Production, jobs, economic benefits from U.S. research and development are ending up overseas (LAT)

[mike r]

http://www.latimes.com/business/la-fi-economy-rd-20100913,0,7883731.story

U.S. hard-pressed to stem domestic R&D losses
The nation's ability to turn ideas into products and profits at home has been eroded by deep manufacturing cuts and policies that result in others reaping the benefits.
By Don Lee, Los Angeles Times

President Obama's proposal to boost the research tax credit for businesses is widely seen as necessary to bolster American competitiveness in the global economy. But even if the $100-billion plan is approved, it won't begin to address the fundamental question of how to turn that research and new technology into jobs and renewed prosperity for Americans.

Over the last two decades, U.S. scientists and engineers have discovered or pioneered the science behind one blockbuster product after another — from flat-panel screens and robotics to the lithium batteries that run next-generation power tools and electric cars. Yet in almost every case, production, jobs and most of the economic benefits that sprang from those breakthroughs have ended up overseas...

New reports show that during the recession American companies ramped up investment overseas for plants and new hires, as well as research and development — even as they cut back domestically. Foreign subsidiaries of U.S. corporations increased their spending on research and development by more than 7% in 2008 from the previous year, pushing the total to nearly $37 billion. But these same multinational companies sliced R&D expenditures in the U.S. that year 2.2% to $199 billion, Commerce Department data showed...

For decades, Washington has taken a largely hands-off, or laissez faire, approach, sometimes even adopting tax and other policies that critics said actively encourage the movement of manufacturing and other business activity overseas. By contrast, export giants such as Germany, Japan and South Korea have embraced government policies — and even pressure tactics — that push businesses to maintain operations at home. "Other countries do a much better job," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan Washington think tank. "We're pretty much the only country with the illusion that we're not in competition with the rest of the world."