REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - U.S. - BRAZIL INNOVATION SUMMIT - BRASILIA, BRAZIL

WEDNESDAY, JULY 11, 2007

AS PREPARED FOR DELIVERY

I’m pleased to be here with this distinguished bi-national group of luminaries to discuss the critical challenge of advancing innovation in both our countries. It is my pleasure to be here on behalf of U.S. Commerce Secretary Carlos Gutierrez and to help fulfill one element of the agreement struck by President Bush and President Lula at Camp David earlier this year.

I would like to thank the U.S. Council on Competitiveness, the M B C and A B D I for their leadership in organizing this important summit.

The bi-national partnership on display today is a great example of the type of international collaboration we witnessed at the Americas Competitiveness Forum that Commerce Secretary Gutierrez hosted in Atlanta last month. With over 900 government and private sector leaders from 30 nations participating, the Forum was a tremendous success and focused, as we do today, on the topic of making our nations more competitive in the global marketplace.

The Forum, along with the ongoing U.S. - Brazil Commercial Dialogue and recently announced U.S. - Brazil CEO Summit, which will include corporate luminaries such as Craig Barrett of Intel and Rick Wagoner of General Motors, are just a few examples of the strong partnership between the United States and Brazil.

THE 3 CRITICAL ELEMENTS FOR COMPETITIVENESS AND INNOVATION

The twin topics of innovation and competitiveness are near and dear to my heart as the head of the United States’ Economic Development Administration.

In this role, I’m in the “what’s next” business. What is the next strategy that will keep our economy growing? What do our economies need to do today in order to take advantage of the next big thing tomorrow?

The heart of this answer is, of course, innovation. We all need development strategies that create an environment that fosters innovation and competitiveness, for this will provide the path to prosperity in the 21st century.

There are significant macro-level issues that impact this discussion: intellectual property rights, barriers to business entry, tariffs and taxation, access to capital, and a globally competitive education system – the elements noted in the December OECD report on innovation in Brazil.

The eco-system we are discussing today requires action not only at the national, regional, and local level – it takes coordination among the public, private, non-profit, academic, and research sectors.

But my role at this Summit is to focus on the steps needed at the regional level. For in order for economic growth to occur it takes both smart national level policy coupled with regional action tailored for specific regional competitive advantages.

In my six years serving President Bush, I have come to believe that there are three things that matter at the sub-national level in building successful strategies for innovation and competitiveness.

#1: REGIONAL APPROACHES MATTER

Number 1: Regional approaches matter. It is a paradox, but in our 21st Century global marketplace, specific regional location matters more than ever before. Yes, our global marketplace exposes us to the opportunity for world-wide partnerships and supply chain efficiencies – as well as increased competition, but the regional competitive advantages of location still matter.

In today’s global marketplace, our domestic economic regions are no longer competing with the company or city next door. Our competition today comes from anyone on any point on this planet with a good idea, a good education, and a good Internet connection. So it is important that when we develop our innovation and competitiveness strategies to best tap into the global marketplace, we focus on all the resources an area can bring to the table:

• What are the workforce strengths of a region?

• What are the institutional assets that can and should work in partnership to increase an area’s competitive advantages? Institutions such as universities, development organizations, research facilities, and business groups.

• What are the established and emerging industry clusters that can be cultivated and drive economic growth?

• What are the regional sources of capital for businesses?

In today’s fast-paced dynamic economy, economic regions can not expect to be all things to all industries. However, every region does indeed have a competitive advantage – or a potential competitive advantage – that is their ticket to answering their “what’s next” question.

#2: COLLABORATION MATTERS

Number 2: Collaboration matters. We must acknowledge that in the 21st century the components of competitiveness can no longer be pursued separately.

Our world becomes more sophisticated and integrated every day – and in order to succeed in this environment, we must respond in an increasingly sophisticated and integrated manner.

We can no longer tolerate bifurcated efforts for research and development, workforce development, educational initiatives, economic development, community development, and environmental stewardship.

Nor can we pursue distinctly separate strategies for urban vs. rural initiatives. These interconnected challenges must be tackled in concert in an integrated and holistic approach.

And, of course, there is one central collaboration partner that cannot be overlooked: the private sector. A strategy for innovation and competitiveness simply will not work unless the private sector is ready, willing, and able to invest.

#3: SPEED MATTERS

Number 3: Speed matters. The pace of change in our global marketplace will only continue to accelerate. Despite the success Brazil and the United States have enjoyed, we cannot afford to rest on our laurels for even a moment. There are no pit stops in this race.

Companies – by necessity – must continually strive to stay one step ahead of changing trends. If they don’t, they will cease to exist. We have the same responsibility as leaders of government to adapt our approach to fit the changing times.

Government – by design – moves slowly, and that can be a problem in our fast-moving economy. Unless we as government leaders – at both the national and regional level – can offer flexible and innovative programs and tools to our economic regions, we risk putting these areas that we are responsible for at a competitive disadvantage in the global marketplace. Innovation is just as important in the government sector as it is in the private sector.

CLOSING

So, these are three things that clearly matter, in my opinion, as we contemplate sub-national action in our common quest of answering “what’s next.”

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