The Post-American World - Fareed Zakaria [87]
According to the World Economic Forum, the United States remains the most competitive major economy in the world. (Switzerland, Sweden, and Singapore score higher, but their combined population is 22 million, about the size of greater Los Angeles.) It ranks first in innovation, seventh in availability of latest technologies, first in university-industry collaboration on R&D, and fourth in the quality of its scientific research institutions. China does not come within twenty countries of the United States in any of these, and India breaks the top ten on only two counts: market size and national savings rate. In virtually every sector that advanced industrial countries participate in, U.S. firms lead the world in productivity and profits. America’s superior growth trajectory might be petering out, and perhaps its growth will be more “normal” for an advanced industrial country for the next few years. But the general point—that America is a highly dynamic economy at the cutting edge, despite its enormous size—still holds.
Look at the industries of the future. Nanotechnology—applied science dealing with the control of matter at the atomic or molecular scale—is considered likely to lead to fundamental breakthroughs over the next fifty years. At some point in the future, or so I’m told, households will construct products out of raw materials, and businesses will simply create the formulas that turn atoms into goods. Whether this is hype or prescience, what is worth noticing is that by every conceivable measure, the United States dominates the field. It has more dedicated nanocenters than the next three nations (Germany, the United Kingdom, and China) combined, and many of its new centers focus on narrow subjects with a high potential for practical, marketable applications—such as the Emory-Georgia Tech Nanotechnology Center for Personalized and Predictive Oncology. At market exchange rates, government nanotech funding in the United States is almost double that of its closest competitor, Japan. And while China, Japan, and Germany contribute a fair share of journal articles on nanoscale science and engineering topics, the United States has issued more patents for nanotechnology than the rest of the world combined, highlighting America’s unusual strength in turning abstract theory into practical products.
The firm Lux, led by Dr. Michael Holman, constructed a matrix to assess countries’ overall nanotech competitiveness. Their analysis looked not just at nanotechnology activity but also at the ability to “generate growth from scientific innovation.”11 It found that certain countries that spend much on research can’t turn their science into business. These “Ivory Tower” nations have impressive research funding, journal articles, and even patents, but somehow don’t manage to translate this into commercial goods and ideas. China, France, and even Britain fall into this category. A full 85 percent of venture capital investments in nanotechnology went to U.S. companies.
Biotechnology—a broad category that describes the use of biological systems to create medical, agricultural, and industrial products—is already a multibillion-dollar industry. It, too, is dominated by the United States. More than $3.3 billion in venture financing went to U.S. biotech companies in 2005, while European companies received just half that amount. Follow-on equity offerings (that is, post-IPO) in the United States were more than seven times those in Europe. And while European IPOs attracted more cash in 2005, IPO activity is highly volatile—in 2004, U.S. IPO values were more than four times Europe’s. As with nanotechnology, American companies excel at turning ideas into marketable and lucrative products. U.S. biotech revenues approached $50 billion in 2005, five times greater than those in Europe and representing 76 percent of global revenues.*
Manufacturing has, of course, been leaving the United States, shifting to the developing world and turning America into a service economy. This scares many Americans and Europeans,