Published Reports

Findings:

An analysis of the production location of U.S. exports—particularly in the nation’s 100 largest metropolitan areas between 2009 and 2010—reveals that:

• U.S. exports grew rapidly in the first year of the nation’s economic recovery. Specifically, U.S. export sales grew by more than 11 percent in 2010 in real terms, the fastest growth since 1997. In terms of job creation, the number of U.S. total export-supported jobs increased by almost 6 percent in 2010, even as the overall economy was still losing jobs.
• Large metropolitan areas powered the nation’s export growth. Taken together, the largest 100 metro areas produced almost 65 percent of U.S. export sales in 2010, three-quarters of the nation’s service export sales and 63 percent of manufacturing export sales. The largest 100 metropolitan areas produced the majority of export sales in 30 states in 2010. Export sales from Midwestern metro areas generated the fastest growth in direct export-production jobs.

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After decreasing in 2010 for the first time in a decade, California's share of U.S. venture capital investment increased from 50.3 percent to 51 percent in 2011, according to the PricewaterhouseCoopers/National Venture Capital Association Moneytree Survey. The state's share of total U.S. venture deals also increased from 39.3 percent to 40.2 percent. Massachusetts, the second most active venture capital state, received 10.5 percent of venture dollars and 10.4 percent of deals in 2011. Together, the top five states (California, Massachusetts, New York, Texas and Illinois) received 77.1 percent of all 2011 U.S. venture capital dollars.

The tenth edition of the OECD Science, Technology and Industry (STI) Scoreboard has been published this week by the Organisation for Economic Co-operation and Development. With over 180 comparable indicators, it analyses trends in science, technology, innovation and industrial performance in OECD and major non-OECD countries (Brazil, Russian Federation, India, Indonesia, People’s Republic of China and South Africa).

The report shows that the United States is leading the way for research. Forty out of the Top 50 universities with the highest research impact are located in the U.S. and the rest are in Europe. Research and development spending in the U.S. was the highest amount of the countries compared ($400bn in 2009), with China and Japan coming second and third. The report also states that innovation is critical for effectively overcoming the current economic challenges:

For the third year in a row, the U.S. has slipped down on the World Economic Forum's (WEF) annual competitiveness survey. The rankings are based on an international survey of 14,000 executives combined with a set of indicators in 12 categories, including infrastructure, economic environment, innovation, and education. Switzerland came in first for the third year in a row, followed by Singapore, Sweden, and Finland. Behind the U.S. were Germany, the Netherlands, and Denmark. The U.S. had been first in 2008. The full report is available on the WEF web site.

During the past century, innovation in mechanics, computing technology, medicine, and business practices has driven economic growth, raised wages, and helped Americans lead longer and healthier lives. The development of assembly line production, for example, and its application to the mass production of automobiles reduced the time to produce the Model T Ford by 68 percent over six years and reduced its cost by 62 percent, allowing middle-class families to afford what had once been a luxury (Williams, Haslam, and William 1992). The rapid pace of innovation and increases in productivity continued for most of the century, expanding the efficiency of American workers and providing more valuable goods and services at lower prices.

Since the 1970s, however, the pace of innovation has slowed, leading to lower overall wage growth for American workers. Moreover, those gains that have been made have not been shared equally across society. Although average wages have risen, buoyed by strong gains at the top of the distribution, the wages of many Americans have stagnated or fallen after adjusting for the cost of living over the past forty years. Reinvigorating the momentum of innovation that benefits all Americans is imperative to create broad-based economic growth and higher living standards.

To take on this challenge, The Hamilton Project held a forum, “PhDs, Policies, and Patents: Innovation and America’s Future,” on June 28, 2011. The discussion explored the evolving role of innovation in driving broad-based economic growth in the United States and the policy environment necessary to foster new ideas in science, technology, and business. From that conference The Hamilton Project pulled from the statements of each of our panelists to identify a dozen facts about innovation. These dozen facts encapsulate three themes: First, innovation has historically improved America’s overall standard of living through higher wages, lower prices, and health advancements. Second, the pace of innovation has slowed more recently and the gains from innovation have not benefitted all Americans. Third, in today’s increasingly competitive global economy, current U.S. policies are not doing enough to promote innovation. Without purposeful policies and necessary investments to spur innovation, the United States may not experience the same sort of economic and technological advances in the current century that we enjoyed in the past.

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