(1888PressRelease)
November 20, 2008 - Raleigh, NC. GCX (Global Corporate Xpansion), one of the world’s premier business journals for global corporate executives and industrial site selection professionals published an article today by Thomas E. Vass, a North Carolina innovation economist, and Dan Loague, the President of the Innovation Economics Alliance, LLC.
The article, entitled What Is Innovation Economics?, takes issue with the definition of innovation proposed by, Dr. Michael Mandel, chief economist of BusinessWeek. (September 22, 2008). In his article “Can America Invent Its Way Back?” Mandel wrote about how “smart ideas can turn into jobs and growth — and keep the U.S. competitive.”
“America’s economic problems are a direct result of very bad political decisions on the nation’s foreign trade policies,” said Vass. “Those bad decisions, beginning around 1991, have fundamentally weakened the structure of the U. S. economy by trading away America’s innovation infrastructure, along with millions of jobs.”
Vass and Loague took issue with Mandel’s conception that innovation is the same thing as invention. In his article, Mandel noted that “Since 2000, the nation's public and private sectors have poured almost $5 trillion into research and development and higher education, the key contributors to innovation. Nevertheless, employment in most technologically advanced industries has stagnated or even fallen. The number of domestic jobs in the computer and electronics sector continues to plunge while pharmaceutical and biotech companies lay off as many workers as they hire.”
“While Mandel can see the failure of the past innovation economic policies,” said Vass, “he seems to turn a blind eye to the relationship between the nation’s technology innovation business model and the economic weakness caused by foreign trade policy.”
Vass and Loague promote a private sector business model deployed in each of America’s 350 metro regional economies. “A better business model,” they write, “means a full service private capital market that funds new ventures, and offers exits for private investors that allows the ventures to continue to grow. The priority is on business growth because it is private business that adds jobs in the metro regional value chains.”
Vass cited a number of key economic indicators to underscore the urgency for a new national economic strategy. He noted that
· since December 1997, over 3 million U.S. manufacturing jobs have been eliminated as imports replaced domestic production,
· between August 2007 and August 2008 a doubling of home foreclosures,
· since the beginning of 2006 home prices decreased by a country-wide average of more than 20%,
· the inventory of existing homes for sale at an all time high since the great Depression of 1929-36,
· unemployment rate at a 14-year high of 6.5%,
· in 2008, the nation’s highest annualized rate of bankruptcy filings,
Vass explained that during the period of time, from 1991 to 2004, the investment inflow to India increased from USD $11 million to $344 million, totaling $4.13 billion, which constitutes a compound rate of growth of over 57% annually. American direct investment in India in 2007 stood at $9 billion, accounting for 9% of total foreign investment into India, with a concomitant outsourcing of skilled American jobs to India. Indian skilled workers earn anywhere between $12,000/year and $20,000/year, with comparable workers in the U.S. earning anywhere between $60,000 and $150,000 annually.
“The economic events in the U. S. and India are related,” said Vass. “The disastrous political decisions on trade have eviscerated America’s ability to innovate because the industrial value chains in each metro region have been destroyed by outsourcing innovation to India and China. Our last great national comparative advantage of technological innovation has been outsourced along with the jobs. The trade policies primarily benefit the top 1% of income earners in America. ”
“Focusing public attention on inventions, as Mandell emphasizes in his article, does not address the fundamental problem in the American economy,” said Vass. “America needs a better business model of innovation investments and a better framework for converting ideas to advanced products and services. It's dead wrong to think that easier and cheaper access to federal money or that American university genius and ideas alone can increase the incidence of economic growth in America.”
About GCX: Global Corporate Xpansion is the quarterly magazine for executives and site selectors planning to relocate a facility or expand global operations. GCX and GCX-online.com provide the support tools necessary for effective global corporate decisions involving selection strategy, incentive negotiations and property acquisition. It is published by Latitude 3 Media Group LLC, of Birmingham, Alabama. Contact Rachel Duran, editor, rduran ( @ ) latitude3 dot com
About the Innovation Economics Alliance, LLC.: The IEA is based in Reston, Virginia. The private, for-profit national trade organization focuses on growing regional economies by targeting innovation-based entrepreneurship, new capital formation and related activities. Contact Dan Loague, President,
dloague ( @ ) cfi-institutte dot org
About Thomas E. Vass: Vass is the President of The Private Capital Market®, Inc., a web-based global due diligence platform for high technology companies that need to raise small amounts of growth capital. He is a registered investment advisor and holds a patent on investing in high technology stocks. He has written a number of books on the technology innovation and is the creator of a theory of technology evolution called Structural Evolutionary Regional Economic Theory (SERET). His economic articles are compiled on a global web platform at www.ssrn.com
Contact tvass ( @ ) privatecapitalmarket dot com
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