The research is based on results of the Torrance Test of Creative Thinking, which has been used to test American creativity for half a century. Dr. Kyung Hee Kim, assistant professor of education at the College of William & Mary, analyzed the data and found that American creativity scores began to fall in 1990 after having risen steadily for decades. And they have been falling significantly ever since. The reasons why are not clear.

For centuries, the U.S. has been the world’s creativity leader. It’s critical that it maintains that position.

Creativity leads to innovation and entrepreneurship. So when it declines, it drags innovation and entrepreneurship down with it.

At the 2010 Aspen Ideas Festival, financial historian Niall Ferguson argued that “innovation” and “entrepreneurship” are the “real mainsprings of American power,” and reviving them is the only way for the U.S. to avoid economic decline.

If American creativity continues to decline, there will be a domino effect in the U.S.: innovation and entrepreneurship will decline, new jobs will not be created, unemployment will rise, the debt will spiral out of control, Gross Domestic Product will decline, and military capability will be weakened by a reduced budget.

The U.S. has rapidly moved up the value chain transforming from an industrial-based economy to a knowledge-based economy to an innovation-based economy. Consequently, many U.S. factory jobs and back-office jobs have moved overseas, and creativity is the last skill Americans have to offer the global marketplace.

What can be done to turn declining American creativity around? There are six possible solutions.

First, invest more in higher education. Recently, Asian universities have been making significant gains on the U.S., long considered to have the world’s best universities. The U.S. cannot continue to reduce funding for state-supported universities while Asian nations are making enormous investments in their universities—especially in the area of research.

Without increased investment, the U.S. will no longer have the best universities in the world to attract the top national and international students. These students often stay in the U.S. after graduating and help fuel the nation’s innovative, entrepreneurial, and economic growth.

Second, create more student programs that encourage creativity. For example, National Lab Day encourages innovation and the Network for Teaching Entrepreneurship encourages entrepreneurship.

Third, teach creativity at all levels of education. Contrary to popular opinion, creativity can be cultivated with time and effort.

Fourth, establish a national innovation system. South Korea established one in the 1960s. Since then, the government has implemented a series of policy measures to enhance the innovative capabilities of universities, public research institutes, and businesses.

Fifth, allow more skilled immigrants to become permanent residents. The U.S. needs to attract immigrants who are highly educated and have much to contribute to U.S. innovation, job growth, and economic growth.

Sixth, provide tax incentives that reward creative efforts.