GA Trade July-Aug 2014 - page 15

existing industries with new ideas
and technologies. For example, look
at howmuch of a new BMW is based
on innovation in information and
communication technologies, and
howmany of the best German
software programmers go towork for
Mercedes-Benz. The U.S., by con-
trast, lets old industries die instead of
renewing themwith new technolo-
gies and innovation. As a result, we
don’t have healthy cohesive indus-
tries; we have isolated silos. An
American PhD student in computer
science never even thinks about a
career in the automobile industry—
or, for that matter, other manufactur-
ing-related fields.
Germany has a network of public
institutions that help companies
recombine and improve ideas. In
other words, innovation doesn’t end
with invention. The Fraunhofer
Institutes, partially supported by the
government, move radical ideas into
the marketplace in novel ways. They
close the gap between research and
the daily grind of small andmedi-
um-size enterprises. Bell Labs used
to do this in the United States for
telecommunications, but Fraunhofer
now does this on amuch larger
scale across Germany’s entire
industrial sector.
Germany’s workforce is constantly
trained, enabling it to use themost
radical innovations in themost
diverse and creative ways to produce
and improve products and services
that customers want to buy for
higher prices. If youwere to fill your
kitchen and garage with the best
products that your budget could
afford, howmuch of this space
would be filledwithGerman
products such asMiele, Bosch, BMW,
Germany actively coordinates these
factors, creating a virtuous cycle
among them. Germany innovates in
order to empower workers and
improve their productivity; the U.S.
focuses on technologies that reduce
or eliminate the need to hire those
peskywage-seeking human beings.
Germany’s innovations create and
sustain good jobs across the spectrum
of workers’ educational attainment;
American innovation, at best, creates
jobs at Amazon’s fulfillment centers
and inApple stores.
It’s high time for the U.S. to revamp
its innovation system. Americans
need to recognize that the purpose of
innovation isn’t to produce wildly
popular internet services. It’s to
sustain productivity and employment
growth in order to ensure real
income expansion. We need new
policies that allowAmerican
innovation to be scaled up and
produced onAmerican soil, by
Americanworkers. Changes need to
happen in howwe transfer radical
inventions from the lab to the
marketplace, via a set of public-
private institutions that do for
Americawhat the Fraunhofer centers
do for Germany. We need to think
about skills training as a lifelong
endeavor, withworkers across the
spectrum of education being taught
how to use new technologies to
increase productivity.
Economic growth doesn’t happen at
themoment of invention. Only
innovation policies that target the
complete innovation cycle will
succeed in creating economic growth
that enhances the welfare of all
citizens. There is nothing a German
can do that a properly trained and
incentivizedAmerican cannot.
DanBreznitz holds theMunk Chair of
Innovation Studies and is a codirector
of the Innovation Policy Lab at the
Munk School of Global Affairs at the
University of Toronto. His latest book
The ThirdGlobalization: Can
WealthyNationsStayRich in the
MuchGerman innovation involves infusing
old products and processes with new ideas
and capabilities or recombining elements of
old, stagnant sectors into new, vibrant ones.
About theAuthor
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