WASHINGTON, (Reuters) – President Barack Obama yesterday announced a competition for $4 billion in federal grants  to improve academic achievement and reverse a decline in U.S.  public schools.

“In an economy where knowledge is the most valuable  commodity a person and a country have to offer, the best jobs  will go to the best educated, whether they live in the United  States, or India, or China,” Obama said.

The president wants states to use funds from the  competition, dubbed the “Race to the Top,” to ease limits on  so-called charter schools, link teacher pay to student  achievement and move toward common U.S. academic standards.

Charter schools receive public funding but generally are  exempt from some state or local rules and regulations. They are  operated as an alternative to traditional public schools.

“America will not succeed in the 21st century unless we do  a far better job in educating our sons and daughters,” Obama  said in an address at the Department of Education.

The $4 billion education grant program was created under  the $787 billion economic stimulus plan passed by Congress and  signed into law by Obama in February. “Rather than divvying it up and handing it out, we are  letting states and districts compete for it. That’s how we can  incentivize excellence and spur reform and launch a race for  the top in America’s public schools,” he said.

The United States has one of the worst high school dropout  rates in the industrialized world, and its students often rank  below those in other Western nations in reading and math.

Obama has portrayed the drive to improve education as part  of a broader push to promote economic growth in the face of a  deep recession and the worst U.S. financial crisis in decades.