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TECHNOLOGY–Competition Grows for U.S. Tech Dominance

By Staff Writer

Besides driving the economy here at home, the U.S. high-tech industry is also making significant contributions abroad in an attempt to keep its tech eminence.

As America strives to stay on top of the tech world, countries such as Iceland, the Netherlands and Singapore are also breathing new life into their economies by helping to build the global digital bridge.

And while the United States has a competitive lead in high-tech manufacturing, the nation has strong competition from Japan, Canada, the European Nordic countries, Israel and Australia.

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Those are the findings of a recent report released by the American Electronics Association and the Nasdaq Stock Market.

The report, “Cybernation 2.0: The U.S. High-Tech Industry and World Markets,” reveals those countries that have successfully established a thriving tech industry have a vibrant venture capital market, access to skilled labor, significant R & D; expenditures, and high Internet, computer and phone usage.

Singapore, with only 3 million consumers, is one of the most competitive and open markets in the world. The country, which has the highest percentage of 24-year-olds with technical degrees in Asia, has the strongest venture capital market in the Asia-

Pacific market. Singapore ranks second to Australia in Internet use per capita within the Asia-Pacific region.

Singapore’s tech status has attracted significant investments from the U.S. tech industry. Singapore ranks second worldwide in U.S. technology manufacturing investment overseas at $7.5 billion, behind the United Kingdom. Japan ranks third.

U.S. tech manufacturers aren’t expanding into countries like Singapore just for the cheap labor, said Michaela Platzer, vice president of research and industry trends for the AEA in Washington, D.C., and senior writer and researcher for the Cybernation report.

“Contrary to what people think, U.S. (tech) manufacturers do not invest primarily in low wage, underprivileged nations,” Platzer said.

She said while manufacturers such as Sony Electronics Inc. and Hewlett-Packard Co. have manufacturing facilities in Mexico, there’s a limit to how much a company is going to invest in such low-wage countries because most of the workers lack high-level tech skills.

“What do you get by having a manufacturing plant in the United Kingdom?” she said. “You get access to the larger European Union. We’re not selling blue jeans. We’re selling sophisticated products. We need a certain market base in order to sell,” Platzer said.

Top Tech Markets

According to the Cybernation report, the United States sold $181 billion in technology products to more than 171 countries last year. Top markets for U.S. high-tech exports in 1999 were Canada, Mexico, Japan, the United Kingdom and South Korea. The top markets for U.S. high-technology exports in 1999 were Canada, Mexico, Japan, the United Kingdom and South Korea.

The fastest growing markets between 1993 and 1999 , among countries where the U.S. exports at least $1 billion in electronics , were the Philippines, South Korea, Ireland, Brazil and Mexico.

San Diego companies are well-positioned to further tap into these markets, said Kevin Carroll, executive director of the local AEA chapter.

“If you look at this insatiable need for technology, like for wireless, we’re providing the infrastructure for the world,” Carroll said, pointing to San Diego-based companies such as Qualcomm, Inc., Leap Wireless, Silicon Wave and ViaSat.

“San Diego is already viewed as an international city. That, coupled with the existing infrastructure, seems to position San Diego very, very well for the future,” he added.

In staking their claim in other countries, U.S. high-tech companies are looking for entrepreneur-friendly markets, such as the Netherlands, Platzer said.

Changing Economies

“The Netherlands, Sweden, Finland , these are very social welfare economies,” she said. “Things weren’t going well for them in the late 1980s. They said, ‘We can’t continue to do this.’ Finland now has 12 competing telecom companies.

“What they’ve done is create a very competitive business environment. They have dismantled some of the old rules.”

In 1998, U.S.-based high-tech manufacturers invested $2.9 billion in the Netherlands. That’s compared to $3.1 billion in Italy and $3.4 billion in Malaysia.

While these countries offer U.S. high-tech firms a chance to position themselves in the global marketplace, they also need to continue to pay attention to what’s happening at home, Platzer said. She pointed to critically needed education reform in the United States.

She said American students should rank No. 1 in science and math in the world; instead, they rank 17th in math and 21st in science.

“A company doesn’t want to have to teach people how to read,” Platzer said. “You want to be able to teach them how to be a C++ programmer or something else to build their skills.”

She said American students should also excel in English.

“We need people who can think, people who have the math skills and the English skills. You constantly have to upgrade your skills.

“Standing still is not an option. America is doing very, very well right now. The question is how do we continue that course?”

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