Innovation: Singapore Is No. 1, Well Ahead of the U.S.

Singapore's emphasis on science education and a highly talented workforce puts it well ahead of the U.S. in a new global ranking of innovation leaders

By Bruce Einhorn

ROSLAN RAHMAN/AFP/Getty Images

• View Slide Show

For anyone interested in working in an innovative environment, the U.S. has long been the top destination. The U.S. has the culture to support innovation: the best universities, the biggest venture capital funds, the most supportive financial markets. American companies from Silicon Valley are among the world's most inspiring success stories for entrepreneurs in China china, India india, and other emerging markets, with startup business leaders looking for inspiration to the likes of Hewlett Packard (HPQ), Intel (INTC), Apple (AAPL), and Google (GOOG).

According to a new report by Boston Consulting Group, though, the center of innovation is not in the U.S. BCG, working with the Manufacturing Institute of the Washington-based National Association of Manufacturers, last week released a survey of 110 countries worldwide looking at the ones with government policies and corporate performance most encouraging to innovation. The U.S. came in No. 8, ahead of Japan (No. 9) and Germany (No. 19) but well behind the two leaders, both of them so-called tiger economies from Asia: Singapore at No. 1 and South Korea at No. 2. (For more on how BCG conducted the survey, and the ranking of the top-performing countries, see the accompanying slide show.)

What accounts for the relatively lackluster performance of the U.S. compared to the Asian tigers? James P. Andrew, the leader of BCG's global innovation practice and co-author of the report, says "the quality of the workforce" in the U.S. is the biggest problem that many respondents had. As part of the survey, BCG questioned some 800 high-level executives at U.S. companies, and many put concerns about human resources at the top of the list of concerns. "Are we developing the skills at the high school level?" asks Andrew, explaining the responses researchers often encountered. "Are we making it easy for the best and brightest to study and stay in the U.S.?"

Lagging U.S. Workforce

The questions are becoming more urgent now as debate heats up surrounding U.S. immigration policy. American multinationals have been among the most vocal in calling for the government to allow highly-skilled people from other countries to work in the U.S. However, data released last month showed that many of the 65,000 H-1B visas went to Indian outsourcing companies that have used the program to send low-cost engineers from India to the U.S. With the U.S. economy worsening and the unemployment rate rising, lawmakers in Washington are calling for more restrictions on H-1B visas. That's leading to a potential backlash in India, where anger at the U.S.is growing at the same time a growing number of Asian graduates of U.S. schools are returning to India and China.

The top-performing country in BCG's list, Singapore, has long focused on trying to attract foreign workers—and encourage locals to go abroad in order to boost their skills.