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ture capital investments in 2005, especially early-stage investments with particular emphasis on biotechnology.

In addition to private venture capital, small companies can obtain federal tax incentives and other help through the research and experimentation (R&E) tax credit (Table 3-3) and the federal Small Business Innovation Research (SBIR) program and Advanced Technology Program43 (Table 3-4).

The US workforce faces the additional pressure of competing with workers in nations with lower wage structures. A US company can hire five chemists in China or at least that many engineers (depending on the field) in India for the cost of one employee of equivalent training in the United States.44 The upshot has been the growing trend of corporations moving work offshore because of wage disparities (Figure 3-11). Wage differences at the factory and clerical levels are even more pronounced.

A recent McKinsey and Company study45 reported that the supply of young professionals (university graduates with up to 7 years of experience) in low-wage countries vastly outstrips the supply in high-wage countries. There were 33 million people in that category in 28 low-wage countries, and 15 million in 8 high-wage countries, including 7.7 million in the United States.46 With opportunities to study or work abroad or to work at home for a multinational corporation, workers in low-wage countries increasingly will be in direct competition with workers from developed nations.

The same study estimates, however, that only 13% of the potential talent supply in low-wage nations is suited to work for multinational corporations because these individuals lack language skills, because of low-quality domestic education systems, and because of a lack of cultural fit. For the United States to compete, then, its workers can and must bring to the workplace not only technical skills and knowledge but other valuable skills, including knowledge of other cultures, the ability to interact comfortably with diverse clientele, and the motivation to apply their skills. US workers also must be able to communicate effectively orally and in writing, lead teams, manage projects, and solve problems. Although much of our education system is working to teach those skills, there is much to do to prepare

43

The other program is the Manufacturing Technology Program in the Department of Defense.

44

The Web site http://www.payscale.com/about.asp tracks and compares pay scales in many countries. R. Hira, of the University of Rochester, calculates average salaries for engineers in the United States and India as $70,000 and $13,580, respectively.

45

McKinsey and Company. The Emerging Global Labor Market: Part II—The Supply of Offshore Talent in Services. New York: McKinsey and Company, June 2005.

46

Ibid.



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