Washington, July 25 - President Barack Obama has announced a race for $4.35 billion in federal grants to improve academic achievement and reverse a decline in American public schools to meet increasing competition from countries like India and China.

'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 announcing the competition Friday.

'In a world where countries that out-educate us today will out-compete us tomorrow, the future belongs to the nation that best educates its people,' he said in an address at the Department of Education. 'We have talked about it for decades but we know that we have not made the progress we need to make.'

Dubbed the 'Race to the Top,' the competition aims to ease limits on charter schools, which receive public funding but generally are exempt from some state or local rules and regulations, link teacher pay to student achievement and move toward common US academic standards.