American power at stake in great innovation race

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Americans like to think of themselves as the most innovative people in the world. At least since 1945, they have had good reason to believe so. During the Cold War, the United States built the most formidable technology-producing innovation system the world has ever seen.

Coordinated action by the U.S. government, the private sector and academia, combined with America’s unique postwar culture, crafted this system. Its creative forces have produced stunning results ranging from the silicon chip to the internet to the global positioning system (GPS) and much, much more.

{mosads}Although built to ensure America’s technological superiority over its Cold War rival, America’s innovation system also has enabled the United States to remain at the pinnacle of the global economy.


But the American system has seen better days. As we outlined in a 2017 report, America’s leaders, at federal and state levels, have failed to maintain this system much less upgrade it.

As a result, America’s long list of difficulties includes falling public investment in research and development (R&D, a critical and under-appreciated factor in national innovativeness), an under-skilled workforce, flagging support for public higher education, decaying infrastructure and much more. 

Increasingly, the challenge is also an external one. Our current research on innovation systems around the world reveals that other countries have done more than just copy the American template. They also have attempted to improve upon it, finding ways to upgrade this template for competitive advantage.

Some assist startups through public investment funds, others provide low-cost higher education, a few are very good at upgrading their workforce skills for the digital economy. The U.S. does none of these things very well if at all, to its detriment.

China, America’s greatest economic and geopolitical rival, is at the forefront of this global competition. China is no longer content to be either the world’s low-cost manufacturer or its great technological copycat. Rather, it regards tech-innovation leadership in strategic terms, as a critical piece of its lofty superpower ambitions.

China’s rise in tech development is nothing short of astonishing, owing to heavy public R&D funding (now at $233 billion annually, second in the world behind only the U.S.), targeted support of specific technologies such as artificial intelligence and robotics, long-term planning and investment and of course, the sheer size of China’s emerging consumer market.

Nor is China alone. Friends and rivals alike are all players in the global innovation economy. They include the largest, wealthiest and most technologically advanced countries including Germany, Japan, France, Great Britain and South Korea.

They include small but highly competitive countries such as Sweden, Israel and Singapore. And they even include countries that most people in the U.S. would not associate with innovativeness but which are attempting — with varying levels of success — to reach the top tier, including Russia, Brazil, Kenya, Mexico and many more.

Even tiny Rwanda, the site of horrific violence during the 1990s, has developed a reputation here for its desire to participate in innovation. 

The global tech-innovation economy therefore is more than a just crowded place. It is also crowded where it counts: at the very top, where it no longer can be said that the U.S. stands alone. Several of the countries listed here, plus others, routinely score higher than the United States in global innovation rankings.

Although China still has some ways to go to reach its goals, it is increasingly difficult to see it failing to match or even exceed the U.S., given China’s resources, size and breathtaking ambition.

The consequences for America’s position in the world — whether geostrategic, economic or otherwise — are profound. America’s security rests to a great extent on whether it can continue to produce the best military technologies and to counter those from other countries.

Its economic fortunes rest as well on its ability to produce cutting-edge, commercially viable technologies through innovation and on adapting its workforce to the requirements of this century’s tech-centric economy. American power, its ability to influence where the world is heading, is at stake.

America’s leaders and its citizens should be alert to the dangers of allowing the country’s innovation system to slide. Unfortunately, we see little evidence of such. Perhaps American apathy stems from the fact that Silicon Valley is still the world’s foremost tech hub.

Perhaps it is due to Americans’ newfound wariness of the valley’s technology and its impacts on society and politics. Perhaps it is ideological, stemming from a belief that the state should not be involved in the economy (despite the fact that the creation of America’s tech-innovation system resulted from one of the grandest public-private partnerships ever created).

Whatever the reason, Americans need to take a good, hard look at themselves and the rest of the world. As we outline at length in both our reports, the U.S. will not long remain the global leader in innovation unless it takes decisive action across several fronts.

The action list is a long one, ranging from recommitting to public R&D investment to supporting higher education to revisiting social insurance schemes (a question as much about portability as anything else) to upgrading workforce skills to making the tech sector more demographically and geographically inclusive.

Americans also need to become more comfortable learning from abroad, where other countries have proven that they too know how to innovate. Borrowing best practices from abroad is no sin. Rather, it is how other countries have managed to catch the United States.

Peter Engelke is a resident senior fellow with the Strategic Foresight Initiative at the Atlantic Council.

Tags China Competition Design Economic growth economy global economy Innovation Innovation economics public-private partnernships Structure

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