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New Geography of Global Innovation: A report from the Goldman Sachs
Global Markets Institute says student interest in science & engineering (S&E )
is low in G-7 countries, suggesting that these markets are likely to have
difficulty replacing an ageing cohort of native-born scientists and engineers.
The G-7 or Group of Seven countries are: Canada, France, Germany, Italy,
Japan, United Kingdom, and United States.
The report says while the United States and Japan remain leaders in
innovation, increased competition from growth markets, notably China, suggests a
changing landscape. Research and development (R&D) spending in Asia surpassed EU
levels in 2005, and is likely to overtake US levels in the next five years,
thanks primarily to striking growth in R&D investment in China. R&D investment
is driven largely by the corporate sector, which finances more than two-thirds
of total R&D spending in many countries.
The new geography of global innovation is critically dependent upon higher
education in science and engineering (S&E) fields. Goldman Sachs says
innovation-led productivity growth in the G-7 will increasingly require public
policies which attract and retain skilled foreign students and workers.
In the short term, a more flexible and talent-friendly immigration regime can
help developed economies and companies to benefit from the globalization of S&E
skills. Longer-term investments in R&D and science education can further enable
G-7 countries to remain competitive by rebuilding student interest in S&E fields
and by expanding the domestic supply of skilled S&E labour.
Goldman Sachs says that while ambitious government goals for R&D
intensity suggest continued growth in R&D spending in China and a relative
reweighting of the global total, broader changes in R&D investment are largely
driven by the corporate sector in many markets.
Industry finances the majority of R&D investment spending both
in the United States and Japan as well as across many growth markets. Industry
finances more than 65% of total R&D spending in the United States, 70% of total
R&D spending in China, and approximately 75% of total R&D spending in Korea and
Japan. Companies driving this shift are those in pharmaceuticals, computer and
electronic products, and transportation equipment, as well as those in some
professional, scientific, and technical services fields.
Along with a shift in R&D investment the report finds that
emerging markets are home to a rising share of global patenting activity,
improved high-tech trade balances and strong labour productivity growth, which
further affects incentives for R&D investment and employment.
The global dispersion of innovative activity enables companies
across a range of sectors to rethink where they operate and invest, making
several markets, including China and India, increasingly attractive to corporate
R&D investment and employment.
An example of the evolving
landscape is provided by the recommendation of a national security panel to
President Obama that a purchase of a US company by Huawei, the Chinese telecom
company, be unwound.
Huawei is well-known in Europe for
its USB modem stick which is commonly used on laptops for mobile web
Huawei is reported to have been
founded by a Peoples Liberation Army soldier and in a 2008 military report to
Congress, the Pentagon stated that Huawei "maintains close ties" to the
Chinese People Liberation Army (PLA).
A Chinese Commerce Ministry
spokesman said Thursday the government hopes for a transparent review of
Huawei's purchase of US computer company 3Leaf.
"We hope the US security examination laws and regulations can treat a Chinese
company fairly, regardless of whether it is publicly traded, state-owned or
private, and can carry out a transparent, predictable review," said ministry
spokesman Yao Jian.
"There's a lot of evidence that what US companies do in China or India for example, actually has positive effects on the US economy in terms of jobs, research, sales, production, and investment in the United States," Dr. Laura Tyson, S.K. & Angela Chan Professor of Global Management at Berkeley University said to CNBC in Davos last month. Fred Bergsten, director of the Peterson Institute for International Economics and Sir Martin Sorrell, CEO of WPP also joined the discussion:
THE WEST ISN'T WORKING:
At the 2011 CNBC debate at the World Economic Forum in Davos, broadcast on CNBC on Feb, 4,5 and 6, panelists grapple with how best to tackle global unemployment. Are fast the growing, vibrant markets in the East a threat or an opportunity for the stagnant, mature markets of the West? Panellists demand urgent action and offer solutions to create complementary and equitable jobs in both hemispheres: