"Innovation -- The Key To America's Global Economic Leadership"
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Our Changing Economy
March 18, 2004
Mr. Speaker, when it comes to responding to the issue of offshoring and its impact on U.S. jobs, we have two choices: we can try to isolate ourselves from the rest of the world, or we can continue to innovate and create better and better jobs for Americans.
After decades of American global economic leadership, successfully competing in the worldwide marketplace, and producing cutting-edge technologies and business practices, the economic isolationism option is clearly no option at all.
That leaves us with only one choice: allow Americans to continue to innovate, grow, and create better jobs.
In fact, innovation has always been the key to our global economic leadership. Our culture of creativity, independence, and free thinking has created what the CEO of an Indian high-tech company recently called a “unique crucible for innovation”. He shares this anecdote, as quoted in the New York Times, about the very powerful force of American innovation: “I was in Europe the other day and they were commiserating about the 400,000 European knowledge workers who have gone to live in the U.S. because of the innovative environment there. The whole process where people get an idea and put together a team, raise the capital, create a product and mainstream it -- that can only be done in the U.S.”
Our long-standing position as the leading global innovator continues to be very strong. For example, the U.S. is by far the world’s leader in producing new patents. In recent years, an annual average of 185,000 new patents are granted in the U.S., compared with 120,000 in Japan and only 45,000 in the entire EU.
We also lead the world in research and development by a huge margin. The U.S. spends over $250 billion on R&D; every year, while Britain spends one-tenth of that amount. Germany spends less than one-fifth of the U.S. total, and France spends one-eighth.
Our growing investments in R&D; have lead to steady growth in the number of invention disclosures and patent applications by academic and non-profit research organizations. In 2002, these grew by 15%, and they continue to increase.
These same institutions also are increasingly licensing their work and partnering with U.S. companies – primarily small- and medium-sized businesses – to apply their discoveries and innovations to the marketplace.
This increased research and licensing lead to major breakthroughs in fields such as healthcare, including cancer and Alzheimer’s treatment; electronics, with applications like improved cellular voice quality and computer monitors that create less stress on users’ eyes; and even a new type of electric generator that can produce electricity with environmentally-friendly hydrogen fuel at a fraction of the cost of current power plants.
Venture capital, by providing the resources necessary to turn ideas into new goods and services, is also a key component of our ability to innovate. Once again the U.S. is the global leader. Business and individual investors provided over $21 billion in venture capital in 2002, compared with just $8 billion in the EU. And that constitutes a 600% increase in U.S. venture capital over the past decade.
This environment is the cornerstone of American prosperity. It gives individuals the freedom to develop new ideas and concepts, and encourages creativity and risk-taking. It has unparalleled financial markets and a venture capital system that are constantly helping Americans turn their dreams into reality. It has given American companies and individuals the power to invest, grow, and create new jobs in cutting-edge fields.
And it is our best answer to those who see offshoring as a reason to retreat behind walls of economic isolationism. We should not be trying to isolate ourselves from the worldwide market, which would actually stifle our innovative environment and cede our position as a global leader. Instead, we should continue to allow our spirit of innovation and entrepreneurship to empower Americans, lead the world, and create better and better jobs.
