Why America cannot see that it is losing traction
Innovation Economics: The Race for Global Advantage. By Robert Atkinson and Stephen Ezell. Yale University Press; 440 pages; $30 and £20. Buy from Amazon.com,Amazon.co.uk
IT IS not surprising that Americans regard their country as an innovation goliath. The world’s brightest scientists compete to study at its universities, its feistiest entrepreneurs dream of moving to Silicon Valley and its savviest consumers buy its iPads and software programs. The Russians claim to be building their own equivalent of Silicon Valley by the name of Skolkovo. You only have to imagine Americans talking about building a United States equivalent of Skolkovo to see how thoroughly they thrashed their former rival at the innovation game.
Yet America’s innovation advantage is fading rapidly; indeed, in a growing number of areas it has already turned into an innovation deficit. In “Innovation Economics” Robert Atkinson and Stephen Ezell, of the Information Technology and Innovation Foundation in Washington, DC, document this claim in laborious detail and also explain why it is happening.
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That said, “Innovation Economics” is a valuable book. The authors are right to warn that America’s leadership in several areas has eroded much more rapidly than most Americans think. They are right to argue that classical economists are often blind to the fact that innovation is the product of ecosystems rather than individual companies and that ecosystems are fragile. They are also right to worry that “innovation mercantilism” can be much more harmful to its targets than traditional mercantilism: even if it doesn’t benefit the sinner in the long run it can seriously damage the sinned against. America will never again have the same dominance that it had in the second half of the 20th century. But wiser policy can ensure that it profits from the rise of the rest of the world rather than seeing its companies battered and its living standards reduced.
Source: economist.com