report states, providing both opportunities and risk for the US in the future.

The Council, now twenty years old, focuses its attention on technological innovation, workforce development, and the comparison of the US economy to that of other nations. Members include corporate chief executives, university presidents, and labor leaders. The Council is affiliated with nonprofit research organizations, professional societies and trade associations.

A significant portion of the 108-page report is devoted to a series of one-page exhibits that highlight US dominance in many drivers of the American economy, but which also identify areas of concern. Of particular note is a section entitled “Foundations of U.S. Competitiveness and Sources of Future Prosperity.” Among the notable findings were the following:

  • The US leads in the 2002-2003 shares of global output in domestic R&D investment, new US patents, scientific publications, scientific researchers, bachelor’s degrees in sciences and engineering, and new doctorates in science and engineering. But each of these shares has declined, in some cases quite dramatically, when compared to the mid-1980 figures.

  • Total US industrial and government R&D spending of $286.4 billion was the highest of all nations. But other nations had a higher percentage growth rate in their R&D investment. China increased its R&D investment at an annualized rate of 19.3% in the last decade.

  • US companies perform most overseas R&D in developed countries, but are increasingly turning to emerging economies. Brazil, China, Hong Kong, India, Korea, Malaysia and Singapore account for a combined share of 9.7 percent of all foreign R&D spending by US foreign affiliates in 2003.

  • Sixteen of the world’s top 25 most innovative companies are American companies. Seventeen of the top 20 universities ranked by research performance are US institutions.

  • While the US now leads the world in PhD production with 1.3 million researchers, the European Union could produce twice as many science and engineering doctorates as the US by 2010. Also, China could also produce more doctorates than the United States by 2010.

  • “Fewer engineers from emerging market countries are ready to work because of language, mobility, educational quality, and cultural issues.

  • Corporate R&D investment in basic research declined or remained constant as a percentage of GDP, shifting to an emphasis on new product development.

  • Nearly all the recent increases in the federal budget are in the life sciences. The compound annual growth rate for life sciences is 5.9% in the period 1986 to 2005, while that of the physical sciences is 0.6%.

  • Foreign students account for most of the growth in Ph.D.s in science and engineering.

  • The US invests significantly more in education, yet test scores are low compared to other nations.

  • Intellectual Property–arguably the foundation of all innovation–is at risk in the US. American businesses lose billions of dollars annually due to intellectual property violations.
A full copy of the report can be found at the Council on Competitiveness website at: http://www.compete.org/

Courtesy of FYI, the American Institute of Physics Bulletin of Science Policy News (http://aip.org/fyi).

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Editor: Alan Chodos
Contributing Editor: Jennifer Ouellette
Staff Writer: Ernie Tretkoff