Texas Border Business
Years ago, during one of the numerous Presidential Economic Summits, I was given the task of identifying the single best thing that the US had done to maintain decades of leadership in business expansion. After a fair amount of research, I determined that the answer was “the next big thing.”
Innovation has been and will continue to be crucial to the ongoing success of the US economy. Whether incremental improvements or pathbreaking new discoveries, innovation is the fuel that drives growth. The telegraph, telephones, cellphones, smart phones, light bulbs, the cotton gin, polio vaccines, the internet, airplanes, sewing machines, and countless other world-changing US inventions have enhanced quality of life and led to tremendous economic gains.
Innovation is no accident. It stems from investments in the necessary infrastructure and an environment that facilitates commercialization of new ideas. The Global Innovation Index (GII), published by the World Intellectual Property Organization, examines 80 indicators related to the ecosystem for innovation. As usual, the United States ranked near the top in 2023, behind only the much smaller nations of Switzerland and Sweden. The United Kingdom and Singapore were also among the top five.
The United States ranked first in 13 innovation indicators ranging from software spending to venture capital to research and development (R&D). Many major US firms are among the leaders in corporate R&D spending, including Nvidia, Apple, Meta, Uber, Alphabet, Microsoft, Adobe, and General Motors. Additionally, US higher education institutions are top spenders (much of it funded by federal government sources), as are numerous state and federal agencies.
Many advances either directly or indirectly involve manufacturing; new technologies and processes are transforming facilities, enhancing efficiency, and revolutionizing production capabilities. We can also thank innovation for greatly enhancing our health (with better imaging, devices, and pharmaceuticals), energy security (through advances which have increased production potential across a spectrum of sources), and other aspects of our wellbeing. Innovations can cause disruptions that invoke challenges, but also spur opportunities. For example, greater adoption of AI will decrease the need for certain types of workers while simultaneously leading to new types of jobs (some of which we cannot yet imagine).
The only consistent path to continued economic success is innovation. The US will never be the low-cost source of many products due to higher labor costs and greater capital concentrations. As a result, it’s imperative to remain at the leading edge of prosperity. It has been the key to success for more than a century and will remain so for the foreseeable future. Through education and enlightened policy to incentivize innovation, businesses will stay strong, American workers will enjoy greater prospects, and people around the world will benefit from lifesaving and world-changing advances. Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
