Obama: 'This is our generation's Sputnik moment'

"The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1000 workers can now do the same work with 100," Obama said.

He noted that rival nations like China and India have invested heavily in educating children with a focus on math and science and said America must match their efforts to stem a decline in student performance in those subjects.

One way Obama said the government can drive innovation is by funding basic research, which leads to breakthroughs that create new industries. He said his next budget will include significant boosts in basic research funding for biomedical research, information technology, and clean energy technology.

“We heartily agree with the President that if we are to win the future, our nation’s focus must be on accelerating entrepreneurship, innovation, global competitiveness and job creation," said TechAmerican president Phil Bond in an e-mailed response.

"Much remains to be done to keep America at the cutting-edge, however. Pro-innovation tax reform, free trade, improved education, immigration reform, broadband deployment, a permanent R&D credit and securing cyberspace are all critical for honing our competitive edge in the 21st century economy."

Obama also lamented the fact that many foreign students who earn advanced degrees in science and engineering at U.S. universities are forced to leave the country after graduation as part of his call for Congress to tackle comprehensive immigration reform.

"As soon as they earned advanced degrees we send them back home to compete with us," Obama said. "Let's stop expelling talented young people who could be further enriching this nation."

Finally, during the portion of his speech discussing the need for rebuilding the nation's infrastructure Obama compared high-speed Internet access to high-speed rail and said the U.S. must improve both to compete.

"Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do," Obama said.