In a recent Wall Street Journal article, reporter John Bussey recounts a dinner conversation he had regarding China’s intellectual property theft.  One American tech executive voiced his confidence that U.S. companies don’t face any real threat from China: "This isn't such a problem for us because we plan on innovating new products faster than the Chinese can steal the old ones,” he said.

But as Bussey points out, evidence suggests that the notion that America can “out innovate” any nation frankly isn’t true. This evidence is examined by economic historian Niall Ferguson in his new book, "Civilization: The West and the Rest.”

According to Ferguson, China and other Asian countries have succeeded in emulating America’s “recipe” for a culture of innovation—and have surpassed us on many fronts. As he put it, "I've stopped believing that there's some kind of cultural defect that makes the Chinese incapable of innovating. They're going to have the raw material of better educated kids that ultimately drives innovation."

So what can the U.S. do to keep its innovative edge? Though Ferguson doesn’t offer a simple solution, his answer mirrors much of what the Alliance for American Manufacturing (AAM) has been pushing for years as recourse for our depleted manufacturing sector:  “The U.S., he says, should improve education, reduce regulation, fix its budget, and hone its political leadership.”

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