Entrepreneurship and U.S. Competitiveness November 4, 2007.

Entrepreneurship and U.S. CompetitivenessNovember 4, 2007

Entrepreneurship and U.S. Competitiveness Copyright© 2007 – Permission Required to Reproduce in any Format

Founded in 1986

Non-profit, non-partisan

More than 170 members

Mission is to set a public policy action agenda to:

Raise the standard of living for all Americans

Through productivity growth

And success in global markets

“Our agenda is at the nexus of necessity and opportunity—and we all have an obligation to serve the nation.”–Duane Ackerman, Former CEO, BellSouth Corporation, Former Chairman, Council on Competitiveness

“Our agenda is at the nexus of necessity and opportunity—and we all have an obligation to serve the nation.”–Duane Ackerman, Former CEO, BellSouth Corporation, Former Chairman, Council on Competitiveness

The Council on Competitiveness brings together CEOs, University Presidents and Labor Leaders

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Did you know?Did you know?

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Sometimes size Sometimes size doesdoes matter. matter.

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If you’re If you’re one in a one in a million million in China . . .in China . . .

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there are there are 1,300 1,300 people people just like you.just like you.

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In India, there are In India, there are 1,1001,100 people just like you.people just like you.

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The 25% of the The 25% of the population in China population in China

with the with the highest IQshighest IQs . . . . . .

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is greater than is greater than the the total populationtotal population

of North America.of North America.

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In India, it’s In India, it’s the the top 28%.top 28%.

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Translation for teachers:Translation for teachers:they have more honors kids they have more honors kids

than we have kids.than we have kids.

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China will soon become China will soon become the number one the number one English-English-speaking countryspeaking country in the in the

world.world.

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If you took If you took every every single jobsingle job in the U.S. in the U.S. today and shipped it today and shipped it

to China . . .to China . . .

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it still would have it still would have a a labor surpluslabor surplus..

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During the course of During the course of this presentation . . .this presentation . . .

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• 60 babies will be born in the U.S.

• 244 babies will be born in China.

• 351 babies will be born in India.

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The U.S. Department of The U.S. Department of Labor estimates that Labor estimates that

today’s learner will have today’s learner will have 10 to 14 jobs10 to 14 jobs . . . . . .

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by by age 38age 38..

2020

According to the U.S. According to the U.S. Department of Labor . . .Department of Labor . . .

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1 out of 4 workers today 1 out of 4 workers today is working for a company is working for a company for whom they have been for whom they have been

employed employed less than 1 yearless than 1 year..

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More than 1 out of 2 More than 1 out of 2 are working for a are working for a

company for whom company for whom they have worked they have worked less than 5 yearsless than 5 years..

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According to former According to former Secretary of Education Secretary of Education

Richard Riley . . .Richard Riley . . .

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the top 10 jobs that the top 10 jobs that will be in demand will be in demand

in 2010 in 2010 didn’t didn’t exist exist in 2004.in 2004.

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We are currently We are currently preparing students preparing students

for for jobs that jobs that don’t yet existdon’t yet exist . . . . . .

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using using technologies technologies that haven’t yetthat haven’t yet

been inventedbeen invented . . . . . .

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in order to solve in order to solve problems we don’t problems we don’t

even know are even know are problems yetproblems yet..

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Name this Name this country . . .country . . .

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• Richest in the world

• Largest military

• Center of world business and finance

• Strongest education system

• World center of innovation and invention

• Currency the world standard of value

• Highest standard of living

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EnglandEngland

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in in 19001900..

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The U.S. is The U.S. is 20th20thin the world in in the world in

broadband Internet broadband Internet penetration penetration

(Luxembourg just (Luxembourg just passed us).passed us).

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NintendoNintendo invested more invested more than $140 million in than $140 million in

research and developmentresearch and developmentin 2002 alone.in 2002 alone.

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The U.S. federal government The U.S. federal government spent spent less than half as less than half as muchmuch on research and on research and

innovation in education.innovation in education.

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1 of every 8 couples 1 of every 8 couples married in the U.S. last married in the U.S. last

year met year met onlineonline..

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There are over There are over 106 million106 million registered users of MySpace registered users of MySpace

(as of September 2006).(as of September 2006).

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If MySpace were a country,If MySpace were a country,it would be the it would be the 11th-largest11th-largest

in the world (between in the world (between Japan and Mexico).Japan and Mexico).

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The average MySpace The average MySpace page is visited page is visited 3030 times a day. times a day.

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We are living in We are living in exponentialexponential times. times.

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There are over There are over 2.7 billion2.7 billion searches performed on searches performed on

Google each month.Google each month.

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To whom were these To whom were these questions addressed questions addressed B.G.B.G.

(before Google)?(before Google)?

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The number of The number of text text messagesmessages sent and sent and received every day received every day

exceeds the population exceeds the population of the planet.of the planet.

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There are about There are about 540,000 words540,000 words in the in the English language . . .English language . . .

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about about 5 times5 times as as many as during many as during

Shakespeare’s time.Shakespeare’s time.

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More than More than 3,000 3,000 new booksnew books are are published . . .published . . .

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dailydaily..

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It is estimated that It is estimated that a week’s worth of a week’s worth of

New York TimesNew York Times . . . . . .

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contains more information contains more information than a person was likely than a person was likely

to come across in a to come across in a lifetimelifetime in the 18th century. in the 18th century.

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It is estimated that It is estimated that 1.5 exabytes1.5 exabytes (1.5 x 10 (1.5 x 101818) )

of unique new information of unique new information will be generated will be generated

worldwide this year.worldwide this year.

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That’s estimated to be That’s estimated to be more than in the more than in the

previous previous 5,000 years5,000 years..

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The amount of new The amount of new technical information is technical information is doubling every 2 yearsdoubling every 2 years..

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For students starting a For students starting a four-year technical or four-year technical or college degree, this college degree, this

means that . . .means that . . .

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half of what they learn half of what they learn in their first year of study in their first year of study will be will be outdatedoutdated by their by their

third year of study.third year of study.

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It is predicted to It is predicted to double double every 72 hoursevery 72 hours

by 2010.by 2010.

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Third-generation Third-generation fiber opticsfiber optics has recently been tested by has recently been tested by

both NEC and Alcatel . . .both NEC and Alcatel . . .

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that pushes that pushes 10 trillion10 trillion bits per second down bits per second down

one strand of fiber.one strand of fiber.

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That’s 1,900 CDs, or That’s 1,900 CDs, or 150 150 millionmillion simultaneous phone simultaneous phone

calls, every second.calls, every second.

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It’s currently It’s currently triplingtripling about about every 6 months and is every 6 months and is expected to do so for expected to do so for

at least the next 20 years.at least the next 20 years.

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The fiber is already there. The fiber is already there. They’re just improving the They’re just improving the

switches on the ends, which switches on the ends, which means the marginal cost of means the marginal cost of

these improvements is these improvements is effectively $0effectively $0..

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Predictions are thatPredictions are thate-papere-paper will be cheaper will be cheaper

than real paper.than real paper.

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47 million laptops47 million laptops were shipped worldwide were shipped worldwide

last year.last year.

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The The $100 laptop project $100 laptop project is expecting to ship between is expecting to ship between

50 to 100 million laptops 50 to 100 million laptops a year to children in a year to children in

underdeveloped countries.underdeveloped countries.

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Predictions are that Predictions are that by 2013 a by 2013 a supercomputersupercomputer will be built that exceeds will be built that exceeds

the computation capability the computation capability of the human brain.of the human brain.

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By 2023, when 1st-graders By 2023, when 1st-graders will be just 23 years old will be just 23 years old

and beginning their and beginning their (first) careers . . .(first) careers . . .

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it only will take a it only will take a $1,000 computer$1,000 computer to to

exceed the capabilities exceed the capabilities of the human brain.of the human brain.

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And while technical And while technical predictions farther out predictions farther out

than about 15 years than about 15 years are hard to make . . .are hard to make . . .

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predictions are that predictions are that by 2049 a $1,000 by 2049 a $1,000

computer will exceed computer will exceed the computational the computational capabilities of the capabilities of the

human racehuman race..

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What does it What does it all all meanmean??

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Shift Shift happens.happens.

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Now Now youyou know . . .know . . .

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Entrepreneurship and U.S. Competitiveness

“For the United States to survive and

continue its economic and political leadership in the world, we must see entrepreneurship as our central comparative advantage. Nothing else can give us the necessary leverage to remain an economic superpower.”

Carl J. Schramm, The Entrepreneurial Imperative: How America’s Economic Miracle Will Reshape the World (And Change Your Life) (New York: HarperCollins, 2006)


Three key attributes:– Ready access to capital and state-of-the-art research;– A culture that encourages experimentation and risk– A regulatory structure that enables firms to start-up

and enter new markets while enabling less productive firms to exit.

Entrepreneurship and U.S. Competitiveness


Entrepreneurship is a major driver of U.S. competitiveness




Yet Our Advantages Will Decline Because:

• Most of the growth in consumer demand that will drive innovation will come from emerging markets.

• By 2020, it is estimated that 80 percent of middle-class consumers will live outside industrialized countries.

• Countries around the world are striving to become world-class innovators.



Emerging Markets Are Rapidly Growing Their Economies, Exports and Share of Global Investment Flows

Source: World Bank, UNCTAD, U.S. Department of Energy, EIA


Emerging Markets Now Number Among the World's Leading Technology Exporters

Source: Global Insight, Inc.


Emerging Markets Already Have the Largest, Fastest Growing Populations

Source: U.S. Census


Emerging Markets Now Number Among the World's Leading Technology Exporters

Source: Global Insight, Inc.


Fostering entrepreneurship is becoming critical to regional economic development

According to a recent Small Business Administration study the most entrepreneurial regions* in the United States had:

• 125 percent more employment growth • 58 percent more wage growth • 109 percent higher productivity than the least entrepreneurial

regions• 67 percent more patents per labor force participant• 63 percent higher percentage of high-tech establishments• And spent 54 percent more on R&D

*The regional entrepreneurship index was composed of the number of new firms per 1,000 labor force participants, average annual change in the number of new firms and the percent of rapidly growing firms.


U.S. Share of Global Output Has Fallen Across a Range of Science and Technology Metrics

Source: NSF, Science and Engineering Indicators (2006), OECD, Main Science and Technology Indicators (2006), U.S. Patent and Trademark Office


U.S. R&D Investment Remains the World’s Largest, But Others Are Increasing Their Investment Faster

Source: OECD, Main Science and Engineering Indicators (2006)


U.S. Companies Perform Most Overseas R&D in Developed Economies, But Are Increasingly Turning to Emerging Economies

Source: U.S. Bureau of Economic Analysis


Global Corporations Rank China as the Most Attractive Location for New R&D Facilities

Source: UNCTAD, Survey on the Internationalization of R&D; Current Patterns and Prospects on the Internationalization of R&D (12 Dec 2005)


The Bottom Line

• There’s nothing awry with the U.S. entrepreneurial system, but we’re still leaving ideas on the table.

• On average, only one in ten patents is ever commercialized.

• For those ideas that are pursued commercially, only seven out of every 1,000 business plans receive funding.

• Running in place is not an option for us.

• The United States will need to work to maintain its leadership position.

• And this is where you come in.

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Samuel Leiken

Senior Director of Policy Studies

Council on Competitiveness

1500 K Street, NW

Suite 850

Washington, DC 20005

(202) 969-3394

[email protected]

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