West Midlands businesses have been slow to adapt to the modern economy, senior academics have warned.
Employers were still getting to grips with sectors such as digital media, which are very different to the traditional manufacturing which once dominated the region, an inquiry heard.
The warning was issued by Professor Madeleine Atkins, Vice-Chancellor, of Coventry University, who said universities needed to work with industry in the West Midlands to ensure the region remained prosperous.
She was giving evidence to an inquiry by the House of Commons Business and Enterprise Committee, which is examining how Britain can compete with countries such as China in the future.
The committee, chaired by Worcestershire MP Peter Luff (Con Mid Worcestershire), had travelled to the West Midlands to visit firms at the innovation centre in Longbridge, Birmingham, site of the former MG Rover factory.
The MPs, who included Julie Kirkbride (Con Bromsgrove) and Adrian Bailey (Lab West Bromwich West), quizzed academics and senior government officials during an evidence session held at Coventry University.
Prof Atkins told the inquiry that many employers in the region had "bumped along okay" but failed to adapt to the need to develop highly-skilled or high-technology businesses.
She said: "I think some of the issues five, six, ten years ago, maybe are around not perhaps under-standing where the new sectors in the economy
were coming from. Also the dominance of the manufacturing sector in terms of concepts like supply chain, which did not actually apply to some of these new emerging sectors, like for example digital media, which does not have quite the same supply chain, where the whole way in which you get to market is different.
"I think it perhaps took a little while to open up from a predominance on the manufacturing to an understanding that there are other ways in which markets are made and other sectors that need to come through."
She added: "Certainly the analysis that was made in the last regional economic strategy and continued into this is that the difficulty with the medium-sized companies in particular, which have bumped along okay but which have not necessarily taken on some of the new technologies or the new ways of doing things that they might have done, has been identified as an issue."
Academics also warned that poor science teaching in schools was damaging the West Midlands economy with the head of Birmingham university saying that undergraduates were choosing to study arts subjects because schools failed to make science fun and exciting.
Professor Michael Clarke, vice-principal of Birmingham University, said: "It is easy to condemn standards of teaching and that is not what I want to do, but there is something about the quality of teaching, the imagination which underpins teaching and the nature of the curriculum that somehow we have not got right, and what I find deeply disturbing is you then create a vicious circle, because who are the teachers of tomorrow?
"They are the kids who have not done science, technology, engineering and mathematics subjects at university."
James Wilkie, Director of Research & Commercial Services at Birmingham University, added: "A lot of these subjects when they are taught as combined sciences at primary level are taught by people who are themselves not particularly scientifically qualified. Another issue is I do not think enough attention is put into imbuing people with the sense of the excitement and the fun that can be had with a career in these areas."
Officials from Advantage West Midlands warned that the West Midlands needed about 70,000 more graduates in the private sector.
Mick Laverty, the agency's chief executive, warned that some employers were slow to recognise the importance of training.
He said: "Some enlightened businesses understand the importance of skills and innovation in terms of their future prosperity; some do not, and you have to use a range of mechanisms to try and persuade them, from perhaps demonstrator projects where you can produce case studies and try and influence their thinking in that sense."
The committee will publish its findings later this year.