BusinessWeek published a story yesterday with three growth scenarios for the outcome of the current financial downturn. I’m with the author in hoping for the third scenario — innovative growth.

In this scenario, the country’s investments in research (bioengineering bacteria to produce cellulosic biofuels, for example) pay off and we are able to increase our exports to the rest of the world.

The key factor, though, is that the product must be manufactured in the US if we want to reduce our trade deficits and subsequently our borrowing. Biofuel processing will probably always be somewhat localized, as the cost of transport is high, and we aren’t likely to have surplus fuel anytime soon as large as our oil appetite is today. However, we can produce the bacteria, fungus, or other microorganisms in the US and export them to plants around the world.

Here’s the BusinessWeek article and here is my original post.

Update: I just found another BusinessWeek article with four ways the country can use innovation to help the economy recover:

  • Inject capital
  • Think global
  • Focus on public programs
  • Support talent