"Just read this past weekend's interview by Wall Street Journal editor Alan Murray with United Technologies CEO Louis Chenevert, Applied Materials Executive Vice President Mark Pinto, and Suntech Power CEO Zhengrong Shi. These business leaders are unanimous in the view that China is taking innovative leadership in the very green technologies the White House is targeting. In particular, Pinto, who has moved Applied Materials' Chief Technology Office, its R&D center, and most of its solar oriented production to China, emphasizes that the critical factor in this trend is not R&D or innovation per se, but large scale production. Says he: "where you've got the manufacturing scale -- that's such a big factor in improving the technology - scale plus technology is going to win. Where would you invest? The place where they're investing in the scale." Adds Dr. Shi, "Manufacturing also requires innovation. China is actually in the situation where they have to consider the future of manufacturing technology. So I think there's a lot of innovation in manufacturing." In other words, innovation isn't the mana from heaven that economists have long assumed it to be. It doesn't arise from some unique American gene. Rather than innovation leading to production, it is production that leads to innovation. And it is precisely here that the United States seems to be suffering from gene deficiencies. In an important new study, Manufacturers Alliance adviser Ernest Preeg points out that U.S. manufactured exports as a share of global exports fell in the decade of 2000-2010 from 19 to 13 percent while China's rose from 7 to 20 percent."
http://prestowitz.foreignpolicy.com/posts/2011/03/07/production_not_innovation_will_win_the_future