WITNESSES SAY IN GLOBAL ECONOMY, U.S. CAN SUCCEED
THROUGH ENTREPRENEURSHIP

U.S. Must Invest in Workforce and Provide Incentives  

Washington, DC - October 4, 2007 – Today, in a hearing of the Subcommittee on Technology and Innovation, witnesses unanimously said that in order for the U.S. to succeed in the changing global economy and attract research and development (R&D) facilities, the U.S. must continue to develop its high-tech workforce and provide appropriate incentives to attract and sustain entrepreneurial ventures.

“For companies, there are a multitude of factors that are considered when choosing to locate R&D facilities, whether that location is in the United States or elsewhere in the world,” said Ranking Member Phil Gingrey (R-GA).  “Our country is seen as being on the cutting edge of R&D, yet we continue to see the emergence of companies choosing offshore locations as an alternative to the United States.  As we move forward, this Committee must address these problems and find ways to provide the proper incentives for R&D investment to remain in the United States.”

This hearing – the third in a series of hearings examining the impact of globalization on innovation – explored the factors that determine how and why a company chooses a site to locate a science, technology, and engineering intensive facility.

In his testimony, Dr. Jerry Thursby, Ernest Scheller, Jr. Chair in Innovation, Entrepreneurship, and Commercialization at Georgia Institute of Technology, describes a survey exploring different factors that contribute to where a company decides to locate their research and development facility.  In describing his conclusions, Thursby noted that “It is striking that very little new science is conducted in emerging economies.  Thus, while companies are conducting R&D in economies despite weak intellectual property (IP) protection, their cutting edge science tends not to be done in those locations.”

In other words, although many companies are conducting R&D in emerging economies like China and India, their cutting edge science is still being conducted in developed economies, such as the U.S., because of stringent IP protection policies.

The study also concluded that “university characteristics are the most important factors in determining where new or cutting edge science is conducted.”  And thus, “From a policy perspective, these results emphasize the importance of policies that support… the training of a highly qualified technical workforce as well as good IP protection which provides incentives, not only to conduct R&D, but facilitates the exchange of ideas emerging from research.”

Ranking Member Gingrey concluded, “The United States has historically been a leader in high-tech, cutting edge innovation, and through a combination of increased domestic STEM education, facilitation of domestic investment in R&D and collaboration on R&D policy, the U.S. can maintain its leadership role.”

Also testifying at today’s hearing were: Dr. Martin Kenney, Professor of Human and Community Development at University of California, Davis, and Senior Project Director at the Berkeley Roundtable on the International Economy, University of California, Berkeley; Mr. Mark M. Sweeney, senior principal in McCallum Sweeney Consulting, a site selection consulting firm; Dr. Robert D. Atkinson, president of the Information Technology and Innovation Foundation (ITIF); and Mr. Steve Morris, executive director of the Open Technology Business Center (OTBC).

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