All posts by Stephen Ezell
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 … Read the rest
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… Read the rest
We are in a world where Republican budgets cut government and taxes—including government spending that is truly investment—and where Democratic budgets increase spending and taxes— including taxes on corporations that compete globally. And so it should be no surprise that the President’s budget mostly conformed to this pattern.
To be sure, there are many things to like in the President’s Fiscal Year 2015 Budget. On the positive side of the ledger is the budget’s call for a slate of programs designed to boost U.S. advanced manufacturing and industrial competitiveness—such as the Administration’s call for $1 billion to create a National Network for Manufacturing Innovation (NNMI) comprised of 45 Institutes of Manufacturing Innovation that are poised to play a key role in revitalizing U.S. manufacturing. The President’s budget also calls for $1.5 billion in funding for the National Nanotechnology Initiative (NNI), $5.1 billion for the Office of Science at the Department of Energy (DOE), and $3.8 billion for the Networking and Information Technology Research and Development (NITRD) program, which plays an important role in keeping the United States at the leading-edge of advanced research into high-performance computing and cybersecurity. It … Read the rest
A Paul Krugman op-ed in The New York Times today, “No Big Deal,” incorrectly argues that completing a trans-pacific trade pact would be of little consequence to the U.S. economy. Rather, successfully concluding The Trans-Pacific Partnership (TPP), which includes 12 Asia-Pacific region countries—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States—is vitally important to the U.S. economy and to future global economic integration, as ITIF argues in Concluding a High-Standard, Innovation-Maximizing TPP Agreement.
Krugman argues that the “glory days” of trade deals are over, in part because previous trade pacts significantly reduced many countries’ tariff levels, such that “there just isn’t much more protectionism to eliminate.”
Unfortunately this line of thinking fails to acknowledge the pernicious and growing impact of NON-TARIFF barriers (NTBs) on innovation industries. These barriers include a range of unfair and distortionary practices, such as inadequate intellectual protections on foreign intellectual property (IP), restrictions on trade in services, barriers to digital trade and cross-border data flows, currency and standards manipulation, and localization barriers to trade—policies that mandate local production or the transfer of technology or intellectual property … Read the rest
In 2012, ITIF’s report Leadership in Decline: Assessing U.S. International Competitiveness in Biomedical Research—which National Institutes of Health Director Francis Collins told the New York Times last July was the one publication he’d most recommend President Barack Obama read—warned that the United States has not been sustaining the historically strong investments in biomedical research that previously propelled it to global life sciences leadership. The report noted that an increasing number of countries are investing more in biomedical research as a share of their economy than the United States. For example, in terms of government funding for pharmaceutical industry-performed research, Korea’s government provides seven times more funding as a share of GDP than does the U.S., while Singapore and Taiwan provide five and three times as much, respectively.
Now comes a new report, Asia’s Ascent—Global Trends in Biomedical R&D Expenditures, from The New England Journal of Medicine confirming these findings. As summarized by a recent Economist article, Biomedical research budgets: The party’s over, the report finds that, from 2007 to 2012, average annual investment in biomedical R&D increased by 33 percent in China, 12 percent in South Korea, … Read the rest
In an op-ed for the Washington Post this past Sunday, Charles Kenny writes that America is No. 2! And that’s great news, referring to the day soon to come when China’s GDP surpasses that of the United States. Kenny writes that this is an eventuality that should not distress Americans, because “losing the title of largest economy doesn’t really matter much to Americans’ quality of life,” particularly because it is America’s superior per-capita GDP that matters more than aggregate GDP, and so “living in an America that ranks second in GDP to China will still be far, far better than living in China.” While certainly Kenny is correct that average per-capita GDP is the proper measuring stick, there are actually a number of compelling reasons why China’s impending eclipse of U.S. GDP will not be the sanguine moment Kenny characterizes it as.
First, the United States has held its position as the world’s largest economy since surpassing Britain for that distinction in 1871; that the United States should be losing that position in 2016 or 2017 is not preordained. Many argue that China’s immense population of 1.36 billion people, … Read the rest
In an otherwise quite nice report from the Government Accounting Office (GAO) called Global Manufacturing: Foreign Government Programs Differ in Some Key Respects from those in the United States, the authors discuss the efforts of countries including Canada, Germany, Japan, South Korea, and the United States to support manufacturing, in part through the development of regional high-tech clusters. Yet the report’s authors argue that “the effectiveness of cluster policy has not been established; the formation of successful clusters in the United States, such as California’s Silicon Valley, suggests that government support for clusters may not be necessary.”
Unfortunately, here the GAO authors are echoing the point of view of individuals such as Michael Arrington, who believes that the Best Way to Fix Silicon Valley is to Leave it Alone. But as Robert Atkinson convincingly argues in Divorce Washington at Your Peril, Silicon Valley—as will a forthcoming MIT-ITIF report, Federally Supported Innovations: 22 Examples of Major Technology Advances that Stem from Federal Research Support (February 2014)—government support has actually played a fundamental underlying role in the development of Silicon Valley (as it has in the development of other … Read the rest
On Tuesday, December 10, Senators John Thune (R-SD) and Ron Wyden (D-OR) introduced The Digital Trade Act of 2013, legislation that would protect the Internet from restrictive measures that obstruct the free flow of data in the global economy. The Act establishes negotiating principles designed to guide U.S. negotiators in addressing key digital trade issues in future bilateral and multilateral agreements and in multi-stakeholder settings. Key principles include: preventing or eliminating restrictions on cross-border data flows, prohibiting localization requirements for data and computing infrastructure, ensuring that provisions affecting platform Internet sites are consistent with U.S. law, and recommitting to a multi-stakeholder model of Internet governance.
Affirming these principles protecting digital trade is vitally important because information and communications technologies have become the modern global economy’s principal driver of growth. For example, a March 2013 study by Finland’s Ministry of Employment and Economy estimates that, by 2025, half of all value in the global economy will be created digitally. Similarly, the McKinsey Global Institute estimates that the Internet alone accounted for 21 percent of aggregate GDP growth between 2007 and 2011 across 13 of the world’s largest economies. Digitally enabled … Read the rest
On Thursday, November 21, ITIF held an event on Capitol Hill asking Are Advancements in Computing Over? The Future of Moore’s Law. Gordon Moore’s revolutionary observation/prediction in 1965 that the number of transistors on a chip would double every 12-18 months (and thus roughly so would computer processing speeds), has proven prescient. Indeed, over the past forty years, processing speeds have increased over 1 million-fold, unleashing a wave of innovation across industries ranging from ICT and life sciences to energy, aerospace, and services, thus playing a transformational role in driving the global economy and improving quality of life for citizens around the world. Semiconductors (i.e., integrated circuits) constitute the bedrock technology for the entire ICT industry, and annually support an ancillary $1 trillion in electronics-based products—everything from mobile phones and automobiles to medical devices.
Yet—possibly as soon as 2020—the dominant silicon-based CMOS semiconductor architecture will likely hit physical limits (particularly pertaining to heat dissipation) that threaten to compromise Moore’s Law unless a leap can be made to radically new semiconductor chip architectures. This is one of the most critical technology issues the world faces today, because without significant investment … Read the rest
Global competition in export credit financing remains increasingly formidable, with foreign competitors enjoying substantial support from their countries’ export credit agencies, as ITIF originally wrote in Understanding the Importance of Export Credit Financing to U.S. Competitiveness. The United States’ Export-Import Bank (Ex-Im Bank) fills an important role in leveling the playing field for U.S. exporters by matching credit support that other nations provide to their exporters, thus preventing foreign exporters from enjoying undue advantage. This ensures that U.S. exporters are able to compete against foreign competitors based on the quality and price of their products and services, and not loose sales because a foreign government has helped a foreign competitor by providing superior financing terms to a potential buyer.
Unfortunately, the 2012 Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United States underscores just how much more other countries—and principally America’s top economic competitors in Europe and Asia—are investing in export credit financing, both as a share of GDP and—in China’s and Korea’s case—even current dollars.
In fact, in 2012, Korea, India, China, France, Germany, and Italy all invested more in new … Read the rest