U.S. Panel Pins Trade Loss on Research Lag

The United States has lost the race for international competition in manufacturing, and risks losing in high technology as well, a presidential commission reported today.

The commission’s report, titled “The New Reality,” traces the decline of American products back more than a decade and a half and said the strong dollar, high wages and high taxes are not the only reasons.

“There is no single action--no simple solution--that can reverse the competitive erosion we report,” it said.

The United States spends less than its competitors on research and development, the report said. Much of what is spent on civilian research is financed by government and suffers from confusion in the allocation of research dollars.

Competitive Edge Neglected

“We’ve concluded that this country has neglected the development of a competitive advantage in manufacturing,” said commission chairman John Young, president of Hewlett-Packard Co. “Seven out of 10 American high-technology sectors have lost world market share since 1965,” he added.

“We determined there is no substitute for attention to the basics,” he said. “American industry needs to focus more on excellence and executing business fundamentals.”

“This nation’s ability to compete has declined over the past couple of decades,” Young said. “Real hourly wages received in our business sector have been virtually stagnant for the past 10 years,” showing the chief goal of competitiveness--a rising standard of living--is not being met.

Despite some “islands of excellence”--U.S. companies that have aggressively modernized--the report found that Japan and other Asian nations are far ahead in several areas and still pulling away.

The President’s Commission on Industrial Competitiveness was created by the Reagan Administration in August, 1983, in response to congressional demands for a government-run industrial policy.