Can the US stay globally competitive?

Pop quiz: which country was the richest in the world, had the largest military, was the center of world business and finance, had the strongest education system, was the world's center of innovation and invention, had a currency that was the world's standard of value, and had the highest standard of living?

It was England. In 1900.

One thing that the current economic conditions are telling us is that the US and US companies may not be as competitive as they need to be. Over the past few weeks we have seen stories that claim that the US is falling behind other countries in terms of innovation, like this recent article from The Economist. As it states in the article, emerging markets are making steady gains, while the US has dropped one spot. The rankings, which measure innovation through the number of patents granted and factors that help or hinder the ability to innovate, are a sign that other countries are catching up to the US. The big question is: will the US go through the same changes that England did?

Innovation and technology is one area where the United States can grow and expand. Competition is always good for the global market. Competition breeds innovation, which helps the market to continually evolve. Businesses, especially businesses in the US, need to realize that they are competing on a global front, not just domestically.

Businesses need to focus on technology and innovation in order to have sustained global competitiveness. One example of a company experiencing hardships right now is GM. We all heard the joke "Government Motors". This is because the U.S Gov. loaned them billions of dollars. We can argue back and forth if this was the correct thing to do or not, but the point was that GM failed to be competitive globally when it was facing new threats from foreign auto makers. There were many articles about the company's emergence from bankruptcy last week. Many people say that one of GM's biggest challenges is to build cars that people want to drive. The company is also competing against various foreign car companies -- companies that consumers feel more confident in. It will be interesting to see what GM is able to do against this competition.

Can GM build customer confidence and innovate in order to become more competitive in the US and throughout the world? Can other US companies focus their business on innovation to become more globally competitive?

So what can the US, and other countries that need to become more globally competitive do? As stated in one of the articles we highlight in this month's Intelligent World newsletter, the countries can develop an innovation policy. Many leading Asian nations including Japan, South Korea, Singapore, and China have explicit national innovation policies that include generous tax incentives and direct funding for innovation. These incentives could be the thing that helps the economy to recover more quickly and not become the England of 1900.