USA: Companies in Advanced Economics Face a New Competitive Challenge

"Fast-growing economies in emerging markets are outpacing more developed countries with respect to investment in innovation," according to Encouraging and Protecting Innovation — a new report from PricewaterhouseCoopers (PwC). A PwC researcher compiled the report utilising survey data collected from over 200 global executives who attended the annual meeting of The Wall Street Journal CEO Council. The report points out that Asia's emerging markets, mostly due to China, already invest more on R&D than the EU and Japan, respectively.

In the near future, respondents believe U.S. companies and companies from other advanced economies will face a competitive challenge from aggressive, cash-rich firms from emerging economies due to sustained commitments to national R&D spending. Twenty percent of global executives also report finding China and India as the most attractive countries for their businesses to invest in innovation.

Respondents also were asked to select the biggest threat to the U.S. as the global leader of innovation. The results include:

• Nearly 40 percent of respondents cite a lack of adequate intellectual property protections in developing countries as biggest threat; and,
• Ineffective science, technology, engineering and mathematics (STEM education) systems and policies are the second biggest threat (20 percent of respondents).

Respondents also cite immigration policies (15 percent), a prohibitory national regulation framework (15 percent) and a high corporate tax rate (13 percent) as factors that impede innovation by U.S. companies. The Wall Street Journal CEO Council commissioned the report.

References / further information:

• Read the report on Encouraging and Protecting Innovation of PwC