“For the first time in nearly a century, we see leadership in basic research and the economic ability to pursue the benefits of that research — to create and market products based on research — in more than one place on the planet.” – Nils Newman

This quote comes from an interesting story published on ScienceDaily. Nils Newman is a co-author of a study done at the Georgia Institute of Technology, which ranked 33 nations relative to one and other on two fronts: technology standing and inputs. Technology standing looks at each nation’s success in exporting high technology products, while inputs are the criteria that help build future technological standing: national orientation towards technological competitiveness, socioeconomic infrastructure, technological infrastructure, and productive capacity.

Here’s a graphic showing how a few key countries have been doing since 1993 (I know it’s a little fuzzy, but technology standing is on the y axis, and inputs on the x… too see it more clearly follow the ScienceDaily link above):

Now a few things obviously jump out about this chart. For starters, China has absolutely soared in terms of the technology standing (now basically tied with the U.S), and is rapidly moving up the charts in terms of inputs. Japan has had a big drop in both measures, and the angle of their descent appears remarkably similar to the angle of China’s rise. The U.S., interestingly enough, has seen their technological standing fall, but their inputs score rise – the latter of which points towards a promising future.

However, there is something troubling here. It appears that by definition, the inputs score is effectively supposed to predict what will lead to future technological standing. It’s fairly obvious that it hasn’t done a good job in the last 15 years or so, as the higher a country’s input score was the bigger the fall in technology standing. So what could be going on?

I have a hunch it has something to do with off-shore production. What I mean by this is that many of the companies from the leading “input” nations shifted their actual production to China, allowing the country to capture the lion’s share of the global technology reading gains. In turn, if this process ever reverses, it will be interesting to see if the country has truly developed strong enough “inputs” to maintain its high rankings.

As for the U.S., the article ends with a relatively pessimistic quote from Newman on the prospects for the U.S.:

“It’s like being 40 years old and playing basketball against a competitor who’s only 12 years old — but is already at your height. You are a little better right now and have more experience, but you’re not going to squeeze much more performance out. The future clearly doesn’t look good for the United States.”

Now predicting the fall of the U.S. is becoming quite popular right now, with the short-term sub-prime crisis coupled with a potentially huge recession causing much angst. However, I would personally be loathe to predict against the U.S. maintaining it’s leadership in the technology area. In fact, and maybe it’s just my contrarian ways, but I’d bet China will hit a big roadblock here much sooner than the U.S…