Obama's call for innovation follows slowdown in most sectors, scholars say

By Brian Vastag
Washington Post Staff Writer
Friday, January 28, 2011; 12:21 AM

Google and the iPhone are American inventions. But the first mass-produced gas-electric hybrid car was made in Japan.

And although the United States now fosters a nascent commercial space industry, if you want to speed from city to city on a smooth, fast train, you have to head to Europe.

As for the world's largest solar energy generator, you won't find it in the American Southwest. It's planned for Morocco.

Over the past decade or longer, U.S. innovation stalled in almost every sector except information technology and agriculture, say scholars who study innovation. Federal figures and industry surveys support their assessment.

In his State of the Union address on Tuesday, President Obama spoke at length about the need to reinvigorate American innovation. "This is our generation's Sputnik moment," he said, promising new investments in biomedical research, information technology and clean energy.

But in a deflating counterpoint to Obama's soaring rhetoric, the nation's third-largest maker of solar panels, Evergreen Solar, announced this week that it plans to cut 800 jobs, shutter its Massachusetts plant and move to China.

"The way to make quantum leaps is to do some risky stuff," said Alan I. Leshner, chief executive of the American Association for the Advancement of Science. "And that's very hard when money is tight."

Innovation scholars point to a "valley of death" where new technologies go to die. The federal government funds basic research. Private industry commercializes technologies springing from that work. But crossing the chasm between the two can be hugely difficult.

"We have investors with lots of money, and we have entrepreneurs with ideas that can get you across the valley of death," said Michael Mandel, an economist who tracks American innovation for the Progressive Policy Institute in Washington. "But it's a lot easier when you have a big winner out there, a gleaming star in the distance."

Outside the information technology sector, the United States has seen few of those huge successes of late. From 2006 to 2008, just 9 percent of American businesses innovated in either products made or in the processes needed to make them, according to a National Science Foundation report. Predictably, the software industry led the way, with 77 percent of those firms innovating.

And since 2004, federal research and development spending increased less than 1 percent above inflation, said Patrick Clemins, who watches the federal budget for AAAS.

In the biomedical research arena, the National Institutes of Health doubled its budget from 1998 to 2004, and drug companies followed suit, pouring huge sums into drug development programs designed to exploit the wash of data from the human genome project. Yet turning DNA into drugs has proved a larger challenge than anticipated, and the number of new drugs approved by the Food and Drug Administration has stagnated in recent years.

"Most of what you see are 'me too' drugs," said Leshner, a former head of two institutes at NIH. "What we need are new drugs."

On Wednesday, Obama announced that his next budget will seek an extra $8 billion for clean-energy research. That's "catch-up" money, Mandel said. "The U.S. hasn't put very much money, in relative terms, into clean energy research and development over the past 20 years," he said. "On energy, we're always going to be running behind. We're squeezed between Japan and Germany, which have invested heavily, and China, where costs are lower."

Although the United States may be behind on clean energy, the nation's agriculture productivity has raced ahead of the rest of the world. Experts attribute much of the progress to biotechnology: About 92 percent of soybeans, 86 percent of cotton and 80 percent of corn crops in this country are genetically engineered to withstand weeds and insects, according to the USDA.

The innovation problem doesn't spring from a lack of good ideas, said Charles Weiss, a Georgetown University professor who studies innovation. "Go to American universities and you'll see people are brimming with great ideas," he said. The problem: Grand new ideas where we need them most - in energy, transportation and health care - bang up against the old ways of doing things.

Take the City Car project at the Massachusetts Institute of Technology. It's a two-seat electric microcompact that aims to revolutionize city transportation by replacing personal cars with smart shared vehicles that can find the nearest parking spot. A model vehicle is being built by a consortium of companies in Spain. But for the City Car to transform cities the way Google has transformed information, its supporters must defeat - or enlist as allies - the American automobile and fossil fuel industries.

As for fossil fuels, there is one American energy technology that has enjoyed remarkable progress: "ultra deep" drilling for oil and gas. In the years ahead, the oil and gas industries are expected to be drilling in 10,000 feet or more of water, through 30,000 feet of rock and into wells five miles away from the main rig.

Another area in which U.S. innovation has long flowered is space exploration and space science. Although American dominance in space travel will temporarily end with the grounding of the last space shuttle this year or next, a new generation of wealthy entrepreneurs is providing a level of space innovation unmatched in the world.

They include numerous businesses founded by men who made their fortunes on Internet start-ups or other businesses that had nothing to do with space - including Jeff Bezos of Amazon, PayPal founder Elon Musk and Virgin Atlantic's Richard Branson.

"These are entrepreneurs who took their profits and put them where their longtime interests were - in space," said John Gedmark, executive director of the Commercial Spaceflight Federation, which represents companies active in what is now called the space industry. "That personal excitement is what breeds innovation, which is the lifeblood of our industry."

Staff writer Marc Kaufman contributed to this report.

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