How will the next generation of American workers be able to help the United States hold on to its spot as the No. 1 economy in the world?
The answer is two-fold: teach the children about intellectual property and teach them well.
“If you look at the global economy right now, the world’s Gross Domestic Product (GDP) is $43 trillion,” says Timothy G. Nash, Ph.D., provost and COO at Northwood University. “The United States in 2005 produced about $12.5 trillion, by far the largest single economy by country.”
Smart Business spoke to Nash about how the country can hold on top its top spot and the role education plays in making it happen.
How strong is the U.S. economy?
The only economic entity that rivaled the U.S. last year was the European Union, which is roughly the same size in terms of GDP. To look at it from a second perspective, the U.S. represents about 29 percent of the world’s GDP and only 4.5 percent of the world’s population. And if you look at per-capita GDP, in the U.S. it is roughly five-and-a-half times the size of the average world GDP.
What is the chief engine of the U. S. economy?
In 2005, the U.S. GDP was broken down like this: 82 percent from services, 6 percent agricultural/mining/construction and between 11 percent and 12 percent manufacturing jobs. A lot of people wonder what happened to manufacturing jobs, which people assumed were a larger percentage than what they really were.
The key driver for a long time has been what we call intellectual capital. These are jobs that are created when you generate patents, copyrights and proprietary products. These, in turn, generate knowledge-based jobs within the economy.
The U.S. holds more than 92 percent of the patents involved in the mapping of the human genome system. Although we are not necessarily the production leaders, the U.S. still holds more than 80 percent of the patents in the automobile industry. And this country also holds more than 80 percent of the medical pharmaceutical patents in the world.
The important thing to understand is that, today, the U.S. is the world’s leader in invention and innovation. As the world economy continues to progress, the average worker needs to drive a more intellectual and knowledge-based economy, one that’s more an imagination- or creativity-driven economy. Therefore, there is a much greater need for people to have a college education and become more highly educated today.
How many people in this country hold college degrees?
A 2004 report by the Dallas Federal Reserve Bank stated that roughly 24 percent of Americans aged 25 years and older have a bachelor’s degree or higher. Another 40 percent have had between one and four years of college but never graduated. The other 38 percent has never been in a college or university at all. That might seem low, but compare it to 1940 when only 4 percent of the American population had a bachelor’s degree or higher. There has been dramatic movement toward a more intellectual and service-oriented economy that can only be driven by a more educated population.
When did the U.S. go from a manufacturing a service economy?
It was about 25 years ago that service-sector wages passed manufacturing wages in terms of average hourly pay. People still think of a service job as one that involves flipping burgers, and it’s not. Service jobs include doctors, lawyers, chemists, accountants, managers, engineers, educators and computer programmers. And that segment of the work force has become the key driver of the economy; it’s strongest and most competitive side.
How does the U.S. remain the center for invention and innovation?
We must continue to educate our population, especially at the collegiate level, where we are revered around the world as having the best university system on the planet. Twenty-eight million high-skilled workers in the U.S. help drive the economy, and of those 28 million people, approximately 8 million come from another country. It was always easy to get students to study in America because the U.S. had freest economy, an open immigration system, and was the safest place in the world due to our military, police and court systems.
Since Sept. 11, it has become more difficult for those students to come to this country and stay after they finish their educations.
TIMOTHY G. NASH, Ph.D., is provost and COO at Northwood University. Reach him at (989) 837-4125 or email@example.com.