Policy makers staged high-profile summits to explore ways to restore U.S. innovation in response to declining competitiveness and the aging of the U.S. engineering profession. They also published reports with dire warnings about the future of U.S. innovation.

Lawmakers responded late in the year by introducing legislation designed to promote U.S. innovation. Among the legislative goals of the "National Innovation Act of 2005" introduced by Sens. John Ensign (R-Nev.) and Joseph Lieberman (D-Conn.) on Wednesday (Dec. 15) are: increasing investment in basic research; improving science and technology talent; and developing a robust innovation infrastructure.

Industry executives, led by lobbying groups like the Semiconductor Industry Association, have streamed into Washington to buttonhole legislators and beat the drum for a crash program to bolster U.S. innovation in an industry shaken by unrelenting competition from Asia. Thus far, the politicization of innovation has yielded few concrete results beyond placing innovation on lawmakers' radar screen.

In short, 2005 marked the emergence of innovation not only as the sine quo non for continuing U.S. prosperity and economic growth but also as a potent political issue. What's more, it became intertwined with related debates over federal budget priorities and ideological issues like the role of government in aiding high-tech industries proud of their entrepreneurial roots.

The competitive threat posed by China, a nation awash in investment capital and plentiful, cheap labor, and India, the global hub for software programming and development, has forced U.S. industry executives to reassess the competitive landscape and recalibrate their growth assumptions. The unspoken fear is that technological innovation will slip away in much the same way as product manufacturing and design.

The exodus of manufacturing to Asia, followed closely by electronic and product design, has many here worried that the great American technology boom of the last 150 years — and with it, an unparalleled standard of living — may be winding down. These fears have been stoked by globalization, rising energy costs, skyrocketing private and public debt and growing concerns about the decline of the U.S. middle class — the so-called hourglass economy.

Add to the political mix an increasingly unpopular war in Iraq along with hurricane relief and the prospects for substantial federal assistance to boost U.S. competitiveness seem increasingly unlikely.

Despite new signs of resurgent U.S. innovation, especially in technology sectors like wireless and consumer electronics, many observers worry that the long-term trends remain unencouraging or worse. They site the decline in the number of U.S. engineering graduates just as the engineering profession ages. Meanwhile, China continues to crank out record numbers of engineering graduates anxious to use their knowledge to raise China's standard of living.

The fear that the U.S. high-tech industry's best days are behind it is palpable. Said one worried industry executive active in the push for government help, "I just don't want to lose it on our watch."

(Return to the 2005 Top 10 story list or go to No. 5