Once upon a time—actually it was just last year—the U.S. was the world innovation champion, according to an annual report by INSEAD and the Confederation of Indian Industry. In this year’s study, the nation slumps to 11th place. Perhaps even more surprising is the new No. 1: Iceland.

Soumitra Dutta, an INSEAD professor of business and technology, who oversaw the survey, theorizes that the rankings show that, as in so much else, size matters. But in this case it’s the smaller the better.

He tells me that having easy access to a big marketplace still makes it easier for innovators to profit from their inventions. Would the iPod or the iPhone have been such big hits if Apple had been based in, say, Iceland? But the Internet is turning the entire world into one big market, to which everyone everywhere has access, he says. Also, it appears that smaller, homogeneous countries can unite to support policies, institutions, and infrastructure that promote innovation—in the developed world, at least.

Size certainly makes a difference in the 2010 Global Innovation Index report. The most-populous land in the Top 10 is Sweden, with 9.2 million people. It finishes second. Several of the biggest nations in the developed world cluster just below the U.S. Japan is 13, with Britain at 14, and Germany at 16. Of the so-called BRIC giants in emerging markets, China comes out best, at 43. Trailing are India (56), Russia (64), and Brazil (68).

The United States is home to the world’s first research park, launched in 1951 at Stanford University. In the sixty years since, another 170 university-related research parks have sprung up across the country, promoting innovation, incubating technology, and stimulating economic growth. Today, however, the United States has lost its lead. China, India, and Korea are home to the world’s largest research parks, developed by their national governments, attracting global research and development companies from afar to their shores.

In 1981, Congress passed the Bayh-Dole Act, giving universities the lead role in transferring technology into the private sector from federally supported research. Such research contributes anywhere from $47 billion to $187 bil- lion annually to our nation’s gross domestic product (GDP). Other countries have copied the U.S. university commercialization model, with the result, for example, that universities in the United Kingdom now have a better record than U.S. universities in technology commercialization.

• 648 new commercial products introduced
• 5,039 total license and options executed
• 595 new companies formed
• about 72 percent of new companies formed with the primary place of business in the institution's home state
• 3,381 startup companies still operating as of the end of FY2008
• 20,115 disclosures
• 12,072 new U.S. patent applications
• 848 non-U.S. patent applications
• 3,280 issued U.S. patents

Today, Athena Alliance is releasing a new Policy Brief Intellectual Capital and Revitalizing Manufacturing which makes a number of recommendations to directly incorporate intellectual capital into a manufacturing strategy and best position the United States for accelerated job, productivity, and economic growth in the coming years.
 
The Policy Brief takes as its starting point the White House paper released last December --
A Framework for Revitalizing American Manufacturing.  The Administration's Framework makes an excellent case that the federal government has a strong role to play in reinvigorating this important sector of the U.S. economy. It outlines the challenges facing manufacturing while describing the opportunities in new product areas. However, the ongoing transformation in manufacturing to a knowledge-intensive activity will require attention to all the inputs to the production process technology, worker skills, and  organizational structures. The Framework recognizes that the nature of the economy has changed and implicitly accepts this basic premise. Intellectual capital, such as patents from research and development as well as managerial know-how,” the document states, is a vital component in determining costs, growth rates and the creation of new industries. But while patents and managerial know-how are important components, a successful manufacturing framework must embrace the full range of intellectual capital and intangible assets. 

The Policy Brief begin released today takes that extra step and provides specific recommendations as to how to include intellectual capital and intangible assets in the manufacturing framework. These include, among other things, programs to explicitly include intangible assets and intellectual capital management services and advice in MEP and SBA programs, use of intangible assets as collateral in SBA loans, and increased disclosure of intangible assets in company financial statements and in bank lending portfolios.
 
Intellectual capital and intangible assets are widely recognized as key drivers of economic value. The recommendations contained in the Policy Brief will help manufacturing firms better realize that value.

I hope you find the paper of interest.  As usual, this and all of our previous publications can be found on our website at www.athenaalliance.org.
 
And don't forget our blog - The Intangible Economy at www.intangibleeconomy.org .

All the best,

Ken