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US 'risks losing No. 1 ranking' - Barrett

Declan McCullagh CNET News.com

Published: 16 Mar 2004 15:20 GMT

America must increase government spending on basic research and development and dramatically improve its educational system if it hopes to remain competitive in information technology, Intel chief executive Craig Barrett warned on Tuesday.

Barrett, an outspoken advocate of education reform, predicted that if US politicians do nothing, companies in China and India will gain the upper hand in the marketplace. He said a good start would be doubling the budget for the National Science Foundation, which gives research grants for universities and has asked for $5.7bn (£3.14bn) in 2005.

"A lot of the political debate is discouraging from my perspective," Barrett said at a breakfast meeting with reporters. "It's not saying, 'how do we remain competitive?' It's, 'how do we protect what we have?'"

Barrett, who is in town for a series of meetings with federal technology managers and members of Congress, also warned that anti-terrorist measures and visa policies had run afoul of the law of unintended consequences by reducing the number of foreign students studying in the United States.

"Either you decide you want to compete... or you become protectionist," Barrett said. "We somehow think that we have a God-given right to be the world's No. 1 economy forever."

Among technology chief executives, Barrett is not alone in sounding an alarm about American competitiveness. Earlier this year, Intel joined Dell, Hewlett-Packard, Motorola, IBM and other firms in a report warning of growing US protectionism and citing China, Indonesia, Malaysia and the Philippines as growing exporters of computer hardware.

Barrett offered few specifics about how to fix America's primary and secondary school system, saying in response to a question about school vouchers that he endorses "anything that makes the system competitive," and adding that he would never send his grandchildren to the public schools near their home in Los Angeles.

He took a swipe at an expected proposal from the Financial Accounting Standards Board to require the mandatory expensing of stock options, which critics have said will create a disincentive for companies to offer them. China's Communist leadership has enthusiastically embraced stock options in its latest five-year plan, Barrett said, "at the same time the United States is trying to dictate them out of the way."