Competitiveness

Innovation, including the diffusion of information technology throughout the economy, is key to boosting productivity, which in turn is at the heart of increasing living standards.

Everybody Needs STEM Talent

December 22, 2014
| Blogs & Op-eds

Critics of the H-1b visas criticize the program for awarding visas to companies in non-STEM industries. However, companies across all industries demand workers with STEM skills. Cutting these companies off from pools of STEM talent will not improve conditions for native workers but force companies to locate overseas. 

The Middle Kingdom Galapagos Island Syndrome: The Cul-De-Sac of Chinese Technology Standards

December 15, 2014
| Reports

Read the Chinese translation of the executive summary.

China has made the development of indigenous technology standards, particularly for information and communications technology (ICT) products, a core component of its industrial development strategy. China has done so believing that indigenous technology standards will advantage China's domestic producers while blocking foreign competitors and reducing royalties that Chinese firms pay for foreign technologies. But, by using indigenous rather than global technology standards for ICT products, China risks engendering a “Galapagos Island” effect that isolates Chinese ICT products, technologies, and markets from global norms, as Japan experienced to the significant detriment of its ICT sector.

This report explains why the development and adoption of global, interoperable technology standards matters. It then explores Japan’s experience with the “Galapagos Island Syndrome,” explaining how that nation’s isolation from global technology markets ultimately inflicted significant damage to an industry that had once been among Japan’s most vibrant.

The report then turns to examining China’s standards development approach and identifies four central shortcomings: 1) it risks picking the wrong standard; 2) it risks delays in standards development (often caused by bureaucratic inefficiency or rivalry) that cause both missed market and economic growth opportunities; 3) it encourages a belief that Chinese markets alone are of sufficient scale; and most importantly 4) even when and if it does succeed in developing indigenous standards, it risks the Galapagos Island  effect that isolates China’s ICT products and markets from global ones. 

The report concludes by offering recommendations for how China can improve its approach to standards development in a way that benefits China’s ICT enterprises, China’s consumers of ICT products, and even the broader global economy. Among other recommendations, it notes that:

  • China should adopt an “open participation model” in product standards development processes and frameworks that is transparent, open, and non-discriminatory for all stakeholders.

  • China should remove policies that inappropriately withhold access to standards-development organizations (SDOs) or other Chinese standards-making forums based on where a company or organization is headquartered.

  • China should align its standards (including national, industrial, and provincial standards) with international standards and use international standards as the basis of Chinese standards and regulations wherever practical. China should not make minor alterations to existing international standards with the intent of developing a China-only standard. 

  • Technology that is not developed or registered in China should still be considered for inclusion in Chinese standards. 

  • Wherever the majority of the rest of a global industry sector has developed a voluntary consensus standardization forum as the preferred venue for the development of certain ICT standards, Chinese industry should join the rest of the sector in the development and use of those standards.

How the United States Outpaced Japan in Software Innovation

December 12, 2014
| Blogs & Op-eds

While Japan had an innovation advantage over the United States in hardware, the United States has an innovation advantage in software. Faster U.S. innovation in software is partially explained by better public/private research partnerships, a more educated workforce, and a broad, global, perspective. An edge in innovation helped the United States become dominant in software publishing in the late 1990s.

Defense Innovation and the Future of American Competitiveness

The Challenges for America’s Defense Innovation

November 21, 2014
| Reports

 

From WWII to the 1957 launch of the Soviet Sputnik to the 1980s defense buildup, U.S. defense investments in research and development not only promoted American security and safety but made a major contribution to U.S. innovation and economic leadership, assisting in the development of a host of industry-defining technologies from the Internet to GPS to the laser. Yet since the end of Cold War, federal funding for R&D, including defense R&D, has increased much more gradually and recently has actually declined. In addition, the 2013 sequestration – which mandated automatic spending cuts numerous programs including defense research initiatives – has exacerbated the challenge.
This report takes a closer look at America’s defense innovation ecosystem, assessing the current state of U.S. military expenditures compared to historical averages and our international competitors. It then analyzes the impact of the sequestration and limited budgets, the decline of the industrial base for defense needs, and the erosion of domestic innovation generally on the health of the defense research enterprise. The United States defense system is still the most innovative in the world, but that leadership is not assured and is in danger of failing. This decline in leadership will not only impact defense innovation and capabilities, but also overall commercial innovation and U.S. competitiveness.

 

From WWII to the 1957 launch of the Soviet Sputnik to the 1980s defense buildup, U.S. defense investments in research and development not only promoted American security and safety but made a major contribution to U.S. innovation and economic leadership, assisting in the development of a host of industry-defining technologies from the Internet to GPS to the laser. Yet since the end of Cold War, federal funding for R&D, including defense R&D, has increased much more gradually and recently has actually declined. In addition, the 2013 sequestration – which mandated automatic spending cuts numerous programs including defense research initiatives – has exacerbated the challenge.

This report takes a closer look at America’s defense innovation ecosystem, assessing the current state of U.S. military expenditures compared to historical averages and our international competitors. It then analyzes the impact of the sequestration and limited budgets, the decline of the industrial base for defense needs, and the erosion of domestic innovation generally on the health of the defense research enterprise. The United States defense system is still the most innovative in the world, but that leadership is not assured and is in danger of failing. This decline in leadership will not only impact defense innovation and capabilities, but also overall commercial innovation and U.S. competitiveness.

Mexico Institute High-Level Innovation Forum

November 20, 2014
| Presentations

Stephen Ezell presented on Mexico’s Innovation Ecosystem at the Wilson Center. Ezell advocated for Mexico's Legislature to turn Mexico’s universities into engines of innovation, to enhance enterprises’ incentives to invest in R&D and productivity-enhancing capital equipment and machinery, and for Mexico to increase investments in both research and development and public health.

Building Blocks of the Ubiquitous Digital Single Market

November 13, 2014
| Presentations

Rob Atkinson discussed ICT growth and its impact on economic development via video conference at the "Building Blocks of the Ubiquitous Digital Single Market," event in Brussels organized by the European Parliament.

View event photo. View event video. (Only plays in Internet Explorer)

How the Cloud Can Drive Economic Growth

October 30, 2014
| Presentations

Canada’s Digital Policy Forum is an independent roundtable devoted to substantive discussion of digital policy issues.
Our mission is to facilitate the development of public policies that advance Canada’s digital economy, by promoting dialogue and the interchange of ideas between civil society, business, and government.
Rob Atkinson presented on "How the Cloud Can Drive Economic Growth" to Canada’s Digital Policy Forum. Digital Policy Forum is an independent roundtable devoted to substantive discussion of digital policy issues. Their mission is to facilitate the development of public policies that advance Canada’s digital economy, by promoting dialogue and the interchange of ideas between civil society, business, and government.

ITIF Ranks 125 Nations on Discriminatory ICT Taxes and Tariffs

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