Innovation is key to winning the global great power competition

Innovation is key to winning the global great power competition
© Getty Images

Positive economic signs like low unemployment, rising wages, and strong growth are masking a troubling trend, which is that the United States has an innovation problem. We are less entrepreneurial today than we were decades ago. The decline in innovation is consistent across sectors. From manufacturing to agriculture, Americans today are starting businesses much less frequently than their parents or grandparents. This puts us at a disadvantage in an increasingly competitive and technological world.

As geopolitics and technology are increasingly intertwined, the United States risks falling behind in this critical technological competition. Our rivals are moving quickly to surpass us in the deployment of advanced technologies. By closing off its markets, subsidizing innovation, and using forced technology transfer and intellectual property theft, China serves as the authoritarian vanguard in this competition. It has become clear that Beijing has a vision of a technological future that builds on innovation by its firms for both economic strength and strict control of its citizenry.

To ensure that future technological innovation reflects open rather than authoritarian ideals, policymakers must take steps to increase American innovation. With a global economy, we cannot simply contain or confront our challengers, we must outcompete them. A 21st century innovation framework will increase entrepreneurship, create solid jobs, maintain a broad vision, and incorporate our strengths of technology, capital, and talent into our strategy for great power competition. With a bold vision reflecting this challenge, we can start by reforming existing policies.

ADVERTISEMENT

First, we need to examine how the public sector and the private sector work together for innovation. For decades, the federal government has been the international leader in research and development. In 2017, across more than 300 national labs, taxpayers spent around $134 billion on science and technology research and development. But many of the most promising inventions from labs never reach the commercial market. Since the 1980s, taxpayer funded invention has become decoupled from commercial innovation. History shows us this was not always the case.

From the Second World War through the Cold War, robust collaborations between government, academia, and industry resulted in unprecedented breakthroughs. The value of technologies with narrow military purposes was unlocked to transform the economy. It is absolutely no wonder that Silicon Valley and Cambridge, two recipients of massive wartime research and development spending, are now global centers for entrepreneurship, innovation, and technology investing. The former gave way to the latter.

Be it in concert with the Defense Department, the intelligence community, or the national labs, American entrepreneurs should have readily available and free access to a wide range of modern taxpayer funded technologies. By both increasing and streamlining the important collaboration between government researchers and entrepreneurs, we could supercharge our economic growth and bolster our national security for the 21st century.

Second, we also need to ensure that our small business programs are adapted and modernized to reflect the pace of technological innovation. The Small Business Innovation Research program, administered by the Small Business Administration, along with its sister program, the Small Business Technology Transfer, set aside nearly $3 billion a year in funding. These funds are administered through almost a dozen federal agencies.

Entrepreneurs commonly opt out of these small business programs, which offer otherwise attractive financing opportunities, because the process is too long, too opaque, and too cumbersome. It also often works at cross purposes with private capital, and some of these policies can ultimately disincentivize growing a company beyond the government definitions of a small business. The federal seed funding program for innovation should be updated so that it makes big bets on transformational opportunities.

ADVERTISEMENT

Finally, people drive innovation, while policy supports or inhibits it. We must ensure that our workforce provides the pool of talent needed for successful innovation. Lessons from examples overseas serve as a useful starting point. Israel has the ability to pair talent with technology and bridge defense and commercial innovation, which has allowed it to stay ahead of fast moving threats in a violent region. Both Germany and Switzerland have built educational models that pair classroom education with on the job skills growth provided by apprenticeships through high school and beyond. We can also ensure that all our changing academic curriculums not only emphasize science, technology, engineering, and mathematics education, but also highlight how the arts and humanities, with creative skills and critical thinking, can work together for innovation.

The United States has a proud history of being the leader in innovation. China and others are actively and directly challenging our dominance. We cannot beat them by adopting a closed and overly bureaucratic approach. Our strengths in innovation and enterprise are the foundations we must build upon. We broke out of the existing paradigms to win the Second World War, the Space Race, and the Cold War. In order to win the great power competition of the 21st century, we need a modern framework that places innovation at the center of our economic and national security.

Glenn Nye is a former member of Congress who is now president of the Center for the Study of the Presidency and Congress. Brendan Hart is a senior fellow at the Center for the Study of the Presidency and Congress.