EXECUTIVE SUMMARY

We Are Still Losing the Competitive Advantage is the natural sequel to the report AeA released two years ago that explored the challenges the United States faced and, in many ways, was ignoring at its peril. Our purpose then was to alert audiences that America’s edge in science and technology was increasingly at risk.

Two years later, we have in large part succeeded. Awareness of this problem among policymakers, the media, and the American people has grown. Reports have been issued, editorials written, initiatives and legislation introduced. Yet despite this, lawmakers have not moved forward with a comprehensive competitiveness and innovation agenda.

Now is the time for action. In updating the data from our previous report, we found that the competitiveness challenges confronting the United States have intensified. This new report includes expanded analysis sections (pages 8-26) with the latest data and updated country case studies to provide the context for assessing our recommendations for action. We provide a timeline of what has happened in the last two years to move this debate forward (page 4). And, to truly bring home the point that competitiveness is not just an academic debate taking place inside the beltway, we include testimonials from high-tech executives from companies of all sizes around the country, illustrating the challenges they confront every day in an increasingly competitive global marketplace (pages 2 and 28).

We said it two years ago and it remains valid today --- in a rapidly changing global economy, the United States must address the implications of the following critical issues to prevent a slide in global competitiveness:

The United States Faces Heightened Competition as Other Countries Are Catching Up
Two years later, the intensity of global competition continues to grow. As our case studies show, countries around the world are moving beyond economic reforms to invest in the factors that spawn innovation and propel nations to become global competitors (pages 10, 12, and 14). While this is a net plus for the world, it is only a net plus for the United States if we maintain our competitiveness. But we are not. For example, South Korea has passed the United States in engineering bachelors degrees awarded (page 11). And we have slipped from 11th to 16th internationally in broadband diffusion (page 15).

Waning Commitments to Research and Development Are Threatening Future American Innovation
Two years later, the good news is that Congress and the President have increased funding for R&D, particularly basic research. The problem is that these investments remain below their peak of the 1980s as a percentage of the economy (page 18). Furthermore, the U.S. R&D Tax Credit, which has supported so much R&D in the private sector, remains temporary, is subject to periodic expiration, and is ranked only the 17th most competitive credit in the world (page 19).

The U.S. Workforce Is Increasingly Unprepared for the 21^st Century Knowledge Economy
Two years later, American kids’ math and science proficiency remains unacceptably low. While 4^th and 8^th graders have improved somewhat, our high school students continue to slide (page 21). This means too few are prepared to pursue technical careers. Thousands of technology jobs continue to go unfilled because not enough Americans possess the requisite skills. And on top of this, the United States continues to close our workforce safety valve: highly skilled and educated foreign nationals (page 23-24). These best and brightest do not come here and take American jobs; they create literally thousands of jobs by developing intellectual property, spawning innovation, and founding companies.

AeA outlines two tiers of recommendations (page 6) The first tier includes immediate changes that have already been introduced in various bills. The second tier recommendations must become part of the framework of ongoing public policy.

1^st TIER RECOMMENDATIONS
Champion Dramatic Improvements in the U.S. Educational System
Support and Increase Research and Development (R&D)
Enact High-Skilled Visa Reform

2^nd TIER RECOMMENDATIONS
Create a More Business Friendly Environment in the United States
Engage Proactively in the Global Trade System
Promote Broadband Diffusion

Additionally, when it comes to specific details of these recommendations, AeA wholeheartedly endorses the recommendations outlined in the National Academies’ report Rising Above the Gathering Storm (page 7).

 
 Download and read the full report:
 We Are Still Losing the Competitive Advantage:
 Now Is the Time To Act

Matthew Kazmierczak
Vice President, Research and Industry Analysis
202.682.4438
matthew_kazmierczak@aeanet.org

Josh James
Senior Manager, Research and Industry Analysis
202.682.4422
josh_james@aeanet.org

This page was last updated on 03/26/07.  
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