By: Doug Kelly, CEO, American Edge Project
American innovation, especially technology innovation, is essential to American economic competitiveness, protecting our national security, and advancing our values at home and abroad.
Innovation doesn’t happen by accident. Though innovation more often focuses on the sole inventor, in reality, most technology innovation emerges from a deliberate and supportive ecosystem that blends talent, capital, incentives, a supportive government policy, and a robust supply chain to supercharge the advancement of new ideas, processes, and inventions.
When this ecosystem is disrupted, short- and long-term innovation can suffer significantly. Two recent items highlight the importance of supply chains to the innovation ecosystem and offer policymakers a warning about other actions that may harm the American innovation ecosystem.
Item #1: Microchip Shortage
The pandemic has exposed numerous supply chain gaps in items of vital interest to America, including microchips. Microchips are essential elements in nearly every aspect of American life. While the U.S. invented the microchip, we allowed the vast majority of the production of those chips to be sent overseas. In fact, the U.S. share of global manufacturing capacity declined from 37 percent in 1990 to just 12 percent today, and nearly 80 percent of chip fabrication is from Asia.
While China is focused on ramping up its own domestic semiconductor manufacturing capabilities, it remains an ongoing threat to the global supply chain of microchips because of its continued hostilities toward Taiwan, which manufactures more than 50 percent of the global chip supply.
To protect innovation now and in the future, U.S. policymakers need to support efforts that significantly increase our capacity for domestic chip production of all types, from the smallest, cutting-edge chips to the larger, more run-of-the-mill chips that power our everyday lives.
Item #2: China’s Purchase Of Cobalt Mines
A recent New York Times investigation exposed how, despite decades of diplomatic and financial investments in Congo, the U.S. “essentially surrendered” control of the largest cobalt mine and reserves in the world to Chinese companies backed by Beijing. With two-thirds of the world’s cobalt found in Congo, decades of American hard work disappeared in just four years.
Cobalt is a rare metal essential to the production of electric car batteries. Every major automobile manufacturer needs cobalt for their future plans as the world begins shifting to cleaner energy and away from fossil fuels. As the Times wrote, “China’s pursuit of Congo’s cobalt wealth is part of a disciplined playbook that has given it an enormous head start over the United States in the race to dominate the electrification of the auto industry, long a key driver of the global economy.” Our policy oversight let a key resource advantage slip away uncontested.
Lessons For Policymakers
These two examples, along with the decline in U.S. manufacturing, should offer policymakers a clear lesson: understand what is strategically important, stay focused on it, and do everything possible to protect and advance it.
American manufacturing muscle won World War II and created a strong middle-class. But then Washington lost focus and passed a series of policies that didn’t protect it. The result: since 1998, America has lost five million manufacturing jobs – a decline of nearly 30 percent. Many of those jobs moved overseas, weakening our country’s capabilities, devastating hundreds of communities across the U.S., and handing an edge to our foreign adversaries.
Similarly, American technology innovation leads the world. It creates an open and free internet and serves as the backbone of our economy and national security. But now Washington lawmakers are considering a series of bills that take direct aim at the heart of U.S. innovation ecosystem. We cannot repeatedly make the same policy mistakes. The stakes are too high. Instead, lawmakers should focus on the strategic importance of U.S. technology innovation, and do everything possible to protect and advance it.