This report reflects the deliberations of the drafting panel on Technology Leadership to Strengthen Economic and National Security that met on March 30, 1995 during the Forum on the Role of Science and Technology in Promoting National Security and Global Stability. The report was compiled by the session drafter and is a summary of the issues raised during the discussion. All points do not necessarily represent the views of all of the participants.
The drafting panel's response to the three crosscutting questions can be summarized as follows:
From World War II until the end of the Cold War, national security provided the underlying rationale for much of the U.S. science and technology (S&T) system. The three major parties to the system -- government, industry, the universities -- grew into their respective roles based on a widely-accepted social compact. Government funded basic research and mission-related technology development. Industry conducted R&D with its own as well as government funding, building defense systems and supporting the U.S. venture into space, while at the same time spinning off technologies with commercial potential. Universities conducted research and trained the people who made the S&T system function. That system, and the social compact that supported it, is now under stress almost across the board.
During the Cold War, basic and applied research sponsored by the Department of Defense (DoD) laid the foundations for technological superiority in weapons systems. Geopolitical objectives more than science drove the nation's space program. A broad-based national commitment to improve health care through investments in medical technology ensured support for the life sciences. Today, three of the five largest R&D funding agencies -- DoD, the Department of Energy (DOE), and the National Aeronautics and Space Administration -- find their missions in flux and their R&D budgets under pressure. For the National Institutes of Health and the National Science Foundation, growth in funding has slowed even as the research communities they support continue to expand. Meanwhile, the Department of Commerce has been carving out a new mission in support of R&D related to the needs of industry.
For several decades after 1945, university research grew rapidly and steadily, fueled by Federal funding. Doctoral enrollments increased, along with the ranks of postdoctoral researchers. Foreign nationals flocked to the United States to study with the best and the brightest among our science and engineering faculties. Much of the university portion of the S&T system continued to follow an expansionary course even as opportunities began to dry up.
U.S.-based industrial firms, without peer in the early postwar years, pursued research in their own interests and, with government funding, in the national interest. For more than two decades, military technologies continued to lead civilian. American companies were able to take advantage of waves of innovation associated with aerospace technologies, with computers and microelectronics, and later with biotechnology. They established commercial leads that in some cases still persist. Today, however, military technologies, with some exceptions, are as likely to lag as to lead commercial technologies: spin-on coexists with spin-off, while the defense technology base has been contracting relative to the commercial technology base.
The larger context for these shifts includes a relatively open international economy in which technical knowledge and skills, as well as business and managerial expertise, diffuse rapidly and have become more widely distributed across countries. Today, U.S.-based corporations face highly competent overseas rivals, many of which have moved steadily upward into high technology -- often with the aid of know-how originating in the United States. It has become harder for American firms to create and maintain technologically-based advantages than in past decades, when they started off farther ahead and the competencies of foreign firms were generally inferior. In a climate of intense competition, fostered by downsizing in defense, deregulation (e.g., in telecommunications), and "globalization" (associated especially with the growth of multinationals), managers feel even more constrained than in the past by the need to focus internally-funded R&D on near-term business objectives. Even the biggest and wealthiest firms have pulled back from long-term, high-risk R&D, in part because of financial market pressures generated at least in part by institutional investors.
Of course, the picture is not all dark. The United States remains ahead in many fields of science and technology, although not so far ahead as in the past. U.S.-based firms have rebuilt their competitiveness in a number of industries over the past decade (albeit with the help of a depreciating dollar and economic distress in Japan, both reversible conditions). International competition has been a powerful stimulus for improvement in sectors like autos and electronics, while, to take another example, inflows of capital and know-how from Japan helped the steel industry.
It becomes clearer year by year that technology is truly the engine of economic growth. But it is not nearly so plain as two decades ago that the nation's S&T system is working well enough to keep U.S. levels of productivity and prosperity the highest in the world. The dangers associated with uncertainty and lack of direction in S&T policy include underinvestment in technologies that could underpin future generations of defense systems, as well as lagging commercialization of technologies resulting from U.S. investments in fundamental research. The pervasive sense of anxiety expressed in various ways by so many Americans over the last few years reflects fears that the United States may not be well prepared for the future.
The drafting group believes that the roles of industry and the universities in the U.S. S&T system remain reasonably well-defined and well-accepted. Industry has the job of product and process development, of commercialization. Universities, alongside their primary function of education and training, share responsibility for research. But the role of government remains unsettled, particularly given budgetary pressures which some believe may soon cut deeply and dangerously into support for longer-term research and generic technology development (in both of which industry underinvests by definition).
The wellsprings of innovation in the United States have not dried up. But they are threatened. (This is one reason why "critical technologies" have drawn so much attention in recent years.) Absent a superpower rival as strong in science and technology as the Soviet Union, DoD may pull back from at least some of the long-term R&D that it once pursued as insurance against technological surprise. Dual use and spin-on, laudable objectives as they may be, will rarely push the frontiers (TRP, for example, supports relatively mature technologies). Universities, trying to diversify their sources of support, will in some cases be drawn away from basic research into more applied work for industry and in other cases may be forced to retrench. The national laboratories, particularly those of DOE, struggling to find new missions and justify their budgets, run the risk, like at least some universities, of losing their sense of direction. Companies large and small, with narrowing profit margins, will make conservative R&D choices.
The problem is not only one of preserving the kind of longer-term R&D that leads to breakthroughs. In the new international economy, deployment and commercialization have become pressing concerns for U.S. industry. For the drafting group, "mid-range" or "middle-ground" R&D emerged as a primary concern. Often the source of fundamentally new products and processes -- and sometimes new businesses, indeed new industries -- mid-range R&D is hard for industry to finance, yet it rarely can be construed as basic research, and therefore tends to be inappropriate for university or government laboratories. The drafting group found it useful to think of this category of projects as centering on time horizons of 5 to 7 years, keeping in mind that some fundamentally new technologies reach the marketplace much more quickly (perhaps as little as two years in fast-moving fields like computer software or catalysis) while others may take a decade or more to come to fruition.
From a national perspective, the need is to maintain a sufficiently large and diversified portfolio of mid-range projects, R&D that would be starved for support without government funding. Some of these projects will pay off quickly; others may not pay off at all. Joint government-industry funding can extend time horizons, increase the number of riskier projects in the national portfolio, and fill the gaps that inevitably open from time to time in any S&T system as complex and dynamic as that of the United States. Thus the drafting group believes that the Federal Government should continue to seek new mechanisms for selectively diversifying the nation's R&D portfolio, with particular attention to mid-range R&D needs that might otherwise go unmet.
Systemic obstacles to more effective utilization of technology and science break down into two categories, the first associated with the end of the Cold War, the second with financial constraints. U.S. S&T policy is in a period of transition. Existing structures, many put in place in the 1950s, must be re-examined. Some may need to be rebuilt, others replaced.
Lack of consensus on the appropriate role for government in support of new technologies (not just science) has made it difficult to "reinvent" U.S. technology policy. Nothing illustrates this better than the ongoing debate over the future of the federal laboratories, particularly those of DOE. Any view of the appropriate role and mission for the laboratories will depend on one's view of the remainder of the S&T system; the question is not the future of the laboratories in isolation, but their future as part of the larger system.
Financial constraints affect all three major parties to the S&T system. That system, after growing for decades, has not yet adjusted to an era of limits, one in which rates of growth of R&D spending even in good years promise to be low by historical standards. Adjustment will be especially difficult for universities and federal laboratories, which have less flexibility than industry.
None of the three parties can look back and find in the pre-World War II world solutions that will work for the future. In the past, the competitive environment for industry was slow-moving compared to today, far less demanding technologically. University research, supported until the war in large part by foundations, was small in scale, science still something of an avocation; much of the government's research support went to agriculture. In such a world it may have made sense for government to leave technology to industry. But that world is gone for good. Reshaping U.S. S&T policies to suit the post-Cold War environment means nothing less than a new social compact among government, business, and the universities.
The United States has less experience with international cooperation in technology than in science. The drafting group stresses the permeability of national borders to flows of technology and the inability of governments to control those flows. This means that the United States must remain aware of the potential costs of outflows of critical technology while at the same time enhancing inflows. The innovations associated with Japanese production systems, for example, have been beneficial to the United States but were quite slow to take root here.
The argument for international cooperation on generic or infrastructural technologies -- where society stands to benefit but companies may fail to invest for fear they will be unable to capture the returns -- parallels that for domestic cooperation. In this light, the drafting group suggests that the United States take the lead in a major international technology cooperation effort -- for example, to develop and diffuse improved technologies for environmentally friendly or "green" manufacturing technologies. Such an undertaking could focus on process technologies for industries with high environmental impacts, such as chemicals or primary metals, where individual firms may have little to gain by way of marketplace advantages and where overlap and duplication drive up total costs. There is much the United States could learn, and much the United States could contribute, by leading such an initiative.
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