When It Comes to Innovation Is America Becoming Third World Country
Arianna Huffington

 

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."

The United States once was the world's innovator -- partly because we didn't have much competition. America now is competing with plenty of countries.

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, the U.S. ranked last.

A study on innovation by the Boston Consulting Group concluded that America is "disadvantaged in several key areas, including workforce 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.

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.

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.

How key is it?

In a study of 120 countries, researchers found that every 10 percent increase in broadband adoption increased a country's GDP by 1.3 percent.

Unfortunately, when it comes to broadband, America is also falling behind.

In 2001, the United States ranked fourth among industrialized countries in broadband access. By last year, we had dropped to 15th. And nearly 93 million Americans still don't have broadband in their homes.

The Obama administration has proposed a National Broadband Plan, with the goal of increasing broadband access from around 65 percent currently to 90 percent by 2020. The plan would make high speed broadband available to 100 million Americans by 2020, and ensure that every high school graduate is digitally literate. But why put it off for a decade?

Another focus of innovation is the green economy. One proposal that would jumpstart innovation is the creation of a Green Bank, which, according to John Podesta and Karen Kornbluh, would "open credit markets and motivate businesses to invest again," and "enable clean-energy technologies -- in such areas as wind, solar, geothermal, advanced biomass, and energy efficiency -- to be deployed on a large scale and become commercially viable at current electricity costs."

Such a bank would also help loosen the available credit for small businesses, and establish the reliable source of funding entrepreneurs need to devote themselves to green technologies and startups.

Such a proposal is already making its way through Congress. Reed Hundt, former FCC chairman under President Clinton, now heads the Coalition for Green Capital, a group whose goal is "to establish a government-owned, wholesale, nonprofit bank that would fill the void that exists in clean-energy legislation in America today." Hundt is currently joining U.S. Rep. Ed Markey in trying to make the Green Bank proposal part of the next jobs bill. Which makes sense, since, according to Hundt's group, a Green Bank would create about 4 million jobs by 2012.

Another area ripe for innovation is our immigration policy -- particularly when it comes to granting visas to foreign-born entrepreneurs.

Great ideas come from all over the world, and if we don't welcome the people with those great ideas, they will go elsewhere. Enter the people behind startupvisa.com, a group with an innovative proposal to make it easier for foreign entrepreneurs to come to America and start job-creating businesses.

Our current law allows foreign investors to get a visa if they start a business in the United States with $1 million in capital that creates at least 10 jobs here. But by requiring those with good ideas to first get foreign funding, it's more likely they will just decide to create their companies someplace else, too. The venture capitalists behind Start Up Visa want to shift the emphasis from foreign investors to foreign entrepreneurs who can get funding from American investors.

This proposal is also in the legislative pipeline. The Start Up Visa Act, co-sponsored by Sens. John Kerry and Richard Lugar, would create a two-year visa for immigrant entrepreneurs able to raise a minimum of $250,000, with $100,000 coming from a qualified U.S. angel or venture investor. After two years, if the entrepreneur is able to create five or more jobs (excluding their children or spouse), attract an additional $1 million in investment or produce $1 million in revenues, he or she would become a legal resident.

These are just three ways of promoting innovation. But they are prime examples of what we need if we are to shake off our complacency and avoid the slow slide to Third World status.

Available at Amazon.com:

The Next Hundred Million: America in 2050

 

 

 

 

When It Comes to Innovation Is America Becoming Third World Country | Arianna Huffington

 

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