NSF study raises serious concerns about U.S. investment in technology

Massive new report shows 'Asia 10' are spending substantially more on R&D than the U.S., which also continues to lose high tech manufacturing jobs

The National Science Foundation (NSF) just released a bevy of reports detailing American investment in science and technology, and the picture's grim.

While the size of the U.S. science and engineering workforce grew 24 percent between 2000 to 2010, to reach 6.65 million, the number of Americans working in high tech manufacturing dropped by 28 percent, and it's still headed down.

Make no mistake about it, high tech jobs still drive the American economy. NSF's numbers show that "Knowledge and Technology Intensive Industries" in the United States account for 40 percent of the U.S. Gross Domestic Product, compared to 32 percent for the EU and 30 percent for Japan. But the U.S.'s share of the world revenue for knowlege-intensive service industries (business, financial, and communications) has fallen from 42 percent of the world total in 2000 to 33 percent in 2010. At the same time, China's world share has gone from 2 percent in 1995 to 7 percent in 2010, largely due to a 20 percent per year growth in China's communications industry.

The largest global increases in science and technology output occured in the "Asia 10" -- China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand. Between 1999 and 2009, the U.S. share of R&D expenditures dropped from 38 percent to 31 percent of the global total, while in the Asia 10 it grew from 24 percent to 35 percent. Yes, you read that correctly: As of 2009, the Asia 10 spent substantially more on R&D than the United States. That, in spite of the fact that R&D in the U.S. has grown an average of 5.8 percent per year for the past five years.

NSF Director Subra Suresh says, "This information clearly shows we must re-examine long-held assumptions about the global dominance of the American science and technology enterprise, and we must take seriously new strategies for education, workforce development, and innovation in order for the United States to retain its international leadership position."

When it comes to high tech manufacturing, the United States is falling behind quickly. The number of people employed in high tech manufacturing in the U.S. fell by 687,000 between 2000 and 2010. The U.S. share of the global high tech manufacturing employment fell from 34 percent in 1998 to 28 percent in 2010. We're rapidly losing manufacturing jobs in high tech industries. An excellent case in point: Apple has shifted almost all of its manufacturing outside the U.S. Over the weekend, the New York Times posted a detailed story about the shift. They cite a last-minute change in the design of the original iPhone: Steve Jobs decided that he wanted glass screens, not plastic, about six weeks before the first phones shipped. The only place that could handle the load? Shenzhen, China. The Times quotes Jannifer Rigoni, then Apple's worldwide supply demand manager, as saying, "They could hire 3,000 people overnight. What U.S. plant can find 3,000 people overnight and convince them to live in dorms?"

For those of us in the IT industry, it isn't all doom and gloom. In 2010, unemployment in the U.S. workforce at large hit 9.6 percent. Among those with a bachelor's degree or higher, it stood at 5.0 percent. But for those in the science and engineering sectors, the rate fell to 3.8 percent. Remarkably, 40 percent of the science and engineering employees in the U.S. with Master's degrees and 50 percent of those with doctorates were born outside the U.S.

Jose-Marie Griffiths, who chairs the National Science Board group that published the report, put it this way: "Over the last decade, the world has changed dramatically. It's now a world with very different actors who have made advancement in science and technology a top priority. And many of the troubling trends we're seeing are now very well established."

The problems are real. The solutions elusive.

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