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chard Freeman says those trends foreshadow a US transition “from being a superpower in science and engineering to being one of many centers of excellence.”56 He adds that “the country faces a long transition to a less dominant position in science and engineering associated industries.”57

The United States still leads the world in many areas of science and technology, and it continues to increase spending and output. But our share of world output is declining, largely because other nations are increasing production faster than we are, although they are starting from a much lower base. Moreover, the United States will continue to lead the world in other areas critical to innovation—capital markets, entrepreneurship, and workforce flexibility—although here as well our relative lead will shrink as other nations improve their own systems.

The biggest concern is that our competitive advantage, our success in global markets, our economic growth, and our standard of living all depend on maintaining a leading position in science, technology, and innovation. As that lead shrinks, we risk losing the advantages on which our economy depends. If these trends continue, there are several likely consequences:

  • The United States will cease to be the largest market for many high-technology goods, and the US share of high-technology exports will continue to decline.

  • Foreign direct investment will decrease.

  • Multinational corporations (US-based and foreign) will increase their investment and hiring more rapidly overseas than they will here.

  • The industries and jobs that depend on high-technology exports and foreign investment will suffer.

  • The trade deficit will continue to increase, adding to the possibility of inflation and higher interest rates.

  • Salaries for scientists, engineers, and technical workers will fall because of competition from lower-wage foreign workforces, and broader salary pressures could be exhibited across other occupations.

  • Job creation will slow.

  • GDP growth will slow.

  • Growth in per capita income will slow despite our relatively high standard of living.

  • Poverty rates and income inequality, already more pronounced here than in other industrialized nations, could increase.


R. B. Freeman. Does Globalization of the Scientific/Engineering Workforce Threaten US Economic Leadership? Working Paper 11457. Cambridge, MA: National Bureau of Economic Research, June 2005. P. 2.


Ibid., p. 3.

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