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U.S. Fears Losing Innovation Edge Over China. New Data Show Why

U.S. Fears Losing Innovation Edge Over China. New Data Shows Why

(Bloomberg) --

America’s fear of losing its technological advantage over China has helped drive the trade war between the world’s two biggest economies, and Bloomberg’s latest global innovation index shows the concern isn’t misplaced: The gap is narrower than ever.

The U.S. fell one place to ninth in the list of the world’s most innovative economies, continuing its gradual descent after getting the top ranking when the index was first published in 2013. China was languishing in 29th place back then -- but it’s been rising ever since, and advanced one more spot to 15th this year.

U.S. Fears Losing Innovation Edge Over China. New Data Show Why

There were bright spots in the index for America, which remains the world leader in both patent activity and high-tech density.

But in education, the U.S. dropped four places to 47th. Data from the OECD Program for International Student Assessment, or PISA, show that American scores haven’t improved over the past decade -- or for 30 years in the case of low-performing students. Only 8% of U.S. students scored at the highest level in mathematics, compared with 44% in the coastal areas of China.

The U.S. also has lower graduation rates, and a smaller share of graduates obtaining science and engineering degrees, than most of its Group of Seven peers. China, meanwhile, has doubled the number of professionals (including PhD students) engaged in research and development to 4 million over the past decade -- 10 times the increase achieved in the U.S.

While President Donald Trump and many U.S. lawmakers accuse China of stealing intellectual copyright in order to close the tech gap, the numbers suggest that it’s happening in other ways too.

“Without investment in education and research, trade tariffs aren’t going to maintain America’s economic edge,” said Tom Orlik, chief economist at Bloomberg Economics.

The Bloomberg Innovation Index scores countries on a 0-100 scale, using dozens of criteria under seven categories that include research and development spending, manufacturing capability and concentration of high-tech public companies.

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net;Wei Lu in New York at wlu30@bloomberg.net

To contact the editors responsible for this story: Sarah McGregor at smcgregor5@bloomberg.net, Ben Holland

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