e c o n o m i c r e p o r t p r e s i d e n t

than it has in the past decade. And in some other countries, such as Korea,Sweden, and Japan, R&D spending is a larger fraction of GDP than in theUnited States. The President is committed to raising the share of outputdevoted to R&D to 3 percent, so that America can continue to be a leaderin new technologies and American workers and businesses can benefit frommore rapid economic growth.Through the Recovery Act and other measures, the Administrationis investing both directly in basic scientific research and development andin the infrastructure to support that research. Most innovation, however,comes from the private sector. Here, the Administration is providing criticalincentives for R&D both in general and in such vital areas as clean energytechnologies. The Administration is also pursuing a wide range of policiesto support the small businesses that contribute so much to technologicalprogress—policies ranging from programs to maintain the flow of credit tosmall businesses to health insurance reform that will help level the playingfield between small and large businesses.Finally, international trade can be an important source of productivitygrowth and incentives for innovation. Trade has the potential to allow theU.S. economy to expand output in areas where it is more productive andto enable higher-productivity firms to expand. Access to a world marketencourages American firms to invest in the research needed to become technologicalleaders. Through these routes, a free and fair trade regime can playan important part in lifting living standards in the long run. But for trade toplay this role, it is essential to enforce existing trade rules and pursue policiesthat ensure that the benefits of trade are widely shared.ConclusionThe past year has been one of great challenge for all Americans.Nearly every family has been touched in some way by the fallout from thecrisis in financial markets, the drying up of credit, and the rise in unemployment.These challenges, moreover, have come after a decade in whichordinary Americans have seen their living standards stagnate, their healthinsurance become less secure, and their environment deteriorate.The rest of this Report describes in more detail the actions thePresident has taken to end the recession, foster stable growth by rebalancingproduction and demand, and rebuild the foundation of the Americaneconomy. More fundamentally, it describes the work that remains to bedone to create the prosperous, dynamic economy the American people needand deserve.38 | Chapter 1