All posts by Stephen Ezell
Indian Prime Minister Narendra Modi’s historic election was viewed with a great deal of optimism by much of the world, including here in the United States. His campaign platform—putting economic growth front and center—championed the kinds of policies needed to get India’s economy back on track. With the Modi Administration having been in office for just about four months now, and as he embarks on his first official visit to the United States, it’s a good moment to take stock of the Modi Administration’s accomplishments to date—and areas where we hope to see continued progress toward improving the state of U.S.-India economic and trade relations.
On the positive side, the Modi Administration has announced a number of promising economic reforms. In particular, it has:
- Retired India’s Planning Commission, a vestige of centralized state planning;
- Eased some restrictions and limitations on foreign direct investment (FDI), notably in the defense and railway sectors (with the FDI ceiling in the former raised to 49 percent and in the latter to 100 percent);
- Committed to renewed infrastructure investment in power generation and transportation networks;
- Set a year-end target to complete long-pending implementation of a
Late yesterday (September 15, 2014), the U.S. House of Representatives passed the Revitalizing American Manufacturing Innovation (RAMI) Act of 2013 (H.R. 2996 in the House; S. 1468 in the Senate). ITIF commends the U.S. House of Representatives for passing this important legislation and calls upon the U.S. Senate to follow suit in quick order. The RAMI legislation calls for one-time funding of $300 million over seven years for the Secretary of Commerce to establish several Institutes for Manufacturing Innovation (IMIs), collectively known as the National Network for Manufacturing Innovation (NNMI). The IMIs represent unique public-private partnerships between the federal government, local governments, universities, research institutes, and industry designed to accelerate manufacturing innovation in technologies with commercial applications by leveraging resources to bridge the gap between basic research performed at U.S. universities and research laboratories and product development by U.S. manufacturers.
Four IMIs have already been established, including America Makes, focusing on additive manufacturing (i.e., 3D-printing) in Youngstown, Ohio; the Next Generation Power Electronics National Manufacturing Innovation Institute in Raleigh, North Carolina; the Digital Manufacturing & Design Innovation Institute (DMDII) at the University of Illinois; and the Lightweight & Modern Metals
In July 2014, ITIF’s Stephen Ezell testified before the Senate Finance Committee regarding the importance of manufacturing to America’s economy and the role that U.S. trade and technology policy plays in supporting American manufacturing. As part of his testimony, Ezell cited data describing the rapid decline of U.S. manufacturing employment to demonstrate the severity of the challenges faced by America’s manufacturing industries. For the reality is that, particularly since 2000, America’s manufacturing sector has been in a steep decline, with job losses outpacing those in many peer countries.
Following the hearing, Marc Levinson, a Section Research Manager with the Congressional Research Service, produced a report countering some of the data in Ezell’s testimony, and suggesting that there is not a clear cause for alarm regarding employment losses in the American manufacturing sector. However, Levinson’s account does not fully present all of the facts and only succeeds in further muddying this important policy debate.
One critique Levinson makes is charging Ezell with bias in selecting base years, which can have a sizable impact on analytical results. Levinson presents data using the years 1991 to 2000 and then the years from 2001
This Friday morning, July 25, the House Committee on Space, Science, and Technology will hold a full Committee markup of H.R. 2996, the Revitalize American Manufacturing and Innovation (RAMI) Act of 2013. This is the House’s companion legislation to Senate Bill 1468, which passed out of the Senate Commerce, Science, and Transportation Committee by voice vote in May.
The legislation would provide authorization, using existing funding of up to $300 million, for the Secretary of Commerce to establish up to 15 Institutes of Manufacturing Innovation (IMIs), public-private partnerships that would focus on developing advanced manufacturing product and process technologies, facilitating their commercialization, and developing workforce skills around advanced manufacturing technologies. As ITIF writes in Why America Needs a National Network for Manufacturing Innovation (NNMI) and How It Should Work, these Institutes would play a pivotal role in enhancing U.S. industrial competitiveness by supporting development of technologies that will enable U.S. manufacturers to compete in the global marketplace. The additional IMIs would join four already chartered focusing on additive manufacturing, next-generation power electronics, digital manufacturing and design innovation, and lightweight and modern metals manufacturing, all of
In mid-May, the world cheered as India elected its new Prime Minister, Narendra Modi. Many believed his election foreshadowed a new beginning for India, as Modi and his BJP party ran on a pro-growth, business-friendly platform in an attempt to improve the environment for doing business and open the country up to greater foreign direct investment, further transforming the country into a robust, 21st-century economy. Sworn in at the end of June, Prime Minister Modi has been in office for a little over a month and, while still in its early stages, his desired tone and policies are beginning to take hold.
As ITIF wrote in The Indian Economy at a Crossroads, Modi’s election heralded a potential turn away from India’s recently growing embrace of “innovation mercantilist” policies, such as local content requirements for manufacturers and arbitrary patent denials and revocations, which were one of many factors contributing to Indian economic growth sinking to decade-low levels in 2013. For example, Modi’s campaign platform included specific provisions regarding intellectual property reforms, demonstrating that he understood that fostering an innovative environment in India would be the key
Amidst a growing debate about the future of the U.S. Export-Import (Ex-Im) Bank, along comes fresh evidence that foreign export credit competition continues to intensify even as U.S. competitiveness at providing export credit assistance continues to weaken compared to leading competitor nations. The 2014 Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United States (released Wednesday, June 25) documents clearly how virtually all U.S. competitors are investing significantly more as a share of their GDP than the United States in providing export credit assistance in the form of loans and guarantees to help foreign buyers purchase their nations’ products and services.
As the figure below shows, virtually all the world’s leading export economies—including the ones which U.S. manufacturers compete most closely against—invested more in new export credit assistance as a share of their economy than the United States in fiscal year (FY) 2013. For example, China’s investment in new medium- and long-term export credit assistance exceeded the United States’ by 5.7 times in FY 2013, while Germany’s level outstripped the United States’ by over 7 times. Korea invested 14 times as much as
Earlier today, ITIF hosted a robust discussion on Capitol Hill regarding our most recent report, The Indian Economy at a Crossroads. We were fortunate to be joined by Congressman Ami Bera (CA-7), along with Executive Vice President of the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) Mark Elliot, and Rick Rossow of the Center for Strategic and International Studies. The timing of the event could not have been more appropriate as India recently elected a new government. With a record 550 million votes cast, Prime Minister Narendra Modi and his BJP party won the election based on their pro-business platform, which provided an excellent context to discuss ITIF’s policy recommendations for the Indian economy.
As the only Indian-American currently serving in Congress, Representative Bera provided a unique and insightful perspective on the U.S.-India relationship, noting that, while it is still developing, the incoming Modi government presents a perfect occasion for U.S. businesses to establish effective partnerships with India. He did recognize the many challenges that currently exist between the two nations, but stressed that the opportunities far outweigh those differences.
This was followed by an overview of
On April 30, a Financial Times article cited new calculations from the World Bank’s International Comparisons Program (ICP) predicting that China is poised to surpass the United States later this year—far earlier than the previously predicted 2019—to become the world’s largest economy. The projections calculate economic size (i.e., gross domestic product, or GDP) based on purchasing power parity (PPP), which more accurately estimates the real cost of living and relative purchasing power of income (as compared to calculations based on market exchange rates) across nations. The ICP figures, updated for the first time since 2005, suggest that by 2011 China’s GDP had reached 87 percent of U.S. levels (up from 43 percent in 2005) and is on course to surpass U.S. GDP sometime in late 2014.
(It should be noted that purchasing power parity comparisons are notoriously unreliable—as this large revision itself shows—although they are generally the best estimates we have. However, because PPP rates show the real costs involved in an economy, they do a good job of comparing actual amounts of economic activity. For example, in terms of economic measurement, a haircut should count for roughly the same
The United States Trade Representative Office’s (USTR’s) 2014 Special 301 Report, released April 30, again places India on the Priority Watch List, highlighting continuing concerns over India’s inadequate protections of foreign intellectual property rights (IPRs), many of which were raised in ITIF’s recent report The Indian Economy at a Crossroads. USTR’s Special 301 reports raises intellectual property concerns in India across a wide range of sectors—including life sciences, renewable energy, digital content, and information and communications technology (ICT) products—so much so that USTR took the unusual step of announcing an out-of-cycle review (OCR), meaning that USTR will undertake an additional review of India’s intellectual property rights protection policies in the fall of 2014.
As the 2014 Special 301 Report notes, “Serious difficulties in attaining constructive engagement on issues of concern to U.S. and other stakeholders have contributed to India’s challenging environment for IPR protection and enforcement.” And while the report does commend India for making “some limited progress in improving its weak IPR legal framework and enforcement system” at the same time it notes that “IP protection and enforcement challenges are growing, and there are serious questions regarding
The Potentially Deleterious Impacts of the President’s FY 2015 Budget on U.S. Life Sciences Industries
As ITIF notes in The President’s FY 2015 Budget Underinvests in U.S. Competitiveness and Innovation, while there are many things to like in the President’s Fiscal Year 2015 Budget, it still does not do enough to invest in innovation or to propose reforms to policies that hinder the competitiveness of key U.S. innovation industries. We see this particularly with regard to three issues impacting U.S. life sciences industries: flat funding for biomedical research at the National Institutes of Health (NIH), the budget’s call to provide only seven years of data exclusivity protection for novel biologic medicines, and the budget’s failure to repeal the self-destructive medical device tax that is contributing to the decimation of the U.S. medical device industry.
First, the FY 2015 budget proposes just $30.2 billion in funding for the National Institutes of Health, which actually represents a 3.6 percent decline over the Administration’s FY 2014 request. This would exacerbate a growing divide in critical investments in biomedical research between the United States and our global competitors. As a recent report from The New England Journal of Medicine, Asia’s Ascent—Global Trends in Biomedical R&D Expenditures