Race to Innovate
Competitiveness, Manufacturing, and Trade Policy Analysis
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 … Read the rest
The African Growth and Opportunity Act (AGOA) is set to expire in September 2015, and last week at the United States-Africa Business Forum, President Obama pitched the idea of an early renewal, building on the growth of the Administration’s “Doing Business in Africa Campaign.” AGOA is the cornerstone of U.S. trade and investment with Africa; over its 14 year history, the program has contributed to a doubling of U.S. trade with Africa. In 2013, U.S. goods imports from sub-Saharan Africa under AGOA and the Generalized System of Preferences (GSP) program totaled $26.8 billion, more than three times the amount in 2001, the first full-year of AGOA trade.
Indeed, by providing duty-free entry into the United States for almost all African products, AGOA has helped expand and diversify African exports to the United States, while at the same time fostering an improved business environment in many African countries through streamlined eligibility requirements. These eligibility requirements remain important in the renewal process though, as part of increasing the desirability of African countries as a business destination lies in making sure that these nations have an environment that fosters growth and investment. Congress … Read the rest
Colombia’s national soccer team famously taught the world how to properly celebrate a World Cup goal; now the nation is poised to teach the world a thing or two about innovation. In 2010, Colombia’s Ministry of Information Technologies and Communications (MinTIC) devised a plan to connect 27 million people, or more than half of its population, to the Internet by 2018. This plan, called Vive Digital, has had many accomplishments, which include increasing the number of Colombia’s Broadband Internet connections from 2.2 million to more than 8.2 million. In the past four years, the Colombian government has reduced the barriers for adoption of broadband technologies, efforts that brought computers and tablets to schools and created a robust network for digital entrepreneurs. MinTIC has also poured investment into Internet infrastructure, and is in the process of extending fiber-optic Internet access to 96 percent of the country’s municipalities—many of which are isolated in remote areas.
The man behind these aggressive efforts is the minister of MinTIC, Diego Molano Vega.
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 … Read the rest
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 … Read the rest
A new data release by the Census Bureau which claims that only 26 percent of STEM workers end up in STEM fields has seemingly strengthened arguments that America does not face a STEM-worker shortage. The surprising statistic has generated coverage from major news sources (including the USA Today and the Washington Post) which have pounced on the new data as evidence that there is no need to encourage students to study science, technology, engineering, and math. The data, however, is highly misleading and skews the reality of demand for and scarcity of a highly skilled math and engineering workforce.
First, let’s start with the definition of STEM graduates. To the Census Bureau, that means not just individuals with a degree in computers, math, statistics, engineering, biology, or the physical sciences (what the average person thinks of when they STEM) but also psychology and social sciences like economics and anthropology.
While psychology and social sciences graduates do technically study science in the respect that academic research in these fields attempt to rigorously and empirically tests hypotheses using the scientific method, these fields are a far cry from what readers imagine … Read the rest
A recent review by the Wall Street Journal of a Standard & Poor’s (S&P) credit analysis of Boeing in relation to the U.S. Export-Import (Ex-Im) Bank appears to have missed the point. The article sums up the report with the quote, “We don’t believe that the expiration of Ex-Im’s authorization in September would hurt Boeing’s credit quality or ability to make planned deliveries in 2014 and 2015.” However, this ignores the fact that this statement relates only to planes already in production being prepared for delivery. S&P goes on to conclude that alternative financing sources would not be able to match the demand for Boeing airplanes, and that Boeing would lose out on new orders of aircraft. In addition, it states that the effect of an Ex-Im Bank dissolution on Boeing’s credit quality would be significant, especially in sales to emerging markets or to start-up and financially weak airlines. Judging by 2014 data, Boeing’s new financing needs would total between $7 billion and $9 billion if it lost the support of the Ex-Im Bank.
This ‘misunderstanding’ seems to stem from a desire to portray the Ex-Im Bank—which has been quietly … Read the rest
It doesn’t take long to get the drift of a new report from the Center for Immigration Studies, a non-partisan, anti-immigration think tank. The title basically sums it up: “All Employment Growth Since 2000 Went to Immigrants.” The only question left to the reader is, why they didn’t simply title it “Immigrants stole all of our jobs”?
Perhaps it’s because immigrants didn’t steal our jobs, and the authors have no evidence that they did, but they’re doing their best to insinuate that they do.
Their main findings certainly look surprising at first blush: immigrant employment has increased significantly since 2000, but native employment has not increased at all, despite the fact that native population has increased twice as much as immigrant employment. It seems like a closed case: all the new jobs went to immigrants, therefore we should decrease immigration.
If only it were that simple. As intuitive as it might seem to argue that a job is a job and an unemployed person is an unemployed person, this is not how economies work. The Center makes a mistake common to many casual observers of the labor market: what economists … Read the rest
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 … Read the rest
Last week, the U.S. House of Representatives passed a bill funding the federal trade agencies that also called for more oversight of them, including the addition of language aimed at preventing the Office of the U.S. Trade Representative (USTR) from negotiating trade agreements that might open up the U.S. government procurement market to enterprises from other countries. The amendment language, part of the fiscal year 2015 Commerce, Justice, Science (CJS) Appropriations bill, consists of one sentence, “[n]one of the funds made available by this Act may be used to negotiate an agreement that includes a waiver of the ‘Buy American Act.’”
The 1933 Buy American Act (BAA) requires the U.S. federal government to prefer U.S. products for all goods, but not services. The BAA applies to goods acquisitions over the micro-purchase threshold of $3,000. Under the BAA, all goods for public use (articles, materials, or supplies) must be produced in the United States, and manufactured items must be manufactured in the United States from U.S. materials. The BAA creates a price preference that favors “domestic end products” from American firms in U.S. federal government contracts for:
- Unmanufactured products mined or