TO build a more-competitive U.S. economy, there must be a precise program, bold enough to respond to the challenges coming from across the Pacific, politically astute enough to appeal to millions of American working men and women. A program that fosters an environment for innovation in manufacturing.

At first glance, it might seem absurd to talk about the need for innovation. American inventors have pioneered many of the breakthroughs in science and technology during the past 50 years that have played a major role in making our nation the most competitive and productive economy in the world. Among the technological innovations that have paid significant dividends are the semiconductor, the computer and the Internet.

Today, however, our speed of innovation is being challenged, and the most serious competition is coming from Asia. Through policies that encourage basic science and stimulate research and development, Asian governments are facilitating innovation in their manufacturing sector and making sure that new ideas are being exploited.

Perhaps most significantly, China, India, South Korea and other Asian countries are getting better at fostering technological entrepreneurship. Instead of using rigid top-down, state-directed technology policies, they have moved to more flexible, market-oriented approaches that spur innovation.

One of the principal advantages Asia now holds is a well-educated technical workforce. Both China and India are graduating high numbers of talented scientists and engineers. According to the U.S. Department of Commerce, in 2002 alone, 58 percent of all the degrees awarded in China were in engineering and the physical sciences, compared with 17 percent in the United States. Particularly troubling is that China's 219,600 engineering graduates accounted for nearly 40 percent of all college graduates, whereas U.S. engineering graduates, a total of only 59,500 engineers, represented only 5 percent of all college graduates in the United States.

The fact that university science and engineering programs in the United States are relying more and more on foreign-born talent reinforces that point. Over one-third of the nation's scientists and engineers with doctorates were born outside the United States.

The conventional wisdom is that only low-skill jobs are moving abroad and that U.S. economic productivity benefits from "outsourcing." But the fact is that moving jobs and functions to China and other countries where labor costs are cheaper and government restrictions are few ought to alarm every American.

It has now become increasingly evident that high-skill manufacturing jobs — and even advanced research work for major firms — are moving overseas. The United States risks losing the entire infrastructure of design, research and development, and the creation of new products and industries. Some U.S. companies warn that by 2010, as much as 90 percent of their research and development work and manufacturing will be done in either China or India.

An article by Adam Segal of the Council on Foreign Relations in a recent issue of Foreign Affairs magazine notes some worrisome trends that indicate America is losing its edge. Segal says it's necessary to look beyond United States' technical dominance to trends in funding for scientific research.

Although total U.S. expenditures on research and development top $290 billion — more than twice the total for Japan, the next-biggest spender — the United States now trails Japan, South Korea and Sweden, among other countries, in the ratio of R&D to Gross Domestic Product. Segal also points out that recent shifts in federal funding will leave basic research underfunded, depriving much of the scientific knowledge that produces innovation.

If we forfeit U.S. high-tech leadership and innovation, it will impact both national security and our standard of living. Government funding for science and education must be maintained. And a business environment that rewards risk needs to be strengthened.

In this regard, the United States needs to meet the challenge from Asia head-on. Only through combined government, industry and academic cooperation can America remain the epicenter of research and innovation. Only through collaborative research, for example, will the United States be able to develop manufacturing equipment capable of making decisions based on acquired knowledge — in other words, experience-based artificial intelligence.

That's the kind of breakthrough that will make our companies competitive; it's also the kind of breakthrough that can be made possible by fully funding federal programs like the Manufacturing Extension Partnership (MEP), a program that encourages small manufacturers to adopt advanced technologies.

The Bush administration and Congress need to recognize that by funding research programs like MEP, they will be helping to commercialize innovations that will give the United States a competitive edge in the years ahead.