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TRENDS - The
Creativity Crisis
For a
century, the United States had led the world in innovation. It
is home to many of the world’s most forward-thinking
companies. It produces many of the most innovative products
and services on the planet. And yet, the American advantage in
innovation is not some home-grown resource that can be found
in the water or the air.
Instead,
the openness of our businesses to new ideas has flourished in
tandem with the openness of our borders to new immigrants. For
example, many of the key entrepreneurs behind the high-tech
boom were born in other countries and then moved to America:
Sergey
Brin, who co-founded Google, was born in Moscow. Andy Grove,
co-founder of Intel, arrived from Hungary. Vinod Khosla,
co-founder of Sun Microsystems, came from India.
The impact
of these and millions of other immigrants on the U.S. economy,
the number the jobs they create, and the amount of wealth they
create, is immeasurable.
But now
imagine that instead of coming to the U.S., the entrepreneurs
who started these firms, and millions of other bright
innovators, stayed in their home countries, or instead
emigrated somewhere else in the world.
This is a
troubling scenario, and it is one that is rapidly becoming a
reality. Economist Richard Florida makes a powerful case for
this in a Harvard Business Review essay called “
America’s Looming Creativity Crisis.”
He asserts
that, “The United States of America — for generations known
around the world as the land of opportunity and innovation —
is on the verge of losing its competitive edge. . . .
America’s growth miracle turns on one key factor: its openness
to new ideas, which has allowed it to mobilize and harness the
creative energies of its people.
“The
global talent pool and the high-end, high-margin creative
industries that used to be the sole province of the U.S., and
a crucial source of its prosperity, have begun to disperse
around the globe. A host of countries — Ireland, Finland,
Canada, Australia, New Zealand, among them — are investing in
higher education, cultivating creative people, and churning
out stellar products. . . .
“Many
of these countries have learned from past U.S. successes and
are shoring up efforts to attract foreign talent — including
Americans. If even a handful of these rising nations draws
away just 2 percent to 5 percent of the creative workers from
the U.S., the effect on its economy will be enormous. . . .
“To stay
innovative, America must continue to attract the world’s
sharpest minds. And to do that, it needs to invest in the
further development of its creative sector. Because wherever
creativity goes — and, by extension, wherever talent goes —
innovation and economic growth are sure to follow.”
According
to Florida, we can measure the strength of a country’s
innovation capability by calculating the percentage of people
in what he terms the “creative class.” The creative class
includes scientists, engineers, architects, teachers, artists,
entertainers, and others who create new ideas. It also
includes all of the knowledge workers who engage in creative
problem solving, such as the creative professions within
business, finance, law, and health care.
Florida ’s
research shows that other countries have surpassed the U.S. in
a key measure: the size of their creative class as a
percentage of the workforce. Florida devised a new index, the
“Global Creative-Class Index.” Starting with employment data
for 25 countries, he calculated the number of people employed
in creative job categories, divided by the total number of
workers, for each nation.
Surprisingly, the U.S. ranks only 11 th, with less than
24 percent of its workforce in the creative class. At the top
of the list, at roughly 33 percent, are Ireland, Belgium,
Australia, and the Netherlands, followed by New Zealand,
Estonia, the United Kingdom, Canada, Finland, and Iceland at
around 25 percent.
Many of
those countries are also experiencing rapid growth in the
creative class. For example, since 1991, Ireland’s has
increased from 18.7 percent to 33.5 percent.
Florida ’s
research supports the disturbing conclusions of several other
studies:
Michael
Porter of Harvard Business School placed the U.S. at the top
of his first Global Innovation Index, in 1995. But in 2005,
Porter predicts that the U.S. will rank sixth, behind Japan,
Finland, Switzerland, Denmark, and Sweden.
At the
corporate level, U.S. companies are falling behind their
overseas competitors. In 2004, BusinessWeek’s
Information Technology 100 listed only six American firms
among the world’s most competitive 25 high-tech companies. By
contrast, 14 Asian companies made the list.
The U.S.
lead in patents is also disappearing. Almost 50 percent of the
patents issued in America go to foreign companies and
inventors.
American
scientists and other researchers are publishing fewer findings
than foreigners. In physics, for example, Americans published
61 percent of scientific papers in 1983; by 2003, they
accounted for only 29 percent, according to Physical
Review.
Florida
sees these as signs that America is “allowing its creativity
infrastructure to decay.”
This is a
problem we’ve been warning you about for some time. For
example, in the May 2003 issue of Trends, we called
your attention to “the explosion of college graduates in
low-wage nations. The Philippines, a country of 75 million,
turns out 380,000 college graduates a year. India already has
a staggering 520,000 IT engineers, with starting salaries of
around $5,000. U.S. schools produce only 35,000 mechanical
engineers per year, while China produces over 70,000.”
We also
told you that, “Based on projections from theU.S.
Department of Labor’s Bureau of Labor Statistics, our
economy will create a demand for 10 million more workers in
2010 than the labor force will be able to provide.” Many of
these jobs will be in the creative class — and many of them
will go unfilled if we rely only on young American workers to
replace older workers when they retire.
The Baby
Boom generation accounts for three of every five workers
between the ages of 25 and 54, when most people are at the
peak of their careers. As they retire over next few decades,
they potentially will leave behind millions of vacant jobs
because the next generation is too small to replenish the
workforce.
As we’ve
suggested in the past, the solution is to fill those vacancies
with immigrants. But now, the competition for highly skilled
foreign-born workers is intensifying. In March 2004, the
Council of Graduate Schools announced that 90 percent of U.S.
graduate schools surveyed had seen a steep drop in the number
of student applications from overseas.
Admissions
applications from Chinese students fell by 76 percent; from
Indian students, by 58 percent; and overall, by 32 percent.
There are
three reasons for the decline in foreign-born students in the
U.S.:
The
U.S. war on terror has increased the scrutiny on foreigners
applying for admission to U.S. schools . And those that
are granted visas feel they are regarded with suspicion by
their fellow students and other Americans they encounter.
Other
countries are wooing foreign students to their own
universities. France, the United Kingdom, Germany, Japan,
and Australia admitted 650,000 foreign students in 2003, 11
percent more than the U.S., according to the Institute of
International Education, which is responsible for awarding the
Fulbright scholarships.
China
and India are competing to keep their own citizens from going
to U.S. schools. They are improving their own educational
systems to the point that they rival America’s best
universities, and they have improved their economies enough to
create attractive jobs to keep people from going overseas to
work.
Whether
they receive their degrees in the U.S. or overseas, foreign
students are less likely than in the past to see America as
the land of opportunity. Since September 2001, applications
for visas have dropped by 40 percent annually. And the
rejection rate for H-1B visas has nearly doubled since then,
from 9.5 percent to 17.8 percent.
This trend will
continue to develop into a crisis unless something is done to
stop it. As it becomes more visible, we predict that companies
will act on Florida’s three recommendations:
First, companies will need to increase their
spending on research. In 2002, corporate R&D
investments fell by $8 billion, according to the National
Science Foundation. America can’t maintain its lead in global
innovation while corporations are cutting budgets to develop
new technologies, new products, and new ideas.
Second, U.S. executives must lobby the
government to open the borders to highly-skilled immigrants
and college students. As Florida points out, “Over
time, terrorism is less a threat to the United States than the
possibility that creative and talented people will stop
wanting to live within its borders.” He urges companies to
create a Global Creativity Commission to devise strategies for
allowing talented people to come to the U.S.
Third, the U.S. must increase the size of its
creative class. This means more than just encouraging
more high-school students to pursue college degrees in science
or engineering. It also demands that businesses find ways to
increase the creativity of every worker, from the cashier to
the CEO. Today, only 30 percent of U.S. workers fit into the
creative class; companies must harness the creativity of the
other 70 percent so that the U.S. can maintain its competitive
edge in innovation.
Source: Audio-Tech Business Book Summaries, Inc. 800-776-1910.
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