Innovation - where is it occurring?

When I watch the Science channel, I am simply amazed by the variety of new ideas that are being considered, developed, tested and refined. A few months ago there was a show about the development of intelligent robots in Japan. Another time there was a show, also based in Japan, about the painstaking, meticulous research that is being done to make the trains run on time - shaving a single second off the schedule is considered worth the effort. There have also been several shows about the cutting edge research taking place at places like MIT, in the areas of energy conservation/generation, new kinds of vehicles, new kinds of navigation systems and so on.

Although the dictionary definition of innovation says that it is merely about introducing something new, I don't consider what passes for innovation (hotmail, priceline, or even facebook) as particularly innovative. Having little revenue and few paying customers is bad enough. But, when one considers that many of these innovations don't enhance the quality of life of their users, they pale in comparison to the examples of real innovation that I described in the first paragraph. Pretty much anyone can come up with ideas like hotmail and priceline and facebook if freed from the normal business requirements of having paying customers.

The reason for this lengthy preamble is: while everyone is focused on such "straw man" innovations, what are we not innovating? What is the opportunity cost of that?

Put another way, do Japanese and German companies - well-known for decades for their engineering excellence - need to import workers from India and China in order to innovate?

Given that the answer is "No", let us stop elevating what the so-called "high skill" imported workers in America do to the level of Innovation.