depended on productivity: the ability to take risks, especially in new enterprises, and an instilled belief in upward mobility. It has provided higher wages for those who “work smarter” and allowed the creation of new wealth for risk takers.

Elements of the Innovation System

In the current and future global economy, she said, many new competitors are emerging, thanks to low wages, a focus on education in science and engineering, and creative ways to attract capital. Countries now know that innovation requires an interlocking set of priorities, which she listed under the following outline.

Talent. Each nation needs a strong educational system and a motivated workforce with diverse skills and interests, as well as a dedication to lifelong learning. Emerging technological powers were creating cadres of technical professionals “capable of inventing the next game-changing technological wave and exploiting the current knowledge base, wherever it exists.”

Investment. Each society must provide resources for long-term development of new, unexplored areas and for short-term development of improved products, processes, and services.

Infrastructure. Physical environments are needed that are conducive to state-of-the-art exploration and business conditions that encourage risk-taking and collaborative activities. These include IP protections, health care, and energy certainties.6

Innovative societies also need a culture that values and rewards risk taking and tolerates failure, she said. The venture capital community often favors people who have failed, in fact, because they assume that failure is an effective teacher, equipping them to meet the next challenges.

Challenges for Innovation in the United States

The United States faced several issues in optimizing its innovation capacity, she said, especially that of demographics. The population is adding new young people, many of whom are minorities with little education. Also, the country faces a complex challenge in admitting educated newcomers while restricting illegal immigrants or those who wish the nation harm. Finally, as many of the current generation of scientists and engineers begin to retire, the nation must learn to accommodate their longer life spans and transfer their knowledge to the next generation.


Adapted from Council on Competitiveness report, Innovate America, Washington, D.C.: Council on Competitiveness, 2005.

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