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Atlantic Century II Report Shows U.S. Second-to-Last in Progress on Innovation-Based Competitiveness

WASHINGTON - The United States continues to face an urgent need to improve its innovation-based competitiveness if it is to achieve a robust economic recovery, according to a report released today by the Information Technology and Innovation Foundation.

The report, Atlantic Century II: Benchmarking EU and U.S. Innovation and Competitiveness, produced by ITIF with support from the European-American Business Council, updates the 2009 report of the same title that compared the U.S. to almost forty nations on 16 key indicators of innovation-based competitiveness, such as scientists and engineers, corporate and government R&D, venture capital, productivity and trade performance.

The 2009 report served as a wake-up call for many public and private sector leaders about the long-term competitiveness of the United States. Corporate leaders such as Eli Lilly and Co. CEO John Leichtleiter and Intel CEO Paul Otellini, top Administration officials, Members of Congress and others have cited the report in making the case for revitalizing U.S. innovation.

The 2011 report finds that the U.S. has made little or no progress. Of the 44 countries and regions surveyed, the U.S. is not number 1, it is 4th, (its rank in 2009 as well), behind Singapore, Finland and Sweden. But this is down from the number one position in 2000.

Of greater concern, however, is the fact that the U.S. continues to rank at the bottom - second only to Italy - on progress on improving its innovation capacity and competitiveness over the last decade.

"The Great Recession and the incredibly anemic recovery are seen by most pundits as simply the result of a failure of regulation, in the case of the former, and a long time to recover from financial crises, in the case of the latter," said ITIF President Robert D. Atkinson. "What this report points to, however, is that it was America's declining innovation performance that was at the heart of the economic crisis and remains at the heart of the current slow economic recovery. Unfortunately, we continue to merely wait for the storm to pass when we should be hard at work revitalizing America's leadership position in the global innovation economy. We cannot create the jobs we need so long as we are ranked next to last in terms of change."

If there is good news in Atlantic Century II, it is the fact that the United States still has strengths, in particular, among particular U.S. states. The updated report measures each of the 50 states against the foreign countries and regions and finds Massachusetts, California, Connecticut, New Jersey, Washington, Delaware, Maryland, Colorado, and New Hampshire would be ranked number one in innovation-based competitiveness if they were their own countries.

In addition to the state comparisons, the other change from the 2009 report is the addition of Argentina, Chile, Indonesia, Malaysia, South Africa and Turkey and the omission of Malta and Luxembourg.

The report urges the U.S. to strive to be a Massachusetts or a Singapore and adopt a strategic innovation and competitiveness policy domestically while at the same time working closely with the EU to stem the growth of "innovation mercantilism" among many other countries.

"The Atlantic Century II confirms that the world is a more connected and competitive place than ever before," said EABC President & CEO Michael Maibach. "The very technologies created by Americans and Europeans-the telephone, the jet airplane, the integrated circuit, the PC... and the Internet-are today used by virtually every nation to level the playing field and serve customers everywhere. EU and U.S. leaders must fashion policies and take high-impact actions to lift the competitive performance of their societies. This can best be done in close cooperation on business standards and polices that create a single Atlantic market. The resultant economies of scale must be used to regain their global competitive leadership."

Among the report findings are the following:

  • Portugal, while plagued with debt, had the highest rate of improvement, since 2009.
  • China had the largest growth in ease of doing business.
  • India increased foreign direct investment flows 378% from 1999-2009.
  • The U.S. leads Europe in broadband quality and subscription rates.
  • The U.S. ranks number for GDP per worker.
  • The U.S. effective corporate tax rate is 35th highest out of 40.
  • Of the 89 countries and states studied Massachusetts alone commits more than five percent of domestic product to corporate R&D.
  • South Korea leads the world in college-aged citizens with tertiary degrees.