OECD: United States Losing its Edge in Innovation

Its recommendations including tweaking recently passed patent-reform legislation and increasing attainment in STEM fields.

The United States is losing its edge in innovation, and needs to implement strong pro-innovation policies as well as education reform "to maintain its status as the world's most vibrant and productive economy."

That's the conclusion of the latest "Economic Survey of the United States" by the Organization for Economic Cooperation and Development, or OECD, which asserts that "fissures have begun to appear" in U.S. innovation.

"The United States is still one of the most innovative economies in the world, but competition is growing and we need better policies to keep the U.S. at the frontiers of innovation," said OECD Deputy Secretary-General Richard Boucher.

Among the recommendations in the OECD report, the organization asserts that "reductions in the federal R&D budget should be as limited as possible."

"Ideally, funds would be appropriated to continue on the path approved in the 2007 America COMPETES Act of doubling the budgets for three key science agencies within a decade," the report adds.  

The OECD also urges federal policymakers to build on the America Invents Act "by ensuring that the legal standards for granting injunctive relief and damages awards for patent infringement reflect realistic business practices and the relative contributions of patented components of complex products."

"Further reforms in the patent law should promote innovation by limiting the possibility to extract disproportionate licensing fees for minor patented functions within complex products," the report says.

Education Reform

Noting that attainment in the fields of science, technology, engineering and mathematics "is essential to provide workers with the skills necessary to become more productive and to adapt to technological change," the OECD asserts that the United States need to reform its education system.

"Attainment in tertiary education stagnated over the past three decades while it grew significantly in almost every other OECD country," the organization says. "Today, 22 out of 30 OECD countries have more graduates in science and engineering among the 25- to 34-year-old workers than the United States."

The report recommends increasing the number of graduates in STEM subjects by giving more students access to high-quality elementary and secondary education.

"States relying heavily on local property taxes to fund public elementary and secondary schools should move to state-level funding to increase the resources and quality of teachers available to socially-disadvantaged students," the report says.

The OECD report makes recommendations in a number of other areas, including how to sustain the economic recovery and how to promote job creation and reduce income equality.

On the job front, the organization suggests developing more return-to-work programs that would "mitigate the risk of long-term unemployment becoming structural."

The OECD calls for immediate implementation of job-training and re-employment programs proposed in the Obama administration's FY 2013 budget.

"Education and training are key to improving skills, reducing mismatches and addressing the problem of slow wage growth," the report says.

"Programs such as 'Race to the Top' and measures to strengthen community colleges are steps in the right direction, but more could be done, such as reducing financial and other barriers to tertiary education and providing vocational training opportunities in secondary school."

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