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.