PERSPECTIVE ON COMPETITIVENESS : Nurture Technologies That Will Pay Big : Research choices should be made with payoffs firmly in mind. Government needs to take the lead.
Our nation’s ability to develop basic technologies--and then to turn them into products and services that consumers will buy--has a direct bearing on economic performance and our standard of living. By and large, American workers earn more than their counterparts abroad. This wage differential isn’t a national right; we have to earn it in an increasingly competitive global economy.
We can do this in two ways. First, technology can make us more productive than our foreign competitors by enabling us to automate key business activities, such as assembling a product or processing a financial transaction. Nobel Laureate Robert Solow of MIT, Michael Boskin, chairman of the Council of Economic Advisers, and others have shown that perhaps half of America’s productivity growth since World War II is attributable to better technology. In addition, technology can improve our standard of living by making it possible for us to provide unique and advanced products, processes and services that command a premium price in world markets.
Clearly, the private sector plays the central role here. It needs to make the investments and take the risks required to commercialize technology successfully. Government incentives, such as permanent tax credits for research and development and accelerated depreciation schedules for manufacturing equipment, can help. But such incentives aren’t sufficient; American firms increasingly compete not just against each other but against companies in other nations that have science and technology policies promoting industrial growth.
Therefore, the basic recommendation by the Council on Competitiveness is for the government and industry to cooperate on a new national priority: keeping America at the forefront of technology.
What the council advocates is a technology policy. While industrial policy involves deciding which industries or products we should promote, a technology policy would identify and nurture technologies that span industries or business sectors. It is a strategy for developing, advancing and implementing generic, precompetitive technologies--that is, those with the potential to contribute to a wide range of yet-undetermined commercial applications.
President Bush has expressed his support for a national technology policy. Some people assert that the government can’t make intelligent choices on supporting critical technologies, yet the government has been deeply involved in choosing R&D; projects. In 1990 alone, the National Science Foundation funded about 17,000 research projects; the National Institutes of Health provided 34,000 research grants. The space program, the Human Genome project and the superconducting supercollider are government-funded.
These examples show that the government can and does work with the private sector to choose technology projects. The issue is whether it adequately considers the impact on competitiveness in making these decisions.
Current federal funding for R&D; doesn’t address this urgent need. Only a small percentage of what Washington earmarks for research has any direct relevance to industry. That’s because military technology consumes two-thirds of the government’s research funding. Another large chunk supports space and energy programs. These are obviously worthwhile endeavors, but the spillover to industrial technology is minimal because technologies relevant to military and commercial uses are widely divergent, much more so than they were 20 years ago. Any crossover from the military to the civilian sector is largely accidental. In fact, there is now heavier traffic in the other direction--from commercial to military.
The competitiveness report contains two key recommendations for federal action. First, the President should make technology leadership an explicit and urgent national priority.
The Administration’s budget plan is a step in this direction. President Bush has proposed a 13% increase in the federal R&D; budget in fiscal 1992, to just under $76 billion. His recommendation to create a high-performance computing network signals recognition of technology’s contribution to competitiveness.
The competitiveness report argues that we must go even further if federally funded R&D; is to improve America’s standard of living. One way to foster such improvement would be to redirect our federal research laboratories. Although the nation spends about $20 billion on these labs, their current culture and direction don’t adequately support technology development that improves economic performance.
The report recommends stronger ties between industry and the labs. This collaboration would include benchmarks that measure industry’s involvement in and the industrial relevance of the labs’ R&D; in the short term as well as the potential for applications of their work in generic technologies on a longer term. Accountability for meeting goals based on these benchmarks is also crucial.
The second recommendation concerns what the council calls America’s technology infrastructure--our schools and research facilities, which are the source of the new ideas and technologies that can reverse our decline.
Federal and state governments have consistently led national efforts to build and improve America’s infrastructure--whether it’s interstate highways or research labs. Given the realities of the new global economic order, it’s essential for the federal government to take the lead in enhancing the ability of the nation’s technology infrastructure to contribute to competitiveness.
But, in the end, more money won’t guarantee success. Our nation must awaken to the direct link between technology leadership and our standard of living. The same sense of mission and urgency that inspired our space program and the liberation of Kuwait should now be applied to the less spectacular but equally important issue of America’s technology leadership.
