REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - WORLD’S BEST TECHNOLOGIES SHOWCASE - ARLINGTON, TEXAS

WEDNESDAY, MARCH 29, 2006

(As Prepared for Delivery)

Introduction by Arjun Sanda, Office of Research and Technology Transfer, University of Texas System

Thank you, Arjun (AHR-joon) for that kind introduction, and my thanks to

Wes Jurey of the Arlington Chamber of Commerce and the Governor of the great state of Texas, Rick Perry, for the invitation to be here today.

It’s great to be back in Texas. Not only is Texas one of my favorite places, it is home to some of my favorite people. Texas is the home of our President, George W. Bush, and I am immensely proud to serve President Bush at this unique moment in American history.

Texas is also the home of Don Evans, the former Secretary of Commerce, and I was honored to serve in the Commerce Department under his stewardship. And of course, David Sampson, the current Deputy Secretary of Commerce, and the man I followed into the position of Assistant Secretary, hails from right here in the Metroplex. David has been a tremendous friend and is doing a fabulous job for the President and Commerce Secretary Carlos Gutierrez. David knows that I am here today, and wishes all his Texas friends the very best.

On behalf of President Bush and Secretary Gutierrez, it is my pleasure to be in Texas today to discuss American innovation and competitiveness.

This is a conference focused on the role of technology, and how technology is changing our lives and our economy. There are technologies being developed in our universities and Federal laboratories today that will have future applications for curing illnesses, making our nation safer, growing our prosperity to new levels, and for purposes that are currently beyond our imagination.

In the future, we’ll wonder how we ever lived without these technologies – just as like today we muse about our ability to “get by” in the good old days before cell phones, Blackberries, the Internet and I-Pods. But for new applications to make it beyond the imagination stage, we have to build successful linkages to nurture entrepreneurial startups and promote innovative activity in high-tech businesses. This event is about creating those linkages, and I congratulate you for the passion you bring to the challenge of defining the future.

As we meet here today, we have good reason to be optimistic about the business environment in which the companies of tomorrow are being formed. Our economy is strong, and it is gaining steam.

Businesses are thriving, investing, and hiring. The economy has created over 2 million jobs in the last year, and nearly 5 million since May 2003 – more than Japan and the European Union combined. Our unemployment remains low at 4.8%, a level that many economists consider full employment.

Real GDP increased 3.5% in 2005, and the economy has been growing for 17 straight quarters, despite the challenges of unprecedented hurricanes, spikes in energy costs and a critical global war on terror.

And, Americans' optimism in the economy surged strongly in March, sending a widely followed barometer of consumer sentiment – the Conference Board’s consumer index – to a near four-year high. The consumer index shot up 4.5 points to 107.2 in March, the highest level since May 2002, a sign that the economy continues to gain steam in early 2006.

America's success as a global economic leader is largely due to our ability to innovate and develop new technologies. Economists calculate that approximately 50% of U.S. annual GDP growth is attributed to innovation. Innovation drives productivity, and a nation’s productivity directly impacts economic growth and a nation’s overall standard of living.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to Ledley's CAT scan machine, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

We are the world leader in venture capital, and we are home to many of the finest research facilities and universities, like SEMATECH and the University of Texas System. We possess one of the most open economies for trade and investment; a stable government, which is exceptionally well led in my humble opinion by an outstanding Texan; and a culture uniquely supportive of risk-taking, which must not be underestimated.

America has 5% of the world’s population, yet we employ fully one-third of the scientists and engineers, and we are the home to one-third of the world’s R&D spending. We invest more in R&D than the rest of the G7 nations – combined. Nanotechnology R&D spending in America has increased 127% since 2001 – and total R&D – both public and private – comprise 2.6% of the nation’s GDP, greater than the E.U. and more than twice the level of China.

Of course, we all agree that we cannot rest on our past success. Other countries, like China and India, are rapidly catching up in areas where we have traditionally been strong. They are opening their markets, strengthening their financial, legal and other public institutions and making both public and private investments that are making them more competitive. In the 21st century, change will come faster, cycle times for products and trends will accelerate, and the nations, regions, organizations, and individuals that succeed will be those best able to innovate and continually adapt.

Our challenge today is this – how do we maintain our leadership role in an increasingly competitive global economy? This challenge calls for efforts on multiple fronts, and President Bush has placed maintaining America’s competitiveness at the forefront of his agenda.

During his State of the Union Address, President Bush announced the American Competitiveness Initiative – the ACI. The ACI is a bold strategy that mobilizes federal resources and programs in a manner that will spur technology innovation and speed new ideas to the marketplace. This strategy is a strong reminder that our continued economic leadership will depend on continued advances in technology.

The President’s American Competitiveness Initiative acknowledges that as the global marketplace grows and becomes more dynamic, other nations will become more technologically advanced and America will face new competition.

We have a choice: We can retreat and ignore this reality, or we can do what has historically made us successful and engage with the world around us. This is a choice between hiding from the future, or helping to shape the future.

The President’s American Competitiveness Initiative calls for dedicating $5.9 billion in Federal resources in 2007, and more than $136 billion over 10 years to increase our investments in Research & Development and human talent. The R&D component will bolster Federal funding in basic research; basic research has made possible many of the technologies being showcased at this event. And the talent component addresses the growing shortage of scientists, engineers, and other technically skilled workers in America.

Within the R&D component, the ACI proposes to double the critical core physical science budgets of three agencies over 10 years: the National Science Foundation; the Department of Energy’s Office of Science, and the Department of Commerce National Institute for Standards and Technology. Federal commitments to R&D in the 2007 budget proposal represent 13.5% of discretionary spending – matching the level during the Apollo Space Program.

To spur private-sector investment in technology, the President continues to urge Congress to make the Research and Development Tax Credit, which expired in December, permanent. A permanent R&D tax credit would provide companies with more certainty in their tax planning and reduce impediments to R&D investment – which is critical, since the bulk of American R&D dollars are invested by the private sector.

Within the talent component, the ACI calls for investments in K-12 education by training 70,000 teachers in science and math education so they can inspire students in elementary school and provide targeted assistance in middle school for students who need additional math instruction.

The ACI also seeks to recruit, train, and deploy 30,000 math, science, engineering, and technology experts from the private sector in classrooms across America to enrich math and science education.

Also, in support of life-long learning, the ACI calls for providing Career Advancement Accounts, self-managed personal training accounts that will allow up to 800,000 workers to seek skills and education that will prepare them to take the jobs of the 21st century.

The ACI also proposes immigration policy reforms designed to attract the world's best and brightest to work alongside America's best and brightest in the math, science, and engineering fields of research and development. In a sense, this is a new and different type of competition in which the U.S. is engaged – the competition for talent. These highly-skilled workers not only spur innovation, but also create other good jobs for more Americans – and the President is committed to doing this in a manner that protects our National security interests.

President Bush also understands that the competitiveness of our nation will increasingly depend on the competitiveness of America’s economic regions. The key to competing successfully in a new era of worldwide competition is through regional collaboration. In order for America’s companies to be fully competitive, the regions in which they do business must be competitive as well – in otherwords, the business environment matters, it directly impacts our national ability to compete.

My friends at the Federal Reserve Bank of Kansas City recently concluded, “Regions can develop only by exploiting their distinct economic assets, seizing unique opportunities in rapidly shifting markets, and fostering the entrepreneurs that make both happen at once.”

What the Federal Reserve Bank folks know, and what you and I know, is that in our global economy, our competition is not next door. The areas around us are our strength, not our competitors. The concept of regional competitiveness is simply the Tom Friedman, ‘The World is Flat’, 21st century version of what we all learned on the school playgrounds of our youth: that there is no “I” in

T – E – A – M and we are stronger working together than when we stand alone.

By thinking of ourselves as part of a broader economic region, we can build on our strengths to better align a critical mass of local resources to spur innovation. Both the University of Texas System and SEMATECH, for example, serve as tremendous resources for innovation in this region.

The Department of Commerce’s Economic Development Administration will play an important role in supporting the President’s American Competitiveness Initiative by helping to create an environment that fosters regional collaboration and coordination.

The President has proposed a $47 million increase for EDA in his 2007 budget request to Congress. This is a strong vote of confidence by the President in an era where discretionary program spending is under great pressure. If the Congress agrees, EDA will use these extra funds to focus strongly on the concept of regional competitiveness. This direction is not new – it mirrors EDA’s long-standing commitment to regional approaches – but we now have a good “White House Seal of Approval,” and therefore we will re-commit ourselves to this goal.

EDA’s investments in regional strategies for economic growth will help build the capacity for innovations such as high-performance computing, next generation manufacturing, upgrading communication systems to ensure that we are all linked to the 21st century economy, and business innovations focused on new technologies and new markets.

The impact of your work to move world-class technologies from research into the marketplace will have a profound, positive impact on the economic future of our Nation. The collaborative activity that is generated from events like the “World’s Best Technologies Showcase” will help to keep America on the cutting edge, ahead of our competition – and to continue our global lead in the development of new technologies, new cures and new industries that create jobs, build wealth and raise the quality of life for all our citizens.

On behalf of the President, thank you for your efforts on the frontier of American innovation and entrepreneurship. America is the greatest land ever known where the merit of ideas can flourish and people who are smart, work hard, and keep trying can change the lives of millions of people for the better and earn an honest profit in the process. I salute you, and I thank you for the opportunity to once again be back in Texas.

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