By World Wide News Desk - Posted on 29 September 2010


New geography of global innovation tied to education

The future of innovation-led productivity growth in the U.S. will depend on the country’s ability to encourage and sustain student achievement in the 21st century. That's the view of global strategists and the conclusion of a new study - “The New Geography of Global Innovation.”

While the United States and Japan remain leaders in innovation, increased competition from growth markets, notably China, suggests a changing landscape. Research and development (R&D) spending in Asia surpassed EU levels in 2005, and is likely to overtake US levels in the next five years, thanks primarily to striking growth in R&D investment in China. R&D investment is driven largely by the corporate sector, which finances more than two-thirds of total R&D spending in many countries.


The new geography of global innovation is critically dependent upon higher education in science and engineering (S&E) fields. Student interest in S&E is low in G7 countries, suggesting that these markets are likely to have difficulty replacing an aging cohort of native-born scientists and engineers.


Innovation-led productivity growth in the G7 will increasingly require public policies which attract and retain skilled foreign students and workers. In the short term, a more flexible and talent-friendly immigration regime can help developed economies and companies to benefit from the globalization of S&E skills. Longer-term investments in R&D and science education can further enable G7 countries to remain competitive by rebuilding student interest in S&E fields and by expanding the domestic supply of skilled S&E labor.

"The expansion of science education, and the global dispersion of research and development, allow many of the most innovative U.S. companies to rethink where to operate and invest. Shifting geographic patterns of R&D in many fields, from health care to high technology, suggest that future innovation is likely to originate in emerging markets," according to the authors of "Let's prepare for global competition," an article on the Politico website. The authors suggest that "policy initiatives in three key areas — education, innovation and immigration are needed, beginning with investment in education and skills for long-term competitiveness.

"Investment in high-quality schools, and increased emphasis on basic science and math education, would help the United States develop more science- and engineering-trained students. This is vital, given these fields’ importance to future economic growth."

"Second, there is an important role for government in basic research and development. Some developed countries have reduced public R&D investment after the economic crisis and its subsequent financial strains. Renewing public investment can stimulate private-sector funding, particularly in critical fields like energy and health, where the benefits of such investment are high.

"Public investment in the innovation infrastructure, like high-speed, wireless broadband technology, is also key. Despite being the OECD’s largest broadband market, the United States currently ranks 15th in penetration. Addressing this imbalance would help reinforce progress on education through e-learning and increased access to online content.

"Third, a more flexible and talent-friendly immigration policy could help the U.S. economy, and its many innovative companies, benefit from the globalization of science and engineering skills. Foreign-born workers contribute significantly to U.S. innovation, constituting 25 percent of today’s nearly 5 million university-educated scientists and engineers. Visa policies for skilled foreign-born workers, particularly in computer-related fields, need to be re-examined."

A copy of the “The New Geography of Global Innovation” can be downloaded from Goldman Sachs Global Market Institute.


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