Americans Take Home the Nobel Prize in Economics, Again

On Monday, October 15^th the Royal Swedish Academy of Sciences announced the winners of final Nobel Prize of the year, Alvin E. Roth of Harvard University and Lloyd Shapley of UCLA. The two economists were honored for their complementary work on “market design” and “matching theory”, theories which have practical uses in matching everything from students and schools to kidneys and transplant patients. The telephone call alerting the winners was “very unexpected, not unimaginable” for Roth, a professor currently teaching at Stanford who still taught class the morning after the Prize was announced.

Dubbed a form of “economic engineering” by the committee, these celebrated theories are derived from a free market approach which allows demand and supply to bring consumers and producers together to begin the stable allocation process for a good. This work is expanded upon by the professors by introducing market designs mimicking the free market into real-world situations. In fact, their theories are components in software programs that have been used as models for school choice process in New Orleans, Boston, and New York. Hospitals are also employing their matching theory in matching incompatible kidney donors with compatible pairs to form a market swap that benefits both parties. This intuitive system is incredibly useful in streamlining and simplifying the matching process into an algorithm and has the potential to aid in virtually any situation where a pair is needed.

Roth and Shapley mark the second year in a row of American winners of this prize.  2011 awardees Thomas J. Sargent of New York University and Christopher A. Sims of Princeton University were honored for their research on a cause-and-effect relationship between government and economic policy. Certainly, both theories have practical implications for American life and offer important insights into economic choices made every day in the lives of American citizens. Perhaps these winnings will even encourage more American students to pursue studies in STEM education and the sciences.  In the words of Roth, “I’m sure when I go to the class this morning my students will pay more attention.”

Posted by Sophia Higgins

Sources: Wall Street Journal, Reuters, CNN, Nobel Prize.org

Photo source: Nobel-Prize @ Mediocre2010’s photostream courtesy of Flickr user Mediocre2010

Apple: the Most Valuable Company of all Time

Steve Jobs would be proud to see where his company is today. The one year anniversary of the cofounder’s passing was greeted with remembrance and cause for celebration; Apple has recently become the most valuable company of all time. Reaching this height is not only an apt tribute to Jobs’ lifetime of innovation but also to his building of an extraordinarily successful company that has not only survived since his passing but exceeded expectations. With stock prices rising from $500 to over $700 a share earlier this year, shares up nearly 80 percent, and the much anticipated release of the iPhone 5 under their belt, Apple has definitely had a stellar year.

Apple came out victorious in other ways as well. The company has experienced impressive success under the reins of former COO-turned-CEO Tom Cook, beating out Microsoft who previously held the MVP title with $618.09 billion in 1999 market value. After winning a high profile suit against competitor Samsung, Apple has successfully defended its turf. From this exclusive creativity comes one of Apple’s newest ideas, the “iPad mini”, which is currently in the production stage. Ultimately, Apple is now peerless in its market. As of the morning of October 7^th, Apple is valued at $652.59 on NASDAQ.

In spite of the general positivity of the year, Apple has faced several obstacles. The infamous Maps app debacle led many to question if, had Steve Jobs still been in charge, this poor-made product would have been released. This leads to further questions of the company’s long term longevity without charismatic Steve Jobs at the helm. Will the ideas continue to flow, the execution remain world-class, and the signature sleekness of an Apple product stay strong for the company? Or will post-Jobs era technologies become diluted away from the Apple dream? CEO Tim Cook argues for the former in his letter commemorating his predecessor’s passing:

“No company has ever inspired such creativity or set such high standards for itself. Our values originated from Steve and his spirit will forever be the foundation of Apple. We share the great privilege and responsibility of carrying his legacy into the future.” –Tim Cook

While we can’t predict the future of the market (even with Apple’s amazing products) one thing is certain: Apple is the world’s most valuable company in history, and it has set a very high bar for peers to match.

Posted by Sophia Higgins

Sources: CNN, Forbes, Reuters, Apple Intelligence

Photo credit: Apple 2 Apple @ Lori Greig’s photostream courtesy of Flickr user Lori Greig

You are invited to A Debate: Is the American Economy in Decline?

You are invited to: 

The Program on America and the Global Economy (PAGE) presents:

A Debate:

Is the American Economy in Decline?

Thursday, October 18, 2012

3:00 – 4:30 p.m.

5^th floor Conference Room, Woodrow Wilson Center

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Debating the Affirmative:

Robert Atkinson, President, ITIF; Author, Innovation Economics: The Race for Global Advantage

Ed Luce, Financial Times Washington Bureau Chief; Author, Time to Start Thinking

Debating the Negative:

Dan Gross, Daily Beast/Newsweek Global Finance Editor; Author, Better, Stronger, Faster: The Myth of American Decline . . . and the Rise of a New Economy

Jim Pethokoukis, Columnist-blogger, American Enterprise Institute

 

Moderator:

Kent Hughes, Director, Program on America and the Global Economy

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To RSVP or watch the live broadcast click here

The Innovation Frontier No Longer Ends at Silicon Valley: Forbes 500 Inc. Companies Come from all over the United States

Forbes is famous for its annual publications ranking the private sector by a variety of means- revenue, innovation, and growth among them. The lists themselves are fascinating, but even more interesting is looking into the details that explain why some companies manage to top the list and others do not make the final cut. An equally interesting question is that of where these companies come from; what is their geographic location and how does that factor into their ranking? Are the most successful companies grouped together in clusters like Silicon Valley, thriving in big cities Boston, or incorporating in business-friendly Delaware? Do the same geographic areas claim a significant portion of the list each year?

The Ewing Marion Kauffman Foundation has conducted research to answer these questions in a work entitled “The Ascent of America’s High-Growth Companies”. This study demonstrates significant geographical diversity in Forbes’ fastest-growing privately-held companies in terms of revenue between 1982 and 2010. The research “reveals that high numbers of fast-growing firms are concentrated in unexpected regions and industrial sectors”. Conclusively, this interactive data map  allows the viewer to visually compare company density by location and witness the overall the geographic diversity.

Kauffman Foundation researchers Yasuyuki Motoyama and Jared Konczal have discussed some of their surprising findings from the study. First is that of all the large metropolitan areas, Washington, D.C. has the “highest concentration of Inc. firms, both in absolute number and per capita (normalized by population)” demonstrating the growth of a strong government services cluster in the last few decades. Second, typical innovation hotspots are usurped by clusters of companies in areas such as Salt Lake City, Utah, Indianapolis, Indiana, Buffalo, New York, and Louisville, Kentucky. Lastly, the researchers found that though many variables such as patents per capita, access to venture capital investments, and ivy league-level universities significantly influence the placement of innovation centers in the United States, only one relationship matters for the largest-growing firms— having a highly-skilled labor force nearby.

The Kauffman Foundation’s research ends at 2010, but the 2012 Forbes list is out. In an ever-changing economy like the United States companies are always adapting to stay efficient and relevant for the consumer, so the geographical densities are likely different but following the same trend of the last thirty years. It appears that Americans have crossed another frontier; entrepreneurs no longer have to grow their businesses in Silicon Valley, but have the resources to create revenue from anywhere. In a world increasingly without borders, innovation and business seem to be able to grow everywhere.

Posted by: Sophia Higgins

Sources: Forbes, The Ewing Marion Kauffman Foundation, Huffington Post

Fortune Brainstorm TECH 2011 @ Fortune Live Media courtesy of Flickr user Fortune Live Media

Techonomy Conference 2012: Objectives of Technology-Driven Economic Revitalization

On Wednesday, September 12^th business leaders, political figures, and technology experts came together for the annual Techonomy Conference in Detroit. Hosted by the Detroit Economic Club, the conference’s agenda focused on the role of technology as a vital component of achieving social progress and economic growth.  This single day program is especially committed to the issues of “reigniting U.S. competitiveness and economic growth, creating jobs, and revitalizing cities in a technologized age”. Featured speakers included Grady Burnett, the Vice President of Facebook’s Global Market Solutions, James Dougherty, an Adjunct Senior Fellow for Business and Foreign Policy on the Council of Foreign Relations, and Justin Fox, the Editorial Director of the Harvard Business Review. They addressed the crowd on topics ranging from challenges in the era of globalization to the democratization of finance and product development to the future of manufacturing and its impact on employment. Audience members were also greeted by the founder of Techonomy, David Kirkpatrick, and treated to speeches on individual entrepreneurial development and other related topics.

The conference took a local look at Michigan and Detroit’s economic struggles for revitalization and at the challenges faced auto-mobile industry. Described as the Silicon Valley of an “earlier era”, Detroit is said to represent the larger issues facing American cities, including adapting to changes in education, employment, and infrastructure brought on by an increasingly globalized market society. Some have questioned the conference’s location of Detroit due to current economic struggles. Techonomy’s founder sends a different message, citing Detroit’s troubles as emblematic of cities that have missed the opportunities of technology in the past but have the potential to resolve these issues. Even a recently hurting automobile industry, a defining characteristic of Detroit, stands to make substantial gains from strengthening its tech culture of efficiency and educational achievement.

What were the goals and expectations of Techonomy? The event sought to utilize the revitalization of industry through technological advances, entrepreneurship, and innovation as major strategies for economic recovery. A focus on the increasing globalization of business and industry practices seemed also to be an objective of the conference. Intent on keeping America pushing the technological envelope, speakers discussed the future of expanding innovation and inspiring competitive growth. Complementarily, lecturers represented a diverse background of national industry and intellectual leadership, to address the concern of declining US competitiveness in detail and tackle the issue from unique viewpoints.

What can the public expect to come from this meeting of multi-disciplinary minds? Perhaps policy-makers will be influenced by the incredible support from the business community for this technology initiative as a means of creating jobs and stimulating urban development. Another possible outcome is a renewed emphasis on education for current and future generations to establish a more highly-skilled workforce with improved techno-literacy. Finally, perhaps Americans will see more pressure for regulatory reform easing start-up business restrictions. Ultimately, conference publicity should push technology to the forefront of economic recovery initiatives as a tool for improving US competitiveness and improving urgent urban issues to speed along city development.

Forbes highlights examples of innovative entrepreneurs in the Detroit area who exemplify these aims and serve as best-practice models for aspiring start-up companies. With the help of the Techonomy and its conference speakers, the American public may be able to look forward to more success stories like these.

Posted by: Sophia Higgins

Sources: Techonomy, Forbes, CNBC

Photo Credit: 2010_08_05_techonomy_105 @ Techonomy courtesy of Flickr user dserals

 

What the Apple-Samsung Case May Mean for Innovation & Competitiveness

In a case that has garnered much attention by the media, Apple claimed that Samsung had infringed on several patents on the iPhone and iPad.The San Jose jury unanimously agreed with Apple in its verdict. However, a similar case in South Korea found that Samsung infringed only one Apple patent while Apple infringed two Samsung patents.

More important than the $1 billion that Samsung must pay to Apple for its infringements (which is a mere 1.5 percent of Samsung’s annual revenue) is the message Apple conveyed to companies with regard to basic design elements in electronic devices.    The case of Apple versus Samsung is just the first of several claims by Apple of patent infringements by other companies.  Most threatening is the message sent to device makers who use Google’s Android operating system.  Apple has surprisingly chosen not to sue Google likely because it is much easier to make a case for monetary damage against companies like Samsung that sell hardware to consumers versus a company like Google, which doesn’t charge device makers for its software.

The impact this case will have on future competition is yet to be seen, as some lawyers argue that Apple isn’t the only company that can come up with innovative designs-and its court victory could encourage more innovation by competitors.  However, others argue that this verdict could stifle innovation as it may force device makers to slow or abandon product development in fear of breaching Apple’s intellectual property resulting in less smartphones and tablets on the market and higher production costs and prices for consumers.

Samsung stated, “It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners or technology that is being improved every day by Samsung and other companies.”

Perhaps this case, which is one of the largest patent damages verdict on record, will encourage others to, “think outside the box” (no pun intended) and develop more unique designs in the future.

 

Posted by: Elizabeth White

Sources: The NY Times, The Wall Street Journal & CIO Journal

Photo Credit: apple-samsung Courtesy of Flickr user diTii

You Are Invited: Universities, High-skilled Immigration, and Regulatory Reform: Implications for America’s Economic Future

The Program on America and the Global Economy (PAGE) Presents:

 

Universities, High-skilled Immigration, and Regulatory Reform: Implications for America’s Economic Future

 

Friday, July 13, 2012

12:00 – 1:15 p.m.

B-369 Rayburn House Office Building

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Speakers:

 Joseph Kennedy, Former Chief Economist, US Department of Commerce

Karthick Ramakrishnan, Associate Professor of Political Science, University of California Riverside and Woodrow Wilson Center Fellow

 Jim Woodell, Director of Innovation and Technology Policy, Association of Public and Land-Grant Universities

 Kent Hughes, Director, Program on America and the Global Economy

 ________________________________________________________________________

 A panel of experts will discuss key aspects of the Start-Up Act with a special focus on the provisions designed to accelerate the commercialization of university research, the regulating of start-up companies, and the broadening of opportunities for temporary immigrants with post-graduate degrees in science, technology, engineering, and mathematics (STEM) to eventually quality for permanent residency visas.

________________________________________________________________________

Please RSVP acceptances only to page@wilsoncenter.org

 

 

Posted by: PAGE Staff

You Are Invited: The Start-Up Act 2.0 and American Innovation

The Program on America and the Global Economy Presents:

 The Start-Up Act 2.0 and American Innovation

 Thursday, June 28, 2012

9:00 – 11:30 a.m.

Joseph and Claire Flom Auditorium, 6^th Floor, Woodrow Wilson Center

 ________________________________________________________________________        

 Keynote:

 Senator Chris Coons, Delaware

 Panelists:

 Michael Waring, Executive Director, Federal Relations, The University of Michigan

 Joseph Kennedy, Former Chief Economist, U.S. Department of Commerce

 Peter Mueller, Director, Government Relations, Intel Corporation

 Moderator:

 Kent Hughes, Director, Program on America and the Global Economy

 ________________________________________________________________________

 Senator Chris Coons is part of a bipartisan group of Senators that recently introduced the Startup Act 2.0 in the Senate.  He will provide a keynote address on the Act followed by a panel discussion that will focus on key aspects of the Start-Up Act 2.0.  There will be a special focus on the provisions designed to accelerate the commercialization of university research, the broadening of opportunities for temporary immigrants with post-graduate degrees in science, technology, engineering, and mathematics (STEM) for visas for permanent residency, and the proposal to assess the impact of regulations.

________________________________________________________________________

 

Please RSVP acceptances only to page@wilsoncenter.org

Directions to the Wilson Center: www.wilsoncenter.org/directions

Immigration Lessons From Our Northern Neighbor?

True or False: Canada has a higher foreign-born population, per capita, than the United States?  Surprisingly, it’s true and it speaks to the lessons the U.S. might learn on how to integrate immigrants into their economies.

While the United States has long had the image around the world as the refuge of the “tired, poor, and huddled masses yearning”, its increasingly arcane and complex immigration system is coming under fire as inefficient in a global economy where labor, just as much as capital, is flowing freely across borders.  More business leaders and policymakers are arguing that immigrants, especially those with in demand skills, are needed to fuel economic growth.

Canada has already caught on to this trend and is taking advantage of gaps in the American system.  Look no further than canadavisa.com, where one of the main links is for foreigners in America on a H1-B or temporary work visa and how they can be fast tracked for Canadian immigration.  Canada, of course offers many of the same things to immigrants the U.S. does: a high standard of living, an advanced economy, rule of law, peace and safety.  In addition, Canada has made a concerted effort to use immigration to directly fill gaps in its labor force, something the US has yet to do.  To determine who is granted a permanent visa, Canada has a simple point system that awards points for things like level of education, occupational skills, language ability, and others factors relevant to productivity.  Only 22% of its immigration was for family reasons (i.e. reuniting mothers with children, brothers with sisters, etc.) while about two thirds of all permanent visas were granted for economic reasons.  In the U.S., the inverse is true: Only 13% of green cards last year were doled out for economic reasons, while two-thirds were for family reunions.

The StartUp Act 2.0, currently being deliberated in both houses of Congress, contains provisions that shift the immigration paradigm in the U.S. towards a more economic view.  The Act would create a new visa for immigrants who graduate from U.S. universities with a master’s degree or doctorate in STEM fields and also create an entrepreneur’s visa to enable immigrants with capital to start businesses and create jobs in the U,S,, rather than returning home to do it.

The U.S. faces both demographic changes (aging and shrinking labor force) and economic forces (e.g. a shortage of STEM workers) that can be solved by a smart immigration policy.  As of now, the US is educating and accepting intelligent and hard-working immigrants temporarily, who are then forced to either return home or go to a country like Canada, where they create jobs and contribute to growth.

Posted by: Sean Norris

Sources: CNN, The Christian Science Monitor, The Fort Wayne Journal-Gazette

Photo Credit: Citizenship Ceremony courtesy of flickr user mars_discovery_district

Promoting “Green Growth” in the Development Conversation

Last week, an audience at the Wilson Center heard new recommendations from the World Bank on how to get countries to grow green. Their report, titled Inclusive Green Growth: The Pathway to Sustainable Development, calls on governments to “think green when pursing growth policies which can be inclusive, efficient, affordable, and necessary to sustain economic expansion in the years ahead.” It makes the point that sustainable growth is critical to meeting the needs of developing nations, and that unsustainable growth will lead to greater socio-economic problems if environmental and social considerations are not accounted for.

The World Bank’s “Inclusive Green Growth” model recommends using more than just a nation’s Gross Domestic Product (GDP) to evaluate its economic growth. It requires using “case-by-case analysis” to minimize short-term costs and promotes enacting “well-designed” regulations to encourage private-sector development that still protects the environment. The World Bank explicitly states that “green growth is not anti-growth,” and presents a plan that implements policies which will allow for greater development that is also “greener” development.

The model that the World Bank has developed focuses on three main pillars to achieving sustainable development: economic, social and environmental sustainability. Economic sustainability requires tailoring a country’s sustainable development strategies to specific circumstances. Meanwhile, social and environmental sustainability encourages sound decision-making by stakeholders in the hopes of building better partnerships between the public and private sectors to meet “up-front capital needs with innovative financing tools.” This recent report by the World Bank highlights how environmental and sustainable growth will be the key to generating a more prosperous and sound world economy. The Inclusive Green Growth project is so important because it points out the need to change our attitude and approach international development efforts moving forward.

Click here to view the video from the event.

Posted By: Jonathan Sherman

Sources: The World Bank

Photo Credit: 24 Solar Panels courtesy of Flickr user Michael Coghlan