Recently, I predicted that India would be the eventual winner of the talent war. This is because they have the people, the culture, continually increasing capital inflow, education, the will, and an increasing amount of openness – in contrast to the US, which is more intent on keeping just about everyone out than letting innovators in.

I’m not going to make a prediction as to who’s going to win the innovation challenge, because innovation takes more than just talent, but I am willing to predict that, the way things are going, it’s not going to be North America. (I’m also excluding Canada because, these days, you can’t be Prime Minister unless you’re willing to take your lead from the US President, whomever that happens to be.)

Basically, I agree with John Kao, as quoted in The Age of Mass Innovation. I think America will lose its global lead and become “the fat, complacent Detroit of nations“, even with Silicon Valley. As Mr. Kao points out, America’s under-investment in physical infrastructure, its pitiful public schools, and frostiness towards immigrants – even though immigrants built North America into what it is today – is the first step on the road to complacency.

Furthermore, as pointed out in Revving Up, China now makes half the world’s motorcycles and India’s Tata Motors is working on a “people’s car” that might radically change the process of design, manufacturing, and distribution in an effort to achieve its target price of no more than $3,000. Today, China is the country that’s pioneering new types of management techniques – that’s a long way from the low cost country we still like to think it is. The fact is, developing countries now have higher levels of “early stage” entrepreneurship than just about every country in the developed world.

And let us not overlook the fact that, as pointed out by Diana Farrell and quoted in The Fading Lustre of Custers, the real problem holding back innovation in many developed countries is too much government in the form of red tape and market barriers. These days, the government has to regulate everything – including the things it knows nothing about.

Considering that we’re full-tilt into the “knowledge economy”, with manufacturing down to a fifth of economic activity in rich countries, it’s down to innovate or die.