Not the Usual Suspects
This isnt the first time Americas competitive advantage has been threatened, but today the challenge is more complex.
In the 1980s, the United States was inventing things, but not manufacturing them as well, particularly at the small- and medium-sized establishment level, says Jan Youtie, a senior research associate at Georgia Techs Economic Development Institute. That led to government programs like MEP, or Manufacturing Extension Partnership, to enhance our competitiveness. Now, the real concern is whether we can maintain our pace of innovation.
Another twist is a new cast of players. In the 1980s, competition came from high-skilled, high-wage countries like Japan and Germany. Today, emerging Asian countries are displaying surprising clout in technology. India is winning recognition in software development, and South Korea is showing strength in electronics and computer storage and display technologies.
China is sparking some of the greatest concern as it evolves from being merely a low-cost competitor to one with growing technology capabilities. From 1989 to 2001, Chinas high-tech industry output, which includes aerospace, computers, communications equipment, pharmaceuticals, and medical instruments, jumped eightfold from $30 billion to $257 billion. In comparison, the United States output slightly more than doubled from $423 billion to $940 billion.
Knowledge economies depend on skilled scientists and engineers, and in the U.S. that workforce is aging. More than 25% of todays scientists and engineers are in their fifties, and many will retire by 2010. Also, fewer students are pursuing science and technology degrees.
In the last three decades, the U.S. has fallen from No. 3 to No. 17 in global rankings of countries with college students earning science and engineering degrees.
Compensation is one deterrent, experts say. Pursuing a business degree is viewed as an easier and faster payoff.
Students spend a great deal of time and money to obtain doctoral degrees when they could have been out in the market earning salaries and building pensions, says Diana Hicks, chair of Georgia Techs School of Public Policy.
At the same time that American students are abandoning science and engineering, fewer foreign students are coming to the U.S.
Thats a problem because foreign students have helped make up for the dearth of U.S. students enrolled in science and engineering. After graduating, foreign students often remain in the U.S. for research jobs, contributing to our nations knowledge base.
Some of the decline stems from 9/11, with new immigration policies making it more difficult for foreign students to secure visas. Another reason, as other countries have bolstered educational centers, their young people no longer are dependent on the United Sates for advanced training.
And if foreigners do choose to study in the U.S., they have more reasons for returning home. In many countries with reformed economies, salaries for professors and researchers have escalated significantly.
When Xiao-Yin Jin, a visiting scholar at Georgia Techs Technology Policy and Assessment Center, was working at the Shanghai Industry Foundation in 1990, his annual salary was less than $1,200 in U.S. dollars. Today, Chinese professors in key universities earn more than $12,000 per year, he says.
Chinese professors can further increase their income by doing government- or industry-funded research, where about 10 to 15% of grant money is available as salary or bonuses. Another incentive, government policies encourage scientists to become entrepreneurs, Jin adds. If a researchers innovation can be used to start a business, the organization is tax-free for three to five years.