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Innovation Research

Innovation Research: State of Innovation

Innovation research: There are number of indications that the U.S. is losing its technological edge. In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978. U.S. venture capital firms are investing more of their funds overseas. Many U.S. trained, foreign national, scientists and engineers are leaving the U.S. and returning to their home countries. In 2001 (the most recent year for which data are available), US industry spent more on tort litigation than on research. A strong start-up technology sector results in a large number of Initial Public Offerings. The chart below shows the incredible number of IPOs that occurred in the 90s and the relative dearth of IPOs since 2000. This is a strong indicator that the U.S. has not been as innovative in the 2000-2009 decade as in the 90s. According to John Kao, an innovation expert from Harvard, One of the most stunning migrations of the past decade . . . has been the U.S. venture capital’s move overseas. The source of such a large share of the funding for innovation is finding its way to China and India in ever greater amounts. In 2006 alone, U.S. venture funds invested $856 million in 71 deals in India and $1.1 billion in 105 deals in China. This is a clear sign of no confidence in the U.S. While it is true that technological innovation is spreading throughout the world, venture capital funds traditionally loath investing far from their home base. The extra cost and time of travel to oversee their investments and the reduced insight into distant investments have usually driven venture capital firms to invest within a days car travel of their home base. The U.S. is now ranked eighth in the Global Innovation Index, behind Singapore, South Korea, Switzerland, Iceland, Ireland, Hong Kong and Finland. The Global Innovation Index is produced by The Boston Consulting Group and the National Association of Manufacturing. It is a good thing that other countries are becoming more innovative. It is a bad thing if the U.S. falling behind in the innovation rankings because it is becoming less innovative. In this case, it is clear that the U.S. has been falling behind in innovation since 2000. There is increasing evidence that the U.S. is experiencing a brain drain. Thirty thousand Indian born technology professionals returned home in 2005 & 2006. U.S. scientists and engineers are being lured away to other countries by better opportunities and equipment. “Edison Liu, former head of the U.S. National Cancer Institute and now a division head at Singapore’s Biopolis, the country’s massive new research center aimed vaulting Singapore to biotech preeminence.” The National Academy of Sciences in 2007 was tasked with reviewing America’s competitive position on science and technology. Some of interesting highlights are provided below The United States is today a net importer of high-technology products. Its trade balance in high-technology manufactured goods shifted from plus $54 billion in 1990 to negative $50 billion in 2001. In 2005, only four American companies ranked among the top 10 corporate recipients of patents granted by the United States Patent and Trademark Office.

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