The first, he said, is a focus on innovation, which “is how we compete, how we thrive, and ultimately how we win.” A new and significant aspect of innovation, he said, is the central role of collaboration. He praised the contributions of Gordon Moore, co-founder of Intel, in leading the work of STEP in the direction of partnerships of government, industry, and university. “He showed us the value of bringing large industries, small industries, universities, and the government together. Those partnerships are what we need to encourage innovation, and they have to reinvent themselves constantly.” He cited the work of Dr. Walshok in San Diego as an example.

He said he would talk about global examples of collaboration, some programs in the other states, and “several myths” that have a direct impact on entrepreneurship. The key message, he said, was simple: the rest of the world is more focused on innovation than ever before, and at a high level. He noted with gratification that both senators from Hawaii understood the need for sustained support for innovation. “There’s enormous focus here on how you help small and medium enterprises.”

Tilting the Playing Field

He added that many economists view the global marketplace as “a place of open competition” and believe that as long as American workers have a level economic playing field, they can out-compete “anyone on the planet.” In fact, he said, the playing field is not level. At a fundamental level, he said, the United States begins at an educational disadvantage, as indicated by its low ranking on the PISA studies. In addition, he said, other countries are not interested in a level field; they are interested in winning. “The goal of their policies,” he said, “is to tilt the playing field to their advantage.”

One way they do this is through strong public support of innovation. He noted that in 1999, China accounted for roughly 6 percent of global R&D expenditures. In 2007, that proportion had risen to 15 percent, and more recent figures show a continued increase. In comparison, he said, the United States makes impressive investments in health research and in defense research. But the amount dedicated to defense research, he said, is misleading, in that much of it—over 90 percent—goes to applied research, including necessary but expensive weapons testing. “These projects are making things work today,” he said, “and we need them, but they should not count as research investments for the future. For the warfighter, that means less of a technological edge in the future.”

He suggested that the competitive focus of the United States should not be restricted to China, because “the rest of the world is moving as well.” He called attention to the success of Brazil’s Embraer Company, which manufactures many of the regional jets flown by Americans, of the European partnership Airbus, and the high-speed train network of France, powered by nuclear power plants.

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