Is U.S. Innovation Headed Offshore?

To those worried about America's ability to compete in the 21st century, the trend is alarming: Just as key manufacturing industries fled offshore in the 1970s and '80s, U.S. companies are now shifting more engineering and design work to low-cost nations such as China, India, and Russia. Surely, innovation itself must follow.

Apparently not, according to a new study published by the National Academies, the Washington organization that advises the U.S. government on science and technology policy. The 371-page report titled argues that, in sectors from software and semiconductors to biotech and logistics, America's lead in creating new products and services has remained remarkably resilient over the past decade—even as more research and development by U.S. companies is done offshore.