(Editor’s note: What follows is the edited text of a speech given at an Arizona charter schools event on May 17 by Craig Barrett, who retired as chairman of Intel Corp. three days later.)

This will be my last speech as chairman of Intel, and I want to do three things tonight: (1) put education into the international context; (2) look at data and see if we are making progress; and (3) offer five suggestions to honestly improve American education.

At the outset, let’s contrast U.S. college education with U.S. K-12 education. America has a bi-modal system–we are generally regarded as having the best university system in the world, and we are generally regarded as having one of the poorer K-12 education systems in the world.

How do we explain this dichotomy? It’s simple: The university system competes–for faculty, for students, for research contracts, for everything. In K-12, there is no competition, for anything.
The difference in outcomes between those two approaches: simply dramatic.

I discovered a long time ago that the ultimate source of knowledge is Chinese fortune cookies, and my favorite one says, “If you want to win, you have to choose to compete.”

You all know the huge transformation the world has seen in the last decade or so. India, China, Russia, Eastern Europe, the Middle East, and Latin America have all entered the global free market economic system. In rough terms, 3 billion new capitalists came into the world’s free market economy in a span of about 10 years.

To compete and win in this now much more intensely competitive world, there are only three levers a country can pull to improve its position: smart people, smart ideas, and smart governmental policies.

Smart people. Every economic correlation you see–per capita income, gross domestic product, whatever you look at–is in direct proportion to the education of a nation’s citizens. If you don’t have a well-educated population, you cannot add value to what you do, and you cannot be globally competitive. Your economy will decline. Period.

Smart ideas. That’s a short way of saying you must invest in research and development. You must invest in innovation. You must invest in creativity. If you are going to add value to what you do for a living, you need to invest capital to add that value.

Smart policies. What is the right environment to invest in innovation? It includes important things like intellectual property protection, attractive corporate tax rates, a trustworthy judicial system, and a minimum of government bureaucracy.

Smart policies will accelerate new venture creation. They let smart people get together with smart ideas to do something wonderful, to start great new corporations, to add value to what they do, build the economy, build the wealth, build the gross domestic product, build the per capita income. This is what everybody in the world is striving to do today.

I travel to about 30 countries a year, talking to business leaders, government leaders, and education leaders–and everybody is talking about the same thing: how to stimulate growth … with the exception of one country.

You got it–America! We are talking about many other things, but not how to improve the standard of living for future generations.