This monograph argues that (1) U.S. economic growth policy has not responded to the relentlessly growing competitive pressures from globalization, as evidenced by declining real GDP growth and (2) the policy solution is to create a more high-tech economy. This argument is dramatically supported by the fact that high-tech workers make almost twice as much as the average for all workers. However, they account for only 6 percent of the workforce. So, the promotion of high-tech investment and support for a high-tech labor force is imperative.
Specifically, investment is required in four major categories of assets: technology, “fixed” capital (hardware and software), highly skilled labor, and an intellectual, financial, and management infrastructure. All four assets must be integrated into functional ecosystems that, due to the complexity and variety of modern technologies, require technology specialization by state/regional “innovation clusters”.
Among the current areas of underinvestment, the secular decline in federal R&D intensity is a particularly serious problem, given a national government’s critical roles in funding scientific research and helping innovation clusters develop new technology platforms. At the national level, this means pursuing an R&D intensity of 4 percent and dramatically expanding direct Federal support for state technology-based economic development.
