ULI conference: US remains role model for innovation

The US will continue to dominate the world in the area of innovation, despite economic advances by China and other emerging powerhouses, keynote speaker Kjell Nordstrom told the ULI trends conference in Amsterdam last week. Speaking on the theme 'Can Europe remain competitive in the new Global Economy?', he said the US had a 'remarkable ability' to attract talent, nurture it and subsequently export it. 'Everyone wants to go to Harvard or Stanford University; it is not for nothing that Stanford is called the Nobel Prize factory.'

Nordstrom, who is professor of economics at the Stockholm School of Economics and co-author of two bestsellers 'Funky Business' and 'Karaoke Capitalism', said that this magnet function was helped by easy integration into US society and an open and democratic societal structure. 'Anyone, whatever their ethnic background, can become an American within two-four years. The same cannot be said of most countries in Europe where immigrants do not become fully assimilated even after years of living there,' he noted.

The US ability to capture and nurture talent meant it would continue to exert influence in all fields of research and innovation. Nordstrom said that ultimately, this meant that the US owned the critical means of production. 'You can't make people creative or innovative; the only thing you can do as a country or company is bring people that are good on board.'

While Europe was 'not good' at immigration and integration, it had a shared advantage with the US over other economic heavyweights such as China, Russia and Middle Eastern countries, Nordstrom said. 'The one competitive advantage we have is that we are open, liberal, democratic societies with a free press. The Chinese can do everything - produce cars, mobile phones and huge infrastructure projects. But they lack an open, democratic society and it is only open and democratic societies that can handle the forces of creative destruction, or innovation.'

Pointing to European companies such as Finnish mobile phone maker Nokia, once a high-tech pioneer and darling of technology stock investors but now struggling to keep up with the competition, Nordstrom said companies had to re-invent themselves continuously in order to stay afloat. 'In the current cycle, companies have to face up to the fact that they have to innovate continuously, and that those innovations will not last for long.'

One side-effect of the huge advances in globalisation and information technology over the past 65 years, he said, was that companies copied each other on a large scale. 'But the capitalist machine rewards originality, not sameness,' he warned. 'Sameness drives out all the profits; we need to build institutions that can continuously create.'

On the subject of cities, Nordstrom said their increasing political influence would lead to the rebirth of the city state, replacing the outmoded nation state concept. He predicted that cities like London, Paris and Moscow would 'decouple' from the rest of their countries in due course, creating their own institutions and forming their own international links. 'Cities create so much value, they control the value added,' he said. Increased urbanisation would also boost their position, he said, pointing to statistics which predict that 60-65% of the world population will be living in urban areas by 2020, rising to 75-80% by 2040. 'We are facing the complete and final breakdown of the nation state,' he said.