President Obama's proposal to boost the research tax credit for businesses is widely seen as necessary to bolster American competitiveness in the global economy.

But even if the $100-billion plan is approved, it won't begin to address the fundamental question of how to turn that research and new technology into jobs and renewed prosperity for Americans.

Over the last two decades, U.S. scientists and engineers have discovered or pioneered the science behind one blockbuster product after another — from flat-panel screens and robotics to the lithium batteries that run next-generation power tools and electric cars.

Yet in almost every case, production, jobs and most of the economic benefits that sprang from those breakthroughs have ended up overseas.

America's innovative spirit may still be the envy of the world — major steps forward in nanotechnology and biomedical fields, among others, continue to be made in U.S. labs. But without more effective policies to translate those achievements into gains at home, the fruits of America's creative genius will probably continue to be reaped by others.

And new reports show that during the recession American companies ramped up investment overseas for plants and new hires, as well as research and development — even as they cut back domestically.

Foreign subsidiaries of U.S. corporations increased their spending on research and development by more than 7% in 2008 from the previous year, pushing the total to nearly $37 billion. But these same multinational companies sliced R&D expenditures in the U.S. that year 2.2% to $199 billion, Commerce Department data showed.

A similar but less dramatic difference was evident in hiring: Employment at these overseas units rose 1% in 2008 — and a stunning 15% in China — but was down 2% for the U.S. elements of the 2,200 multinational firms the Commerce Department studied.

Some of these jobs were lost to automation, but Obama and many independent economists said a big factor was the sharply different policy approaches of U.S. and foreign governments.

For decades, Washington has taken a largely hands-off, or laissez faire, approach, sometimes even adopting tax and other policies that critics said actively encourage the movement of manufacturing and other business activity overseas.

By contrast, export giants such as Germany, Japan and South Korea have embraced government policies — and even pressure tactics — that push businesses to maintain operations at home.

"Other countries do a much better job," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan Washington think tank. "We're pretty much the only country with the illusion that we're not in competition with the rest of the world."

Obama, as he announced a package of stimulus measures last week in a Cleveland suburb, sought to sound a populist, even nationalistic note:

"Instead of tax loopholes that incentivize investment in overseas jobs," he said, "I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in Ohio, right here in the United States of America."

Some corporate chiefs bristle at the notion that they are exploiting loopholes. Rather, they said, they are sending work overseas because it's efficient and because otherwise they wouldn't be able to compete. And many would argue that American innovation and entrepreneurism remain the envy of world.

But there's little doubt that U.S. research investment has slipped from its once-preeminent position. By one common measure, private R&D spending as a share of economic output, the United States was No. 8 among developed countries in the latest tally by the Organization for Economic Cooperation and Development.

Washington's funding for basic research, meanwhile, has been essentially flat since 2003, on an inflation-adjusted basis. The federal R&D budget for 2011 shows a decline, according to the National Science Foundation.

"This is the last trend one wants to see with global R&D spending continuing to grow rapidly," said Gregory Tassey, senior economist at the National Institute of Standards and Technology, a federal agency promoting technology and industry.

Yet economists and business leaders worry that increasing support for U.S. laboratories and technology centers will not necessarily strengthen the economy.