According to the Progressive Policy Institute, “sustainable economic growth, job creation, and rising real wages require domestic business investment.” That investment, they say, is directly tied to those industries that are best positioned to innovate on a broad scale.
While American productivity is at an all-time post-war era low, there are a few sectors in our society where innovation, and therefore investment and productivity, has flourished: telecommunications, energy, and technology/Internet.
In the recently released report, U.S. Investment Heroes of 2015: Why Innovation Drives Investment, PPI identified those companies that are investing “domestically in buildings, equipment, and software,” whose “capital spending is helping to raise productivity and wages across the economy.” AT&T, Verizon, Exxon Mobil, Google, Chevron, and Walmart top this year’s list of investment heroes, with the top investors being telecom and cable providers, energy production, and technology and Internet companies, which comprise 15 of the 25 companies on the list, and account for 71 percent of the total investment.
As noted by the report’s authors, “the top investment heroes, with few exceptions, are found in those industries with a rapid pace of innovation. The rise of wireless and broadband, energy production innovations such as hydraulic fracturing and horizontal drilling, and the mobile app/Internet boom are creating new markets and new investment opportunities.”
If innovation bears greater investment, PPI theorizes that the on-going “investment drought” the country has been experiencing over the past ten years is “linked to ‘uneven innovation’ —that is, rapid innovation in some areas is combined with a lack of commercially successful breakthroughs in other areas such as material sciences and healthcare. The weakness in innovation, outside of tech and energy production, leads to a lack of investment, weak productivity growth, and sluggish growth of real wages.”
Even as PPI lauds this year’s investment heroes for their efforts at shoring up America’s economy, they encourage the creation of government policy that is “directed towards broadening the scope of innovation, which will generate both more investment and more jobs.” The nation’s Investment Heroes do a lot toward increasing productivity and opportunities for growth, but their efforts won’t support sustainable growth unless we have a truly ‘inclusive innovation’ and investment experience across the country.