The geopolitics of innovation. A new Sputnik moment.

These days I’ve been hearing a background hiss about a “new” sputnik moment… (google it, and you’ll see)

One explicit reference to the Sputnik metaphor comes from a report sponsored by the Council on Foreign Relations, an independent, nonpartisan membership organization, think tank, entitled “Innovation and National Security. Keeping Our Edge”. It has been produced by a Task force chaired by retired Admiral William McRaven and McKinsey’s James Manyika, which counts with people like ex-Google CEO Eric Schmidt, former DARPA head Regina Dugan or investor Reid Hoffman to name but three of them.

The Task Force argues that (this is a brief summary; you may find an extended one and the full report here; my emphasis in bold type)

For the past three-quarters of a century, the United States has led the world in technological innovation and development. Catalyzed by the Sputnik satellite launch and the need to compete with the Soviet Union, the United States invested heavily in scientific research and development (R&D).

Today, however, the United States risks falling behind its competitors, principally China. U.S. federal R&D as a percentage of gross domestic product (GDP) peaked at above 2 percent in the 1970s and has declined since, (…) China, meanwhile, is catching up, having increased its R&D expenditures by an average of 18 percent annually since 2000. Indeed, the Task Force concludes that China is closing the gap with the United States and will soon be one of the leading powers in emerging technologies.

In addition to the challenge posed by China, the accelerating pace of innovation, which is increasingly disruptive and transformative to societies, makes finding policy responses more difficult.

Total R&D expenditure by country

The United States needs to respond urgently and comprehensively over the next five years and put forward a national security innovation strategy to ensure it is the predominant power in a range of emerging technologies, such as :

  • AI and data science
  • Advanced battery storage
  • Advanced semiconductor technologies
  • Genomics and synthetic biology
  • Fifth-generation cellular networks (5G)
  • Quantum information systems
  • Robotics

Such a strategy, the Task Force concludes, should be based on four pillars:

  • Restoring federal funding for R&D,
  • Attracting and educating a science and technology workforce,
  • Supporting technology adoption in the defense sector, and
  • Bolstering and scaling technology alliances and ecosystems

Although private-sector investment has risen over the past three decades, it is no substitute for federally funded R&D that targets national strategic concerns.

US R&D Funding by sector (Federal and the rest)

Only the government can make the type of investments in basic science that ignite discoveries; such investments are too big and risky for any single private enterprise to undertake.

The White House should announce moonshot approaches to societywide national security problems.

The Task Force recommends the United States introduce additional scholarships and modify immigration policies to enable its world-class universities to attract and educate a science and technology workforce.

The United States should partner with like-minded countries to develop common policies for the use and control of emerging technologies and work with major trading partners to promote the free flow of data and development of common technology standards.

Market share of base stations. Chinese firms in RED!

The Task Force finds that China wants to dominate the industries of the future and in a decade will likely spend more than any other country on R&D. While the Task Force “commends the White House for confronting China on cyber espionage and IP [intellectual property] theft,” it also finds that “the administration is over weaponizing trade policy, with long-term costs to U.S. innovation capabilities.” The Task Force concludes, “Slowing China down is not as effective as outpacing it.” The best way to answer China’s challenge is to compete more effectively. The response to this challenge must truly begin at home.

Next week I will be talking about innovation and, in particular, industry 4.0 in Spain here. Setting aside the opportunity of the name, industry 4.0 should have been a Sputnik moment for Europe, a “moonshot” approach to European competitiveness problems in the world the Task Force describes, very much in line to what Mazzucato has been praying for years.

I know, I know Spain is not in the Champion’s League of Innovation. I have faith, but it’s hard.


Featured Image: A replica of Sputnik 1

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