REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - TENNESSEE VALLEY CORRIDOR NATIONAL SUMMIT - CHATTANOOGA, TENNESSEE

THURSDAY, JUNE 1, 2006

AS PREPARED FOR DELIVERY

Thank you, Congressman Wamp, for that kind introduction. Congressman, I appreciate your vision of what it takes to succeed in a changing global economy, and your ability to work with State and Federal officials on both sides of the isle to pursue that vision. Thank you for the invitation to be here today.

It is an honor to join my Federal colleagues on this panel. At Commerce, we work to be good Federal partners, and everyday we work in concert with other Federal and State agencies to advance economic development initiatives. As a result of today’s Summit convened by Congressman Wamp, I look forward to even stronger collaboration between Commerce, Energy and the ARC.

As we meet here today, we have good reason to be very optimistic about the environment in which we do our jobs. The landscape is filled with positive news about our economy.

Let’s take a look at job growth: We’ve created 5 million new jobs since October 2003. Our unemployment level is down to 4.7%, what many economists consider full employment.

Our growth rate – measured by GDP – for 2005 was 3.5%, almost twice that of any E.U. nation and last quarter, our GDP was an impressive 5.3%.

We’ve had solid growth for 18 straight quarters – and our GDP per capita is the highest among all major nations.

Real, after tax incomes, have increased about 14% since January 2001 and, despite returning $880 billion to taxpayers through the President’s tax cuts, the Treasury Department recently reported that tax revenues have increased to the highest level in history.

More Americans own their home than ever before – about 70% -- and homeownership is a critical economic driver.

All this is tremendous news, not just at the National level, but a strong, growing National economy can be tapped for development efforts at the local level. Maintaining America’s leadership in the worldwide marketplace will take effort, and that’s why this afternoon I’d like to describe 5 “new realities” of the 21st Century economy, and then I’ll close by outlining an important Presidential initiative to maintain America’s leadership.

Let’s start with New Reality #1: While perhaps the most obvious, it is the most important, which is that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says, the world is…flat.

In the new flat, global economy, competition is not just from the firm down the road. Our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Pop Quiz: Which of following products is more “American”: a new Ford Mustang or a new Toyota Siena mini-van? … Well it depends. Ford is an American company. Toyota is not. Both products are manufactured in America, but the Toyota contains 90% American-sourced parts, and the Mustang has about 65% American-sourced parts. You tell me which is more “American”?

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the US population. It took 35 years for the telephone to do the same. The Internet did it in only 7 years.

There are good jobs that exist today that we couldn’t even dream-up two years ago: Podcast manager…Blog writer…I-Pod accessory manufacturer…Satellite radio host.

This new reality where cycle times for products and ideas will continue to shrink, requires all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do will be rewarded.

New Reality #3: The world becomes a bit more complicated everyday. Responding to this reality means that the components of competitiveness can no longer be pursued separately. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs, occurring in separate silos can no longer be tolerated. One of the first steps to success in the 21st Century, is to begin to collaborate these efforts at the regional level.

Second, in our new 21st Century, Tom Friedman-the World is Flat reality, we must acknowledge what we all learned on the elementary school playground, that we are stronger when we stand together than when we stand alone, and that there is no “I” in T – E – A – M.

We need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

New Reality #4: Collaboration with the private sector becomes more critical every day. While governments at all levels, educational institutions and non-profit institutions can be important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur regardless how much government spends.

The private sector should have not just a seat at the table, but should be actively engaged as full partners in the creation and execution of workforce and economic development strategies.

The 5th Reality is that America is positioned to win in the 21st Century. This nation has never encountered a challenge it has not met. We are the most competitive, productive, and innovative country the world has ever known.

America continues to be the country of choice for millions across the globe who are looking for learning and economic opportunity and we are the most important market on the planet.

And at the end of the day, our ability to innovate is our – and every other –country’s only possible sustainable competitive advantage. This is why President Bush proposed the American Competitiveness Initiative, which is a bold plan to:

• Double Federal funding for basic Research & Development;

• Make permanent the private sector R&D tax credit;

• Improve math and science skills in our schools;

• Triple the number of workers getting job training; and

• Attract and retain the world's best and brightest people for the benefit of American enterprise.

This will allow the certified smart folks at places like NIST, Energy, and the National Science Foundation to advance research that will lead to the breakthrough inventions of tomorrow. The overall commitment the President is calling for will bring Federal R&D investment to the same percentage of the Federal budget as during the Apollo Space program.

The Economic Development Administration will play an important role supporting the ACI. And to help us accomplish this, the President has proposed a $47 million increase for EDA in 2007.

An example of the type of investments EDA likes to support can be seen in EDA’s recent award to Technology 2020, an initiative which brings together the assets of Oak Ridge National Lab and the University of Tennessee. This project will make Tennessee an international hub for nanotechnology, and create 1,000 higher-skill, higher-wage jobs.

In fact, EDA sees much to like in the Tennessee Valley Corridor and in 2004, EDA awarded this region our highest honor, the EDA National Excellence in Economic Development Award.

These are some of the “new realities” we collectively face – filled with opportunity and challenge. American Competitiveness Initiative, demonstrates that this President and this Government “gets it” and that the Federal Government can take pro-active action to help ensure America’s competitive advantage for today, tomorrow, and the generations to follow.

On behalf of the President of the United States, it has been my great pleasure to be with you this afternoon. I look forward to continuing our discussion.

# # # #