The presidential election process is upon us. For the next year all of the candidates vying for the presidency will focus on the current problems that we face here in the United States. And while there is plenty for the candidates to discuss (such as the rise of international terrorism, the large number of U.S. citizens not working, and the slow economic growth), this post looks to highlight an area of success that is ongoing in the United States.
One of the key determinants regarding the future outlook of any country is how much time and effort that they invest for the future.
And in that score, the United States stands clearly at the forefront internationally. A recent report from the Council of Foreign Relations entitled, “Keeping the Edge”, analyzed where United States stands in key dimensions of economic competitiveness. They concluded that the United States is particularly strong in regards to innovation which drives rising living standards in advanced economics.
Some of the findings:
- Of the top 20 universities in the world that produced the highest impact scientific research, 16 are in the United States and feature such notable private schools such as Stanford University, Harvard University and Massachusetts Institute of Technology (MIT) and such notable public schools as University of California, University of North Carolina, Ohio State University, University of Texas, and University of Washington.
- The total U.S. research and development spending is higher as a share of the economy since the early 1960’s. Most of this spending is done by private companies. In addition, a recent survey indicated that the average U.S. corporation is planning to boost research spending in 2016 by nearly twice the rate of its international competitors. Again these companies are looking to a brighter future.
To quote from the report:
U.S. businesses are strongest in industries where innovation plays a large role—in IT (e.g., Apple, Google, Microsoft), pharmaceuticals (Pfizer, Merck), financial services (JP Morgan Chase & Co, Wells Fargo), and industrials (General Electric, Boeing). A greater share of the U.S. economy is knowledge-based (meaning industries linked to science and technology) than any other economy, and the share is growing faster than that of its peer competitors.
- The share of the U.S. economy based of knowledge intensive is as high as it was in the 1960’s, reaching nearly 40%. No other large international economy is even 30% today.
Most of these knowledge-based business services are in the private sector. Surprisingly the federal government has grown small businesses which help drive this part of the economy. This was done back in 1982 under Ronald Reagan with the Small Business Innovation Research Program (which has been renewed several times since then). It requires all federal agencies with large R&D programs to set aside 3% of their research budgets for small businesses.
Some of today’s largest companies of today such as Apple, Compaq and Intel all received assistance in the 1980’s from this program. Today, some 6,500 small companies are beneficiaries.
To quote the report,
Although many top U.S. companies are global in terms of operations and revenue, they all benefited from a start-up launching pad in the United States that is among the best in the world. It is easier to take business risks and try something new in the United States because bankruptcy laws are more forgiving to business failure, it is easier to hire and fire workers, and capital markets are deep and broad. The United States consistently ranks among the easiest places in the world to do business and its regulatory barriers to start-ups are among the lowest.
During the next year when you hear the presidential candidates discussing the future of the United States, remember the country continues to be very strong due to the commercial innovations and scientific breakthroughs of its companies and universities which are the building blocks of the future economy. Threats to this innovation lead from China and others is real, but let’s continue to put in place the conditions that will allow us to flourish into the future.
The full Council on Foreign Relations (CFR) report is below:
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