American innovation is in trouble

THE world is impressed with the United States these days. On recent trips to Europe and Asia, I kept hearing praise of the country’s innovation and entrepreneurship. But a set of new studies suggests that the glittering examples of Facebook, Snapchat and Uber are deceptive. American innovation is in trouble.

“Over the past 30 years, the rate of start-up formation in the United States has slowed markedly, and the technology industry has come to be dominated by older companies,” writes Robert Litan in the current issue of Foreign Affairs. In 1978, start-ups — companies less than a year old — made up almost 15 percent of all US companies. But by 2011, that figure had slumped to 8 percent. “For the first time in three decades, business deaths exceeded business births,” notes Litan.