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The newspaper of The Johns Hopkins University February 6, 2006 | Vol. 35 No. 20
Thinking Out Loud

William R. Brody

By William R. Brody

The Need to Act Now

Innovate, or die! That could be the slogan of "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future," an insightful report released recently by the National Academy of Sciences. The report — prepared by its Committee on Science, Engineering and Public Policy, chaired by Hopkins trustee Norm Augustine of Lockheed Martin — echoes similar findings from the Council on Competitiveness National Innovation Initiative, which I co-chair with Intel CEO Craig Barrett. Simply put: The United States' economic future is being seriously challenged by a number of countries that are pushing their own agendas of innovation.

For those who like math, consider this calculus of innovation that offers a simple formula to describe our problem:

1. Knowledge drives innovation
2. Innovation drives productivity
3. Productivity drives economic growth

To innovate we need to generate knowledge. This requires two ingredients: people who have the skills, training and creativity to discover and invent, and support for the basic research necessary to employ those talents.

Unfortunately, both are threatened. It may surprise you to know that federal government spending on research and development peaked in 1964 at around 2 percent of GDP. Today, it is less than half of that — about 0.8 percent! And while industrial R&D has risen, most corporate spending goes for development of known technologies and pharmaceuticals, not to the discovery of new knowledge. In fact, major corporations that once led in discovery, like IBM, GE and AT&T, found that the return on investment was not satisfactory to their Wall Street investors and have dramatically shifted resources to applied development, away from basic research.

Similarly, while in recent years the NIH experienced a significant growth in its research budget, its spending has now peaked, and the agency is looking at absolute decreases this coming budget year. Meanwhile, funding for the physical and information sciences has languished over the last decade. If we are to meet the challenges ahead, above-inflation increases in all government basic research are needed.

But this is only part of the solution. The science and technology talent pool depends upon an expanding supply of highly educated, bright people. With U.S. high school students scoring near the bottom of developed countries in science and math, we need to shore up science and math teaching in our K-12 schools. We must also encourage students to major in science and engineering in college and graduate school in order to reverse a trend of declining enrollments in these critical fields.

Post 9/11, our immigration policies have made it difficult for students from many countries to gain access to the U.S. for graduate study in technical fields. Yet we depend upon this pool of talent to matriculate in the U.S. for their Ph.D.'s and stay to build new companies and new industries. Easing immigration policy for these graduate students is not only good for innovation, it is also great diplomacy. Even if these students return to their home countries to live and work after their studies, they become potential good will ambassadors for the United States.

Finally, we need some changes in corporate tax policy to reward companies for investing in R&D and for locating new research facilities in the U.S. Company executives at innovators like Intel and General Electric tell me they locate facilities where they can access the best talent — and where there are tax incentives for them to invest. These companies love Ireland, for example, because it is the one country in Europe that has enjoyed a sustained economic boom, fueled by its highly educated work force and low corporate taxes. Similarly, Finland has powered its economic growth with a well-trained work force — and what is often called the world's best public education system. The correlation between literacy rates, scores on high school standardized math and science tests, and economic growth is telling.

President Bush made innovation and competitiveness part of his State of the Union speech. Now we need to encourage Congress to allocate the funds required to implement a plan of action.


William R. Brody is president of The Johns Hopkins University.


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