Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy

September 20, 2012
For the United States economy to thrive, its traded sectors, especially advanced manufacturing, must be globally competitive.

For the U.S. economy to thrive, its traded sectors, especially advanced manufacturing, must be globally competitive. Unfortunately, the opposite is true: the United States has seen virtually no growth in traded sector jobs since 1990 and has watched manufacturing output (when measured properly) fall by 11 percent over the past decade. The United States urgently needs to develop a comprehensive response. ITIF will host a Capitol Hill forum on September 20 presenting two reports offering key solutions. Read more »

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Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy

September 20, 2012
| Reports

Download the fifty recommendations from the report (PDF)

By definition, countries that wish to successfully compete in the global economy must have highly competitive traded sectors. A nation’s traded sector comprises those industries and establishments which compete in international marketplaces and whose output is sold at least in part to nonresidents of the nation. Traded sectors include almost all of a nation’s manufacturing activity, some services (such as software, Internet, and engineering services, and entertainment content like music, movies, and video games), and some of the extraction sectors (e.g., farming or mining). Because these industries face market competition that is global in nature in a way that non-traded, local-serving industries (e.g., retail trade or personal services) do not, their success is by no means assured. For example, while we may not know whether Safeway, Giant, or Walmart are going to gain market share in the U.S. grocery store industry, we do know that the industry itself will be healthy, dependent only on the income and purchasing habits of American consumers. On the other hand, while we may not know whether Boeing or Airbus are going to gain market share in the global aircraft industry, we also do not know whether there will be aviation industry jobs in the United States, since this depends on the United States winning in global competition in this industry. Put differently, if a grocer goes out of business another will emerge to take its place to serve local demand, but if a traded sector enterprise such as a manufacturer or software company closes, the one that takes its place may well be located in another country.

This report presents 50 federal-level policy recommendations to help restore U.S. traded sector competitiveness (and an additional 13 state-level recommendations). The recommendations are organized around federal policies regarding the “4Ts” of technology, tax, trade, and talent as well as policies to increase access to capital, reduce regulatory burdens, and enable better analysis of the competitiveness of U.S. traded sectors.

While we believe all 50 recommendations are needed, we list what we believe are the most critical 10 recommendations here:

  1. Create a network of 25 “Engineering and Manufacturing Institutes” performing applied R&D across a range of advanced technologies.
  2. Support the designation of at least 20 U.S. “manufacturing universities.”
  3. Increase funding for the Manufacturing Extension Partnership (MEP).
  4. Increase R&D tax credit generosity and make the R&D tax credit permanent.
  5. Institute an investment tax credit on purchases of new capital equipment and software.
  6. Develop a national trade strategy and increase funding for U.S. trade policymaking and enforcement agencies.
  7. Fully fund a nationwide manufacturing skills standards initiative.
  8. Expand high-skill immigration, particularly that focused on the traded sector.
  9. Transform Fannie Mae into an industrial bank.
  10. Require the Office of Information and Regulatory Affairs (OIRA) to incorporate a “competitiveness screen” in its review of federal regulations.

Finally, while the report presents 50 specific recommendations, it also articulates four key themes that permeate the report and which should be viewed as essential thematic components of a U.S. traded sector competitiveness strategy. Beyond implementing specific policies, these are the key themes U.S. policymakers must embrace if the United States is to restore its traded sector competitiveness:


  1. The federal government must place strategic focus on its traded sectors, because it simply can’t rely entirely on its non-traded sectors to sustainably power the U.S. economy.
  2. The United States needs to embrace and reintegrate an engineering culture. While America has thrived on science-based innovation and has a strong science culture, it needs to become much more of an engineering economy. The notion that the United States can win through science alone is fallacious, because science is a public good that’s freely traded around the world, whereas gains from engineering-based innovation are capturable and appropriable within nations.
  3. The United States must move toward an economic system more focused on production than consumption. This means being willing to give short-term consumption less priority in our politics. Examples include raising the gasoline tax to invest more in roads and highways, pushing for a lower U.S. dollar, and raising taxes on individuals in order to cut them on businesses, particularly those in traded industries.
  4. There is a need to seriously rethink the structure of the global trading system and ensure that it is a trading system based on market-oriented principles. Unfortunately, the last decade in particular has seen a troubling rise in “innovation mercantilism,” which fundamentally hurts the U.S. competitive position while violating the spirit and often the letter of the World Trade Organization.

ITIF Report Details 50 Policies to Bolster U.S. "Traded Sector" Competitiveness

WASHINGTON (September 20, 2012) - A comprehensive strategy aimed at strengthening U.S. establishments competing in global markets is needed for the United States to boost short-term recovery and long-term prosperity, according to a report released today by the Information Technology and Innovation Foundation. Read more »

Next President Needs to Tackle Innovation Deficit Too

September 14, 2012
Robert Atkinson, author of "Innovation Economics," says the next President need to tackle America's innovation crisis to bring back manufacturing.

Robert Atkinson talks about Innovation Economics on "The Street," saying the next President need to tackle America's innovation crisis to bring back manufacturing. Read more »

Winning the Race 2012 Memos

September 5, 2012
| Reports

As the 2012 presidential campaign moves in the final stage, ITIF is presenting general principles and specific recommendation ideas across several policy areas we believe the next President and Congress should adopt to restore U.S. global competiveness and prosperity.

As chronicled in Innovation Economic: The Race for Global Advantage, the United States is losing its once formidable edge as an innovator. Many other nations are putting in place better tax, talent, technology and trade policies, and reaping the rewards in terms of faster growth, more jobs, and faster income growth. It’s not too late for the United States to regain its lead but it will need to act boldly and with resolve.

Week by week until the November election, the Winning the Race series will put forward creative yet pragmatic ideas in policies affecting taxes, trade, education, broadband, the digital economy, clean energy, science and technology and other areas. Taken as a whole, the series represents a new Innovation Consensus to replace the outdated Washington Consensus.

Memo One (September 3, 2012): Boosting Innovation, Competitiveness, and Productivity

Memo Two (September 10, 2012): Trade and Globalization

Memo Three (September 17, 2012): Corporate Tax

Memo Four (September 24, 2012): Digital Communication Networks

Memo Five (October 1, 2012): Traded Sector Industries

Memo Six (October 9, 2012): Digital Economy

Memo Seven (October 15, 2012): STEM Skills

Memo Eight (October 22, 2012): Clean Energy

Memo Nine (October 29, 2012): Science and Technology

Memo Ten (November 5, 2012): Overcoming the Barriers 

Complete List of Policy Recommendations: Top Policy Recommendations for the Obama Administration to Help the United States Win the Race for Global Advantage

How to Improve Manufacturing in America

August 13, 2012
Rob Atkinson on American manufacturing program at the National Chamber Foundation.

The National Chamber Foundation, together with the Manufacturers Alliance for Productivity and Innovation as well as the National Association of Manufacturers, hosted a half-day program focused on how we may build American competitiveness through manufacturing. Rob Atkinson presented his view of the state of American manufacturing and the economy to the panel of manufacturing experts. 

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Foreign IT IP Theft Damages U.S. SME Manufacturers

August 6, 2012
| Blogs & Op-eds

It’s vital that that the United States pursue a “whole of government” approach to combat foreign IT IP theft. This starts with the quality of trade agreements the United States enters into (and the trade infringement remedies they permit) and continues through the effectiveness of U.S. agencies and policies charged with combatting IP theft and enforcing trade agreements. While these efforts are spearheaded by the U.S. Trade Representative’s Office, the U.S. International Trade Commission, and particularly U.S. Customs and Border Protection on the enforcement side, the U.S. Federal Trade Commission (FTC) also has a vital role to play in cracking down on foreign manufacturers who are ripping off U.S. intellectual property and using stolen information technology in their products.

Manufacturing in America - A Story of Global Competition

August 2, 2012
| Blogs & Op-eds

The conventional wisdom that U.S. manufacturing job loss is simply a result of productivity-driven restructuring (akin to how U.S. agriculture lost jobs but remains healthy) is fundamentally flawed. U.S. manufacturing lost jobs because manufacturing lost output; and it lost output because its ability to compete in global markets declined significantly. If the United States is to rectify this and restore U.S. manufacturing competitiveness and jobs, it must embrace a comprehensive national manufacturing strategy focusing on the "4Ts" of technology, tax, trade, and talent.

Morrill at 150: Creating American Manufacturing Universities

July 19, 2012
| Blogs & Op-eds

In The New England Journal of Higher Education, Rob Atkinson makes the case for a new Morrill Act, in which the federal government support the designation of a core of approximately 20 leading “manufacturing universities.” As part of this designation, these universities would do several things. First, they would revamp their engineering programs much more around manufacturing engineering and, in particular, work that is more relevant to industry. Also, academic institutions would receive an annual award from the National Science Foundation (NSF), ideally at least $25 million a year, plus prioritization of their projects in the awarding of NSF grants

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