The Emerging Global Battleground in Innovation

Commentary

Much has been written about the emerging global battle for dominance of the innovation-based economy between China and the United States. This battleground has been referred to as the “fourth industrial revolution,” characterized by a paradigm shift in the way innovation affects technological development.

The winner of this battle, it’s predicted, will control the keys to the world’s economic prosperity for the next several centuries.

In a 2019 Carnegie alliance policy brief, James L. Schoff warned that the ability for nations to nurture and sustain breakthroughs in innovative fields “can potentially shift the future balance of economic and military power, prompting governments and large corporations to compete aggressively now over their development and applications.”

We don’t dispute that warning. However, we pose the following question: How would one measure innovative dominance? Currently, there’s no comprehensive, standardized way of measuring whether an economy is successful in creating a nurturing innovative industry.

Ultimately, success in the new economy will involve creating great jobs, attracting people to live there, and giving people in the area a chance to thrive. The Brookings Institution believes that regions successful in building the innovation economy will garner disproportionate benefits. Its research supports that belief and has identified five “innovation superstar” regions as creating far more jobs, attracting more capital for growth, and generating higher productivity than other areas of the United States. The flipside of successful innovation, however, is its uneven distribution across the nation.

A map (pdf) produced by Brookings shows that only a relative handful of regions in the United States have seen growth in innovation since 2005. Many of America’s largest metro areas have seen innovation jobs shrink since 2005.

Brookings’s definition of “innovation jobs” spans industries. More than simply information technologies, software, and semiconductors, it includes industries such as agricultural technology, robotics, telecommunications networking, chemical manufacturing, aerospace, and science and technology services. The areas that have generated rapid growth in these innovative industries tend to have great universities that produce world-class research and highly trained people, thereby nurturing the conditions that foster and infuse innovation in technological development.

Given the opacity of the Chinese economy, we doubt that we would ever be able to measure regional innovation growth in China. We may never know whether Hangzhou is out-pacing Chongqing let alone Silicon Valley.

Fortunately, with generous funding from the CEO Leadership Alliance of Orange County, the A. Gary Anderson Center for Economic Research at Chapman University has started that measurement journey for the United States. The center has harnessed a team that includes scholars from both Chapman and the University of California–Irvine to create a regional innovation indicator. That effort is being spearheaded by the authors of this article.

The indicator takes a quarterly snapshot of how 20 tech hubs are doing across the United States. Our indicator series is the first to use a standardized measurement of business growth, job growth, and wage growth to assess over time. The first public unveiling of the indicator will take place on Dec. 17 at Chapman’s 43rd Annual Economic Forecast Conference.

In addition to providing local leaders with a scorecard to measure their progress in creating jobs in the innovation industries, we hope it will be used as a tool in determining the causal factors that explain how and why innovation jobs are created. As a bonus, the Chapman-UCI Innovation Indicator will provide the first look at how the COVID-19 pandemic has affected innovation economies.

It will be critically important for the United States to continually measure its progress in its innovative industries. By focusing on broadening the country’s global innovation competitiveness, we can ensure that America enhances its global dominance in creating and nurturing prosperity for its citizens.

Stay tuned!

Jim Doti is president emeritus and professor of economics at Chapman University; Ken Murphy is an assistant professor at the University of California–Irvine; Raymond Sfeir is a professor of economics at Chapman University; and Marshall Toplansky is a clinical assistant professor at Chapman University.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.