Saturday 30 July 2011

USA and EU falling behind in innovation and competitiveness

We have seen that the European trade associations for businesses offering ICT goods and services want pan-European regulation. The industry players have lined up behind the Digital Agenda, including the Digital Single Market, expecting the politicians to play their part for a competitive Europe.

The dual ambitions of the European Commission to focus on promoting sustainable public finances and contributing to growth-enhancing economic reforms according to the Europe 2020 strategy (EU2020) are, in my view, remarkably well in line with what European business leaders and policy shapers are calling for.

But the European Union needs much more: full scale support from politicians at all levels.


Again, Twitter acted as the news medium, alerting me to the ITIF benchmarking report about innovation and competitiveness. (Sadly, I am not able to give credit to the individual tweeter, since I forgot to note the tweet, which already seems to have disappeared.)

The Information Technology & Innovation Foundation ITIF, based in Washington DC (USA), published The Atlantic Century II: Benchmarking EU and U.S. Innovation and Competitiveness, which found both dark clouds over all and bright spots with regard to nine of the the United States of America (introduction):

… the 2011 report finds that America has made little or no progress since 1999. Of the 44 countries and regions surveyed, the United States still ranks fourth 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 in improving its innovation capacity and competitiveness over the last decade. But the updated report contains encouraging news for some individual states. Measured against the foreign countries and regions, Massachusetts, California, Connecticut, New Jersey, Washington, Delaware, Maryland, Colorado, and New Hampshire would all be ranked number one in innovation-based competitiveness if they were their own countries.

Great for Finland and Sweden, but only if we do not count the nine top US states, more innovative than any nation in the world.

If the USA ranked a (disappointing) fourth, what should we say about the EU, where the fifteen old member states (EU-15) remain stuck in eighteenth place, with the ten new member states (EU-10) still further behind, in position 27?

The rate of progress for the US and the EU can only be described as dismal. Both continue to lose ground in the the ”great game” of the 21st century, the global innovation race.

Besides the good marks for Finland and Sweden, the best news from Europe is that five Central European countries – Cyprus, Slovenia, Estonia, the Czech Republic and Latvia – are in the top ten regarding the speed of long term progress between 1999 and 2011, although the recent depression has sapped strength.

The study offers practical advice for the USA and for Europe. Both must push back innovation mercantilism and improve their policies on innovation, productivity and competitiveness.

Europe needs to fully embrace innovation, including the ”creative destruction” so alien to many of its protectionist politicians.

America is described as ”torpid”, sleepwalking to decline without decisive and proactive public action to shape and to act on an national innovation strategy.

This century is not going to be Atlantic, if the US and Europe remain in the slow lane.

You can study the full report:

Robert D. Atkinson and Scott M. Andes, the Information Technology and Innovation Foundation: The Atlantic Century II: Benchmarking EU & U.S. Innovation and Competitiveness (July 2011, 42 pages)


We need the humility to learn and the courage to act, in both Europe and the United States.

Ralf Grahn

P.S. SFGate tells us that Lt. Gov. Gavin Newsom has unveiled An Economic Growth and Competitivenss Agenda for California, in Silicon Valley. The plan is available here.

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