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Why America is Losing Its Innovative Edge
Wall St. 24/7 ^ | 09/16/2010 | Jonathan Berr

Posted on 09/16/2010 6:28:21 AM PDT by SeekAndFind

As the world economy entered its worst decline since the Great Depression, corporations were less interested in innovating. Now, as the economy begins to recovers U.S. corporations are in danger of being eclipsed by their Chinese rivals.

According to the World Intellectual Property Organization (WIPO), the total number of patent applications filed across the world grew by 2.6% in 2007. This is the lowest growth rate since the dot-com bubble burst in the early 2000 . To make matters worse, the data, the latest available, showed zero growth in the U.S. China, however, showed a gain of 18.2%. Preliminary 2009 data showed a drop in filings at the major patent offices of 2.9%, WIPO says. China, again, was the exception, showing a growth of 8.5% in applications.

Total trademark applications declined by 0.9% in 2008 – the first decrease since 2001. The drop in demand for trademarks is largely due to decreases in the number of applications from major countries. American applications fell 11.7% while they soared by 20.8 percent in China.

“The post-crisis innovation landscape will invariably look different from that of a decade ago,”WIPO Director General Francis Gurry says . “While the strength of the recovery remains uncertain, there will likely be a continuing geographic shift of innovative activity toward new players, especially in Asia.”

The Research and Development spending picture also is depressing. Expenditures by publicly available companies fell by 1.7 percent between 2008 and 2009. There were huge variations. Companies in the troubled automotive, construction and consumer products sectors showed declines. For example, General Motors (NYSE:GM) dropped by 24.5% and Toyota Motor’s declined by 19.8%. Caterpillar Inc.’s (NYSE:CAT) dropped by 17.8%, and Unilever NV (LON: ULVR) fell by 3.9% China, however, continues to spend aggressively on R&D as R&D Magazine notes:

China’s investment in its Guangdong region, for example, is impressive: About 100 state laboratories for engineering innovation and R&D will be established over the next three years in this area and the goal is that by 2012 it will have three to five industrial clusters powered by high-technology that will generate nearly $15 billion in industrial output. By 2012, R&D expenditure will account for 2.5% of the region’s annual GDP.”

Indeed, China’s economic rise is breathtaking. The Communist nation recently took Japan’s spot at the word’s second biggest economy. Of course, the U.S. remains number one, but if its innovation economy dries up how long will that last.

WIPO’s data is cause for concern. Innovation is the lifeblood of any economy. Unless they create new products and services, businesses will eventually die. This is particularly true of small businesses, which are the backbone of the U.S. economy. They are also the major innovators. As the Kaufman Foundation notes, startups create an average of 3 million new jobs annually. Other types of companies are net job destroyers.

President Obama has recently proposed making the R&D tax credit permanent and even expanding it. That idea — which is an ancient one — is long overdue. We also need to streamline the patent process and make it more difficult for so-called patent trolls to enrich themselves through litigation. The U.S. government also needs to give tax incentives for companies to (temporarily) hire workers to help generate sales which, in turn, will spur new ideas.

America will need decide — and decide soon — if it wants to be a nation of producers and consumers. We all know that Americans are great consumers. But if we want to control our destiny we have to make bold and innovative products and design. Otherwise, instead of changing the world we will be changed by it.

–Jonathan Berr

TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: america; competitiveness; innovation

1 posted on 09/16/2010 6:28:23 AM PDT by SeekAndFind
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To: SeekAndFind

dah !!! the unions !

2 posted on 09/16/2010 6:30:54 AM PDT by lionheart 247365 (-:{ GLENN BECK is 0bama's TRANSPARENCY CZAR }:-)
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To: SeekAndFind
Well, innovation has more to do with culture than spending - I'm not sure China can successfully throw money at the problem.

A bigger issue is that he tax and regulatory environment American small and medium sized businesses face is a sick joke - as if Josef Stalin has seized total control of the low end, but leaves the big boys alone to generate tax revenue and campaign contributions and calls that system "capitalism". Rather than providing R&D tax credits which can only be earned by the likes of Raytheon and Boeing, it would seem more appropriate to redesign the entire landscape.

3 posted on 09/16/2010 6:35:07 AM PDT by Mr. Jeeves ( "The right to offend is far more important than any right not to be offended." - Rowan Atkinson)
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To: lionheart 247365

RE: dah !!! the unions !

Actually most design and innovation are being done in companies that are not unionized ( Engineers and Scientists don’t have unions ).

4 posted on 09/16/2010 6:35:12 AM PDT by SeekAndFind
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To: lionheart 247365
/s ?

Union membership is around all-time lows. Union membership will go the way of the dodo.

5 posted on 09/16/2010 6:40:02 AM PDT by Palter (If voting made any difference they wouldn't let us do it. ~ Mark Twain)
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To: SeekAndFind

Don’t forget bubo the CLOWN has killed NASA...

6 posted on 09/16/2010 6:40:12 AM PDT by Huebolt (It ain't over till there is not ONE DEMOCRAT HOLDING OFFICE ANYWHERE. Not even a dog catcher!)
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To: Mr. Jeeves

Our corporations are very innovative in the cultural cleansing of America to fit their ideal of an amoral materialistic foreign tribal thing to suit globalism. It is elitist so that blocks out “unqualified” people from innovating which was always a part of our success. We hear all the time, “You don’t have a degree so you can’t do anything except work at McDonalds.” If that had been the culture Bill Gates labored under as a boy, he might not have quit Harvard to build Microsoft in his dad’s garage. What qualifications did he have for such an independent action?

Our innovation rested in freedom’s melting pot culture of freedom and it’s values.

7 posted on 09/16/2010 6:51:58 AM PDT by SaraJohnson
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To: SaraJohnson

Your example of Bill Gates is flawed in that he birthed his own corporation from his own ingenuity and had above average intellectual capacity.

A High School education is worthless. A college degree indicates you are trainable and have the capacity to stick with something but still stops short of actually proving your real ability and ultimate value.

I wouldn’t hire anyone without a Bachelor’s for a professional position. And mommy and daddy didn’t pay for my 4 year sheepskin, I earned it the hard way and it took me 8 years. If this poor boy could do it debt free then anyone can.

8 posted on 09/16/2010 6:59:19 AM PDT by TSgt (And the war came.)
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To: SeekAndFind

We just need to accept the average Chinese worker’s standard of living. Problem solved.

9 posted on 09/16/2010 7:09:26 AM PDT by Wolfie
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To: SeekAndFind

Why are we losing our edge?

Because you need 6 permits and to pay 4 fees before you can even scratch your arse, that’s why we are losing our edge.

10 posted on 09/16/2010 7:30:07 AM PDT by FrogMom (No such thing as an honest democrat!)
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To: TSgt

Your example of Bill Gates is flawed in that he birthed his own corporation from his own ingenuity and had above average intellectual capacity.

Actually, that is exactly what I am saying. A talented person (which you classify as “intellegent”) with an idea is not dependent upon a college degree to acheive innovation.

That truth is what has always been a central part of the American culuture prior to the cleansing of multiculturalism which dictates requirements of elitism.

It is great that you got a college degree! I plowed the row next to you for my formal education and I have made sure my sons have not had it easy, too. But when I promote people in my business, it has totally to do with their working track record; their demonstrated character, talent and abilities; not their degrees and not their foreigness or body type.

11 posted on 09/16/2010 10:04:34 AM PDT by SaraJohnson
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To: Palter

Great graph ,,, but the damage has already been done between the unions and nafta , cafta and over regulation America has lost it’s labor force competitiveness in the world market .

12 posted on 09/16/2010 1:10:39 PM PDT by lionheart 247365 (-:{ GLENN BECK is 0bama's TRANSPARENCY CZAR }:-)
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