Weak education system threatens U.S. innovation, study says

The single greatest threat to American prosperity is the country's educational system, said Harvard Business School professor Michael Porter, co-author of a new economic report released by the Council on Competitiveness.

The report, "Competitiveness Index: Where America Stands," measures two decades of U.S. economic data against emerging global economies.

Porter said the United States is pre-eminent in almost every measure of innovation, including domestic research and development spending, "but we are no longer the only game in town."

Contrary to popular belief, domestic R&D investments by multinational corporations are rising just as fast as foreign R&D investments, he said. The index analyzes how changes in technology, demographics and the economic policies of many countries have affected the playing field on which Americans must now compete to prosper in the 21st century.

The exceptions to the U.S. stranglehold on competitiveness are apparent in the number of scientific publications and new doctorates conferred in science and engineering, according to the report, which was issued today. The countries that make up the European Union have surpassed the U.S. in those two categories.

Currently, the United States has more engineers capable of working at multinational companies, but not for long, the report suggests. China has twice as many young engineers, but only 10 percent are suitable to work at multinational enterprises, the report states.

"This ultimately may become a serious problem," Porter said.

Other countries perform better on international standardized tests, although the United States spends more per student on education than any other country except for Switzerland, the report states. South Korea, the country with the second highest score in mathematics, spends about half as much per student as the United States does, according to the findings.

The quality of the U.S. K-12 education system "is our No. 1 economic problem," Porter said. Attempts to change the system -- including raising teacher salaries, increasing testing and adding charter schools -- have not worked, he added.

"We got to do some structural changes, and I don't know if the nation's ready for that," Porter said.

The new index presents past and present economic data to help shape future policy.

Deborah Wince-Smith, president of the Council on Competitiveness, said the theme that emerges throughout the index is that none of the challenges facing the nation's leadership is insurmountable.

The index is not a scarcity model, she said. "It's a model of growth and opportunity."

According to the report, there are significant imbalances within the federal R&D portfolio. In the fiscal 2006 budget, 59 percent of all federal R&D is for defense, primarily for the development and testing of weapons systems, the report states.

"Flat levels of funding for the physical sciences have raised concerns that investment is inadequate for the United States to remain at the forefront of physical research in the long term," the report states, adding that the president's new American Competitiveness Initiative proposes to increase federal spending for basic research in the physical sciences and engineering to address this imbalance.

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