Can the U.S. Maintain its Leadership in Innovation?

Innovative projects like self-driving vehicles still suggest that the United States is on the forefront of new technology, but companies have plenty of reasons to stay on edge and in front of the pack.

by Chris Fleisher, The Pittsburgh Tribune-Review / March 7, 2016
credit: Flickr/Boegh Boegh/Flickr CC 2.0

(TNS) -- Matt Rogers returned to his alma mater Carnegie Mellon University last October and took a spin in the future of transportation.

The car was a 2011 Cadillac, otherwise unremarkable but for one thing — it could drive itself.

“I think it's very ready,” Rogers, a Silicon Valley entrepreneur, said of CMU's self-driving prototype. “There's a lot of testing and real-world usability work to do, but it's pretty mature.”

Rogers keeps close track of consumer tech trends. He's co-founder of Nest Labs, which makes high-tech household items such as a “smart” thermostat. The company was purchased by Google for $3.2 billion in 2014.

He pointed to CMU's self-driving vehicle prototype as evidence of how the United States remains a world-leading technology innovator.

Yet, he acknowledged that American companies have plenty of reason to look over their shoulders, especially in China, which may leapfrog the United States in making self-driving cars commercially viable.

For all the research and development investment in this country — the United States spends more in total than any other country — nations such as South Korea have more ambitious agendas for technology development.

A recent report from the Washington think tank Information Technology & Innovation Foundation ranked the United States 10th in its impact on global innovation, partly because of a lack of government funding for university research such as that being done at CMU.

Overseas investment

South Korea spends more on research and development, as a percentage of its overall gross domestic product, than any country at 4.3 percent, according to the Organization for Economic Co-operation and Development, which works with governments around the globe on economic development.

The United States ranked fourth at 2.7 percent of GDP, behind Israel and Japan.

Televisions, smartphones, and wearable technology such as smartwatches may have been pioneered in this country, but have blossomed beyond our borders.

Asian companies such as Samsung and Sony are doing the pioneering work on televisions, for example. This year's Consumer Electronics Show was abuzz over a flexible LED screen that could be rolled up like a newspaper. It was made by South Korean electronics maker LG Electronics Co.

“I think the U.S. holds its own in coming up with new things, but we don't do a good job improving on it,” said Dennis Galletta, a professor of business administration at the University of Pittsburgh's Katz Graduate School of Business.

The latest wearable technology and smartphones are coming from overseas. Apple leads the pack with its iPhone and Apple Watch, but international competition is catching up, said Scott Steinberg, head of consulting firm Tech Savvy, in St. Louis.

LG and Samsung just offered watches with built-in cellular connectivity, and Chinese smartphones are expected to make headway into the U.S. market this year. The world's third-largest smartphone maker, Chinese company Huawei Technologies, plans to bring its flagship Mate 8 phone to the United States, offering consumers a more affordable alternative to the iPhone with a sturdy metal body and long battery life.

Racing to the roads

Few products are developed without some American influence, said Marty Greuber, principal of Teconomy Partners, an Ohio-based technology and economic development consulting firm.

A lot of the latest gadgets shown at the Consumer Electronics Show this year, for example, were built around U.S.-made semiconductors.

“The visible technology — the thing that you touch — may have an international company basis, but there is still a strong U.S. semiconductor industry that powers that thing,” Greuber said.

American companies such as Google, General Motors and ride-sharing company Uber have invested heavily in autonomous car technology. CMU has partnered with Uber and GM to develop self-driving vehicles.

Rogers' ride in CMU's Cadillac convinced him that the technology is nearly ready for the road. But that doesn't mean Americans are going to own the first driverless cars. There are legal questions — such as driver liability in a crash — that must be resolved. Also, there isn't the urgency to get them to market as in other countries, such as China.

Autonomous vehicles offer a safer and more efficient alternative to existing methods of transportation and could help China cut congestion that ensnares many of its cities.

Chinese Internet search giant Baidu Inc. has joined the race to develop self-driving vehicles. Company executives have not given a timeframe for when they will be commercially available. Industry experts say it will be a decade before self-driving cars hit the road, but if any place has a reason to act faster, it is China, Greuber said.

“The magnitude of the infrastructure challenge in China is forcing them to look at everything and anything to help,” Greuber said. “That's part of why, whether it's central state investment or incentivized corporate investment, they are spending a lot of money looking at these technologies.”

Who's doing research?

Rogers, Greuber and other tech experts believe that America leads the world in technological innovation, but said its long-term position as a global hub is not assured.

Companies that would drive the next generation of world-changing technology, including Apple, seem to increasingly focus on investments that will have a near-term financial return, rather than developing products that may not affect their bottom line for 30 years, they said.

And the United States ranks poorly — 18th worldwide — in its rate of growth for government funding of university research, according to The Information Technology & Innovation Foundation.

“Generally, it's the role of large research institutions and universities to do the long-range, 30-year technology development,” Rogers said. “That, from my perspective, has slowed. The big, interesting things that Bell Labs was working on 40 years ago, who's working on those things today? I don't know the answer.”

©2016 The Pittsburgh Tribune-Review (Greensburg, Pa.) Distributed by Tribune Content Agency, LLC.