Speakers at a June 24 congressional briefing sounded a wake-up call
that increasing competition from the rest of the world threatens America's
preeminence in innovation. The speakers reported that the U.S. science
and innovation system is seen as a model; many countries are investing
significant amounts to imitate it, and are making strides in scientific
advances, developing scientific talent, and attracting outside business
The briefing was kicked off by Senators Lamar Alexander (R-TN) and
Jeff Bingaman (D-NM), who have both demonstrated recognition of the
role that science and technology play in the nation's competitiveness.
Bingaman commented that the U.S. has not been "as focused"
on S&T investment in recent years as have many other countries,
and Alexander pointed out that federal funding in many areas of the
physical sciences and engineering has been flat or declining for years.
Council on Competitiveness President Deborah Wince-Smith defined innovation
as the ability to keep productivity growing by creating new knowledge
and quickly turning it into products. With more nations at the cutting
edge of innovation, capital increasingly free to flow around the world,
S&T talent and knowledge creation centers available globally, and
greater separation of design and production, she stated, the nature
of innovation is changing and the U.S. is at an "inflection point."
She added that certain aspects of this change are not yet well understood,
including the shift from technology-driven markets to a greater "pull"
Wince-Smith and international trade expert Thomas Howell emphasized
that other governments are determined to replicate the U.S.'s formula
for success. The U.S. system, Howell said, comprises outstanding research
universities; a good industry-government-university working relationship;
"Silicon Valley" clusters of venture capital, companies, and
universities; successful consortia; the welcoming of foreign talent;
and dynamic programs at the state level.
Alan Rapoport of NSF cited statistics indicating that other countries,
especially many Asian countries, are succeeding in efforts to increase
their S&T and innovation capacity. While the U.S. is still the world
leader in high-tech industries and has the greatest number of international
technology alliances, he said, some Asian nations have nearly doubled
their share in global high-tech markets over the past several decades
and have almost tripled their share of high-tech exports. The U.S. share
of total articles in science and engineering publications has been declining
since 1988, while that of many countries is growing, and indicators
of bachelors-degree production in the natural sciences and engineering
show the U.S. far behind many other nations. In addition, Rapoport said
that R&D expenditures of OECD countries (countries in the Organisation
for Economic Co-operation and Development) has been rising consistently
for years, while, as may speakers noted, the U.S.'s investment in physical
sciences and engineering has been flat or in decline. This country is
"living off of past efforts," Howell declared.
What is needed for the U.S. to stay on top, Wince-Smith suggested,
is to restore emphasis on the sciences that drive innovation, develop
better metrics for the results of innovation, and transition away from
disciplinary "stovepipes" in education and research to a multi-disciplinary,
cross-sector model. Policymakers must also recognize the importance
of tax and fiscal policies, she said, and deal with the deficit and
entitlement spending, high corporate tax rates, and intellectual property
and piracy issues. When asked whether business regulations affect the
U.S.'s creativity and ability to innovate, Wince-Smith agreed that many
regulations and policies could act as "a drag" on innovation,
including employee healthcare, environmental regulations, and agricultural
subsidies. These are "choices we make as a nation," she stated.
She cited the healthcare industry as one area in which efficiency and
productivity could be vastly improved.
In reply to a question about a correlation between science and engineering
PhD production and innovation, Howell responded, "In my view, you
cannot ever have too many PhDs." Wince-Smith advocated professional
master's degrees that incorporate business knowledge and a multi-disciplinary
perspective. Asked to explain high unemployment in certain fields of
engineering, the speakers did not have an answer.
From the President's Council of Advisors on Science and Technology
(see FYI #48)
and the American Association for the Advancement of Science's annual
Science and Technology Policy Forum (see FYI
#57) to the recently-issued Electronic Industries Alliance report
(see FYI #67)
and this congressional briefing, the issue of maintaining U.S. leadership
in innovation is beginning to attract high-level attention. Many efforts
to understand the issues and make policy recommendations are currently
underway. The Council on Competitiveness (http://www.compete.org)
plans to release a policy agenda during the National Innovation Summit
In related news, data collected by NSF indicate that, between 2001
and 2002, the U.S. investment in industrial R&D declined $7.7 billion,
or 3.9 percent. According to NSF, this represents "the largest
single-year absolute and percentage reduction in the current-dollar
cost of industrial R&D performance since the survey's inception
in 1953." When the data are adjusted for inflation, NSF states,
the decline still represents the largest single-year reduction of the
years surveyed and the second largest percentage reduction; the largest
constant-dollar percentage reduction occurred between 1969 and 1970.
It adds that contributions to industrial R&D from company funds,
federal funds, and other non-federal sources all declined between 2001
The information is provided in an NSF "InfoBrief" released
in May; see InfoBrief NSF04-320 at www.nsf.gov/sbe/srs/infbrief/ib.htm.
The document warns that its estimates are subject to some error, but
states that "the sample has been designed to provide reliable estimates
of the overall total of R&D performed."