Future R&D Environments: A Report for the National Institute of Standards and Technology (2002)

Michael McGeary

The purpose of this paper is to summarize the recent views of external organizations on future technological and industrial trends. “Recent” was taken to mean reports issued during the past 2 years. Eight reports from six organizations were identified. The organizations are Battelle, the Council on Competitiveness, the Industrial Research Institute (IRI), the National Intelligence Council (NIC), RAND, and the U.S. Commission on National Security/21st Century (also known as the Hart-Rudman Commission).

The reports were selected because they are comprehensive in scope. That

excluded a number of reports that focused on particular technologies or technology areas (e.g., information technology, nanotechnology). In several cases (Battelle, the Council on Competitiveness, IRI, and RAND), the organizations had issued earlier reports on the subject, which could also have been used, although the most recent reports tend to incorporate the results of the earlier work.

It is interesting that the most comprehensive forecasting exercises were conducted in the national security area. Those include the reports by NIC and the Hart-Rudman Commission and a report by RAND done as input to the NIC report. There is a long history of policy planning, including technology policy, in the national security arena, probably because the federal government has overall responsibility in that area, including maintenance of the U.S. technology base and surveillance of technological threats to the United States. On the domestic side, no agency has overall responsibility, and there is little incentive to undertake comprehensive planning or forecasting. The lead organization in this area, the Council on Competitiveness, was created as a response to an external threat— Japan’s economic inroads into American and world markets in the 1980s.

As much as possible, the reports are allowed to speak for themselves. The summaries often directly quote from them or are close paraphrases of their main points. Comparative analysis is reserved for the conclusion of this paper.

U.S. Competitiveness 2001¹ analyzes U.S. economic performance from 1985 to 2000—what drove U.S. prosperity in the 1990s and where economic performance fell short—and identifies the challenges facing U.S. leadership to sustain the nation’s competitive advantage. Porter and van Opstal conclude with recommendations for keeping the United States competitive in the future.

Porter and van Opstal show that the extended economic expansion was built on strengths in all key components of economic growth:

• Post-1995 growth in GDP per capita reached quarter-century highs.

• Two-thirds of GDP growth was due to increases in productivity growth and capital stock per worker that, in turn, were driven by investment in and deployment of new technologies.

• High productivity growth, along with supportive monetary policy, permitted full employment without inflation.

• Entrepreneurial activity—much of it in technologically intensive fields such as information technology and health—created millions of new businesses and jobs (an estimated one-third of new jobs between 1990 and 1997).

• Government fiscal discipline freed up capital for private investment.

• The United States led the world in patenting, the best single measure of innovation.

• Although the trade deficit was large, there were trade surpluses in the innovation-intensive sectors of the U.S. economy—advanced services, high-technology services, and licensing of intellectual property.

The authors go on to argue that the economic boom of the 1990s masked persistent areas of weakness in the U.S. economy that could undermine longer-term prosperity:

• Forty percent of U.S. households did not prosper for most of the 1990s.

• U.S. income inequality was the highest in the industrialized world, indicating a growing skills and education gap and a failure to make the most of the nation’s human resources.

• National investment in frontier research lagged, and enrollments and degrees in science and engineering, outside the life sciences, began a downward trajectory, which limited U.S. capacity for innovation.

• Personal savings rates hit lows not seen since the Great Depression, which drove the current account deficit to record levels (more than 4 percent of GDP) and increased U.S. dependence on foreign capital.

An increased commitment to innovation is needed just for the United States to stay even, because other countries are increasing their capacity for innovation. The elements of innovative capacity—talent, technology, and capital—that powered U.S. leadership in cutting-edge technologies are now globally available:

• More nations are acquiring high-end innovation capabilities with concerted investments in research and development and technical talent.

• Other nations are developing fast-follower capabilities to rapidly commercialize innovation that originated elsewhere.

• The supply of scientists, engineers, and technicians is growing substantially faster abroad than in the United States.

• America’s first-mover advantage in information technology is diminishing because of aggressive investment in and deployment of information technology (IT) by the rest of the world.

To increase the nation’s standard of living in the long run, policy makers will have to invest in innovation, increase workforce skills, and strengthen regional clusters of innovation. The authors recommend that the United States undertake the following:

• Increase federal investment in frontier research.

• Strengthen support for fundamental disciplines that have been neglected.

• Expand the pool of U.S. scientists and engineers by upgrading K-12 math and science education, broadening the science and engineering pipeline to include more women and minorities and increasing incentives for institutions of higher learning to increase the numbers of graduates in scientific, engineering, and technical fields.

• Modernize the nation’s research infrastructure.

A world-class workforce is needed to sustain global competitiveness. The fastest growing and best-paid jobs require some level of postsecondary education, but there is evidence that demand for education and skills is outstripping supply while a significant percentage of the population is not prepared. The nation must invest in education and training to maximize the potential of every citizen to sustain future economic growth.

• Improve math and science education.

• Provide access to information technology to all students.

• Raise postsecondary enrollment rates for underrepresented minorities.

• Increase access to higher education for students from low-income households.

• Extend training opportunities to more workers.

Nearly 30 percent of the population will be at or over retirement age by 2030, leaving behind a smaller and less experienced workforce.

• Bring more citizens into the workforce by employing the under- and unemployed and raising workforce participation among older workers.

• Increase productivity per worker by increasing investment in technology, training, and education.

The locus of innovation is increasingly regional, because geographic concentrations or clusters of firms, suppliers, and related institutions in particular fields constitute networks of technologies, resources, information, and talent that foster innovation.

• Extend the focus of competitiveness and innovation policy to the regional level.

• Support regional leadership initiatives and organizations that enhance and mobilize cluster assets.

• Identify best policy practices in cluster development.

Global Trends 2015² attempts to summarize changes in the world over the next 15 years that national security policy makers should take into account, based on the expertise and analyses of a broad range of nongovernmental organizations and experts.

The effort began in late 1999, when several dozen government and nongovernmental experts in a wide range of fields participated in two workshops to identify the major factors that will drive global change over the next 15 years. The workshops were followed by a series of more than a dozen conferences at a number of government and private research institutions on specific topics and by discussions with outside experts. The results are synthesized in this 85-page report (the HTML version on the Web, without graphics, is 45 pages long).

The report identifies seven global drivers and related trends that will shape the international system in 2015: demographics; natural resources and the environment; science and technology; the global economy and globalization; national and international governance; future conflict; and the role of the United States. It is acknowledged that no single driver or trend will dominate, each driver will affect different regions and countries differently, and in some cases, the drivers may work at cross-purposes rather than be mutually reinforcing.

Several drivers are given more prominence in Global Trends 2015 than in an earlier effort, Global Trends 2010, published in 1997. For example, globalization is considered an even more powerful driver: “GT 2015 sees international economic dynamics—including developments in the World Trade Organization— and the spread of information technology as having much greater influence than portrayed in GT 2010” (p. 6). Also, “GT 2015 includes a more careful examination of the likely role of science and technology as a driver of global developments. In addition to the growing significance of information technology, biotechnology and other technologies carry much more weight in the present assessment” (p. 7). And, “GT 2015 emphasizes interactions among the drivers. For example, we discuss the relationship between S&T, military developments, and the potential for conflict” (p. 7).

The world population will increase from 6.1 billion in 2000 to 7.2 billion in 2015, but nearly all the increase (95 percent) will be in developing countries, mostly in urban areas. There will be little or no growth in most of the advanced economies. One result implies a need for substantially increased per-worker productivity: “In advanced economies—and a growing number of emerging market countries—declining birthrates and aging will combine to increase health care and pension costs while reducing the relative size of the working population, straining the social contract, and leaving significant shortfalls in the size and capacity of the work force” (p. 8). This situation also implies the need for continued immigration in high-income countries to relieve labor shortages. Reductions in health care costs would also help relieve the situation.

The report sees adequate energy, despite a nearly 50 percent increase in demand over the next 15 years, because of increased energy efficiency and large supplies of oil and gas that will be more efficiently extracted. But by 2015, nearly half the population of the world will live in water-stressed countries, and disputes over water could lead to conflict, especially if there are other tensions (e.g., in the Middle East). There will be adequate supplies of food, driven by advances in technology, although there will be problems with distribution in some areas. Environmental problems will persist and grow, although the report sees declining pressure on the environment caused by economic growth, because of technological advances (e.g., increased use of fuel cells and hybrid engines; better pollution controls; increased use of solar and wind power; more efficient energy use; and more efficient exploration for and extraction of natural gas).

According to the report, development and diffusion of information technology (IT) and biotechnology will be significant global drivers. Breakthroughs in materials technology and discoveries in nanotechnology will also be important. It identifies two major trends, (1) integration of existing disciplines to form new ones and (2) lateral development of technology: “The integration of information technology, biotechnology, materials sciences, and nanotechnology will generate a dramatic increase in innovation. The effects will be profound on business and commerce, public health, and safety,” and, “Older established technologies will continue ‘sidewise’ development into new markets and applications, for example, developing innovative applications for ‘old’ computer chips” (p. 32).

Many new IT-enabled devices and services will be developed and rapidly diffused during the next 15 years. Wireless global Internet access is technologically feasible. Some countries and population groups, however, will not benefit much from the information revolution.

The report says that the biotechnology revolution will be in full swing by 2015, “with major achievements in combating disease, increasing food production, reducing pollution, and enhancing the quality of life” (p. 33). Among the areas in which developments will be significant by 2015: genomic profiling; biomedical engineering; therapy and drug development; genetic modification; and DNA identification. But these developments will be restricted to the West and the wealthy in other countries because of expense, and there will be substantial moral and religious controversies over some biotechnologies.

Trends in science and technology pose major uncertainties. Advances in science and technology may lead to dramatic breakthroughs in agriculture and health and provide leapfrog applications, such as wireless communication systems in less developed countries without landlines, but how or even whether such advances will benefit every nation and group is impossible to forecast. And, increasing reliance on computer networks makes U.S. communications systems vulnerable targets for rogue states, terrorists, and criminal groups, and advances in biotechnology, nanotechnology, and materials sciences provide opportunities for adversaries to conduct biological warfare or bioterrorism.

The report (released in December 2000) sees a sustained period of global economic growth through 2015, although there will be periodic financial crises.

The growth will be driven by five factors: political pressures for higher living standards; improved macroeconomic policies to reduce inflation; rising trade and investment; diffusion and incorporation of IT that increases economic efficiencies; and increasingly dynamic private sectors in many emerging market economies (along with deregulation and privatization in Europe and Japan). This optimistic outlook depends on avoiding “potential brakes to growth”—if, for example, the U.S. economy suffers a sustained downturn; Europe and Japan fail to manage their demographic challenges; China and/or India fail to sustain high growth; emerging market countries fail to reform their financial institutions; or global energy supplies are disrupted in a major way (p. 39).

Globalization, including “greater and freer flow of information, capital, goods, services, people, and the diffusion of power to nonstate actors of all kinds,” will threaten the capacity and authority of most governments and create a demand for greater international cooperation on transnational issues (p. 38). National governments will have increasingly less control of flows of information, technology, diseases, migrants, armaments, and financial transactions across their borders, and there will be increasing pressures for international cooperation. Transnational private-sector organizations, both private and nonprofit, will play a greater role.

The risk of war among developed nations will be low (but more destructive if it does occur). The greatest potential for conflict will stem from internal disputes: “Experts agree that the United States, with its decisive edge in both information and weapons technology, will remain the dominant military power during the next 15 years. Further bolstering the strong position of the United States are its unparalleled economic power, its university system, and its investment in research and development—half of the total spent annually by the advanced industrial world” (p. 56). Because of this overwhelming edge in military power, adversaries can be expected to pursue other ways to threaten the United States, such as terrorism and attacks on critical infrastructure (communications, transportation, financial transactions, energy networks): “At the same time, the trend away from state-supported political terrorism and toward more diverse, free-wheeling, transnational networks—enabled by information technology—will continue” (p. 50). It is also more likely that state and nonstate adversaries will develop or acquire more sophisticated weaponry, including weapons of mass destruction, and use them.

The United States will still have unparalleled global economic, technological, military, and diplomatic influence in the international system. It will be the leading proponent and beneficiary of globalization and will remain in the vanguard of the technological revolution in IT, biotechnology, and other fields; however, it will encounter resistance from allies as well as adversaries to what is considered U.S. hegemony. Diplomacy will be more complicated, with more developing nations (e.g., China, India, Brazil), regional organizations, multinational corporations, and nonprofit organizations to deal with. The United States will encounter greater difficulty in using its economic strength to achieve foreign policy goals. Meanwhile, other governments will invest more and more in science and technology and education to prosper in the global economy. Governments, including the United States, will also benefit from greater communication and cooperation between national security and domestic policy agencies to deal with transnational threats, for example, infectious diseases, bioterrorism, and criminal activities.

New World Coming was an early report of the bipartisan U.S. Commission on National Security/21st Century,³ chaired by Gary Hart and Warren Rudman, and created in 1998 in response to the view that U.S. national security policies and processes needed to be reexamined in light of changed circumstances. Those changes in the national security environment included not just the new geopolitical situation following the end of the Cold War but also significant technological, economic, social, and intellectual changes:

In its final, Phase III report in April 2001, the Hart-Rudman Commission concluded, among other things, that the U.S. systems of basic research and education were in crisis while other countries were expanding their investments. The commission recommended doubling the federal research and development budget by 2010 and increasing the competition for those funds on the basis of merit. It also recommended elevating the role of the President’s science advisor to over-see R&D expansion and other critical tasks, such as reviving the national laboratory systems and instituting better stewardship of the science and technology assets of the nation. And it recommended passage of a new national security science and technology education act to produce more scientists and engineers and qualified teachers in science and math.⁵

The commission began its work by trying to understand how the world would evolve over the next 25 years. The Phase I report included a volume of supporting research and analysis prepared by a national security study group, a set of national security scholars and practitioners formed to provide the commission with research and analytical support.

The first chapter analyzes global dynamics in science and technology, economics, governance, and national defense from 2000 to 2025.

The Phase I report begins by acknowledging that scientific advances and technological innovations in the 21st century will cause social and political discontinuities that cannot be foreseen. Nevertheless, the report goes on to look at trends that can be observed and their implications.

In asking what technologies will emerge over the next 25 years, the report begins by noting that a major characteristic will be the increasingly smaller scale of new technology. For most of the 20th century, increasing scale led to higher efficiency and performance. “Now, however, miniaturization, adaptability, and speed are primary traits. Ever more capacity is being placed on tiny silicon wafers, and we are beginning to mimic the molecular assembly capabilities of biological systems” (p. 6). The report goes on to identify three technology areas in which the most important innovations of the next 25 years will occur, including combinations of the three: information technology, biotechnology, and micro-electromechanics (MEM).

According to the report, there are also indications that nanotechnology will develop rapidly and have potentially revolutionary impacts, especially at the intersection of information technologies and biotechnologies. In this area and oth-

ers, however, such advances are not likely to have much impact in the next 25 years. After a major innovation, it takes most of a 25-year period to develop products and create the production, transportation, and marketing infrastructures needed to make a difference.

The report spends a number of pages on the challenges posed by new technologies, as well as their benefits. One challenge is to adjust to the ever faster pace of change caused by technological innovations. New technologies will also raise difficult and contentious legal, moral, and religious issues. They may even affect national identity and eventually change the nature of government itself.

In this section, the report looks at structural changes in the new global economy. These include an explosion in the volume of international capital flows to developing countries in the 1990s, especially from private sources, and dramatic changes in production, both enabled by advances in information technology. This has led to a new kind of economic integration. First, the ratio of trade to world GDP is historically high, reflecting greater interaction among national economies. Second, trade is shifting from manufacturing to services and involving many more countries. Third, multinational corporations are creating truly global production networks. Fourth, stock markets have sprung up around the world and provide a way to accumulate savings and make investments based on market criteria. Fifth, international and multilateral institutions are playing important and expanding roles. Sixth, there are rising expectations around the world pressuring governments to reduce impediments to global economic integration.

The report then reviews the reasons for resistance to global economic integration that slow or even prevent change (even in the United States) and lead to uneven progress in globalization. Other present or future events disrupting globalization over the next 25 years could include civil war and international conflict, war, a major disruption in global energy markets, the AIDS epidemic in Africa and Asia, another major unexpected pandemic, or a world recession. Avoiding the last—world recession—depends on the continued strong performance of the U.S. economy.

The report concludes that, absent a major economic or political global crisis, the major trends in global finance, manufacturing, transportation, telecommunications, and trade described in the report will continue: “The cross-border web of global networks will deepen and widen as strategic alliances and affiliates increase their share of production and profits. The internationalization of production networks will also continue. But the speed at which other parts of the globe join the integrative process, and the inclusiveness with which countries are transformed, is likely to be uneven and in many cases much slower than anticipated”

(p. 29). Nevertheless, the global economic system could be multipolar by 2025, as China, India, and Brazil become substantial export markets.

The implications for U.S. national security include greater economic disparities among and within countries; increased interdependence among open economies, including the United States; exploitation of trade and private capital markets for parochial purposes by certain nations; and challenges to the identity of nations and therefore to the legitimacy of their governments.

Part III of the report examines the social, technological, economic, and political trends shaping the future of the United States.

Unlike most other developed nations, the population of the United States is expected to grow over the next 25 years, from 273 million to 335 million. Despite the growth, the population will age substantially. Nearly 18 percent will be over 65 in 2025, and the ratio of those in the workforce to those in retirement will go from 3.9 to 1 in 1995 to 2.3 to 1 in 2025. Health-care costs will continue to rise. The racial and ethnic composition of America will change, as minorities increase from 28 percent to 38 percent of the population.

The United States has top universities, which enroll large numbers of foreign students. Non-U.S. citizens constitute a substantial share of the graduate students in many fields—the physical sciences, engineering, mathematics, and computer science—and many of them stay on to work in the United States. At the same time, K-12 students in the United States do not compare well internationally in science and mathematics (which is probably related to declining numbers of U.S. students who major in the physical sciences, mathematics, and engineering in college). A relatively high proportion of adults is illiterate.

American preeminence in science and technology is expected to continue over the next 25 years, although global trends in technology will have their effects:

The most dramatic effect of science and technology on the United States is likely to be their contributions to strong economic growth during much or all of the next 25 years. The size of the impact depends on the rate of growth and whether the gains in productivity from the information revolution will raise it to 3 percent or more.

The U.S. economy will become more internationalized. U.S. foreign trade as a share of GNP went from 11 percent to 24 percent during the last 20 years, and that trend should continue.

The recommendations set forth here are contained in New Foundations forGrowth,⁶ a report done for the National Science and Technology Council in the White House.⁷ The report is based on a yearlong effort to identify ways to improve (or reduce barriers to) innovation in the United States. The recommendations in the report are based on a literature review, on a synthesis of ideas submitted in response to a call for papers that went out to hundreds of businesses, business organizations, and laboratories asking for ideas for improving innovation, and on inputs at several workshops.

The report was done at the RAND Science and Technology Policy Institute, a National Science Foundation (NSF)-funded research and development center that supports the Office of Science and Technology Policy (OSTP) and other federal agencies with objective outside analysis of science and technology policy issues.

The approach of the report is to look at steps that affect the U.S. “national innovation system,” a concept named by Richard R. Nelson in 1993.⁸ The Ameri-

can innovation system consists of a complex network of interacting institutions— industry, government agencies and laboratories, research universities, and nonprofit research institutions.

Private industry in the United States is currently very innovative and well able to capitalize on innovation in the marketplace. But industry does not constitute all aspects of the innovation system, especially those activities on which firms are not likely to recoup their investment. The public sector plays an important role, including direct and indirect assistance to the process of innovation and support of the infrastructure that enables economic innovation. Popper and Wagner list a number of types of direct assistance, including funding of research and development; protecting intellectual property; setting technical standards; agricultural and manufacturing extension services; and procurement actions. Indirect assistance includes regulation of the financial infrastructure; favorable fiscal policies; improving the education system; providing the national transportation and information infrastructures; and assisting trade.

In the face of strong global competition, government is playing a larger role in sponsoring partnerships among the institutions in the innovation system where interactions are weak. Partnering of various types appears to be one of the emerging characteristics of innovative activity and needs to be better understood. Government can provide funding in areas difficult for or of little interest to industry. In some sectors, government is a large buyer, which influences what products are developed. Finally, government sets and enforces the rules of the game and also regulates negative spillovers such as pollution and unsafe products.

Popper and Wagner present a series of recommendations related to the functioning of national innovation as a system: ensure inputs; improve the environment; facilitate communications; and understand better the dynamics driving the system.

• Improve the quality of K-12 education in general and raise the level of math and science education in particular.

• Expand options for access to science and technology education among groups currently underrepresented in the workforce of those fields.

• Increase opportunities for retraining in science and technology for the current workforce.

• Take measures to determine that resources and incentives are in place to ensure the output of a sufficient supply of technically trained professionals from institutions of higher education.

• Ensure adequate levels of public funding for fundamental science and engineering research.

• Make funding decisions a more informed process for assessing priorities and providing balance across fields in a manner commensurate with the complexity of the national innovation system.

• Consider whether making the resarch and experimentation (R&E) tax credit permanent would be beneficial to the national innovation system and the larger economy.

• Evaluate the development of mechanisms to encourage investment in emerging technology sectors that currently receive limited venture capital funding and how such sectors and points of advantageous entry might be determined.

• Consider what measures may be required to ensure that patent review processes maintain currency with new technology developments.

• Assess the effects of recent policy changes (such as the Bayh-Dole and Stevenson-Wydler Acts) on the flows and balance of government-funded research and their effects on private sector activities.

• Begin a systematic review of the process for setting technical standards considering both the potential importance and limitations of government involvement.

• Consider the role and process of standard setting as an aspect of U.S. trade policy.

• Assess national needs for new measurement and testing systems that would create a benefit across industries.

• Examine federal investment priorities to ensure that public investments in infratechnologies are sufficient to sustain the growth and development of the national innovation system in desired directions.

• Evaluate the importance of various kinds of partnerships, as well as public-private consortia, in pursuit of innovative activity, determine when the public good would best be served by their coming into being, and consider how they may be fostered.

• Define clearly the boundaries for legal cooperation and research among firms in the private sector as well as between firms and the government.

• Consider what policy guidelines would be needed for informing the construction and operation of partnerships with a public component.

• Raise the awareness of federal agencies about issues affecting the national innovation system and their own roles within that system.

• Seek to define and identify best practice across federal agencies and promote learning and transfer of such practices to other settings.

• Seek opportunities to create or use existing forums and venues to foster discussion among federal agencies, between federal agencies and their state and local counterparts, and among government, industry, and academia on issues of common interest affecting the national innovation system.

• Seek ways to recognize explicitly the de facto partnership and mutuality of interest between public and private sector institutions in support of the national innovation system and to enhance the complementarity of their activities.

• Seek means to raise public awareness of the importance of innovative activity and what is required in the way of public actions to support that activity.

• Raise the prominence of formal awards for leadership in the field of technology development.

• Improve timely access to available government agency data on innovative activity and harmonize existing government databases.

• Increase incentives for agencies to collect data on innovation and technology use and transfer by means of special surveys and expansion of routine collections.

• Develop new measures and data categories to improve understanding of the innovation system and the interplay between public and private actions.

• Explore new means to assist in formulating policies that will be adaptive and robust to a variety of possible outcomes rather than static and restrictive.

• Explore new means to enhance foresight and forward thinking about developments in the national innovation system and the implications of its actions for the society and economy.

• Work to improve methods for measuring the long-term social and economic performance of investments in basic research.

• Identify centers of excellence in science and technology to encourage linkages and leverage across national boundaries.

• Examine the global patenting system for ways to improve the efficiency of the patenting process.

• Identify ways that government can facilitate product and process standardization across national boundaries and determine when it might be appropriate to do so from the perspective of U.S. interests.

Popper and Wagner conclude by selecting five top recommendations:

1. Ensure adequate levels of public funding for all fields of fundamental science and engineering.

2. Consider the benefits of making the R&E tax credit permanent.

3. Examine the global patenting system.

4. Improve opportunities for training and retraining the science and technology workforce.

5. Raise awareness within the federal agencies of their role in providing the infrastructure for the national innovation system.

From 1996 to 1998, the Industrial Research Institute (IRI) undertook several studies of future changes in industrial R&D and the technological innovation process during the next 10 years. This article, “Industrial R&D in 2008,”⁹ summarizes the outcome of an effort at the 1998 IRI annual meeting to understand how the industrial R&D laboratory would operate a decade later.

Larson reported that the other IRI studies had found that changes in industrial R&D would accelerate over the next decade. A planning exercise highlighted several drivers of change, the most important of which are information technology and globalization. It found that the industrial laboratory of 2008 would be different in several dimensions: people; technology intelligence; data acquisition/computational capabilities; and the innovation process.

R&D scientists and engineers of 2008 will become extremely customerfocused and self-motivated, with a deep understanding of the value of technology to the firm. They will also be more versatile, with multidisciplinary backgrounds and skills that are constantly being upgraded. They will be more risk-taking than their predecessors, always looking for new opportunities and applications for their work, by developing broad networks of contacts.

R&D leaders will be more fast-paced and adept at creating teams with the right skills and personalities for their mission. They will work to ensure quality and effectiveness by aligning technical teams with corporate or business-unit strategies. Company needs will be closely correlated with the needs and interests of research personnel through more effective reward systems. The role of the R&D leader will evolve to one of integrating technology throughout the enterprise.

Technical intelligence will be fully integrated throughout the firm and far more comprehensive than today. Future use of technology intelligence will be more organized, with a core group of experts trained in collecting, analyzing, and applying needed information. The system will be based on close coordination

with business units and their strategies, because closeness to the market and customers will be critical. Alliances and partnerships with strategic players will continue to grow, along with the outright acquisition of competing technologies.

Technical work will be more efficient and effective, utilizing a wide variety of outside resources. R&D is becoming much more productive through extensive use of advanced computer hardware and software, which enable techniques for microminiature and combinatorial analyses in numerous fields and thus provide a comprehensive prediction of real-world performance. Increased outsourcing, partnerships, and alliances with expert companies and universities will become necessary, along with a significant increase in IT investment.

The need for a “smart” organization will force reeducation of the workforce, which will have to understand the importance of openness to new ideas. High-performance cross-functional teams will have multiple skills, aligned values and rewards, consistent work processes, lateral thinking, and smooth transition from concept to development to commercialization. Scientists will not work in “silos” but will be organized to encompass a common purpose that fosters customer-supplier-organization interactions. All R&D staff will spend a major portion of their time with customers, in their markets. Virtual global laboratories, already common in some companies, will make around-the-clock R&D a reality for most companies.

How does industrial R&D of 2008 compare with that of the present? For the most part, the differences will be quite dramatic because the information age (which has already had a profound impact) promises to accelerate the rate of change in R&D organizations.

First, information technology will have a profound impact on the way R&D is conducted. Second, teams will be the norm, but the need for individual ideas and creativity will be more important than ever. Researchers will need to be even more adaptable to change and constantly enhancing their skills through knowledge-based programs. Third, the intellectual capacity of the organization must grow to compete in an intensely competitive global marketplace. Technical intelligence must be collected, protected, and applied by the entire organization. Finally, the innovation system must be seamless throughout the organization, driven by a vision of where the corporation wants to go, nurtured with a strategy of how

it wants to get there, and managed by persons with a solid understanding of technology as well as business.

According to Top Strategic Technologies for 2020,¹⁰ the most important technological trends that will shape business and the world over the next two decades are the following:

• Genetic-based medical and health care. We will witness an explosion of medical technology originating from genetic research, giving us the ability to detect and correct many genetic-based diseases before they arise, possibly even in the womb. And a wide range of new pharmaceuticals that originated from genetic research will come onto the market, leading to treatments, cures, and preventive measures for a host of ailments.

• High-power energy packages. Developments such as highly advanced batteries, inexpensive fuel cells, and microgenerators of electricity will make many of our electronic projects and appliances highly mobile. These new, high-power, distributed energy systems will provide backup, if not primary, energy sources for appliances, homes, and vehicles. We’ll also see further improvements in batteries—perhaps linked with solar power—and small generators fueled by natural gas.

• GrinTech (green integrated technology). Global crowding, fears of global climate change, and mountains of garbage will thrust environmental concerns to the forefront of consumer and industry attention around the world. The integration of advanced sensors, new materials, computer systems, energy systems, and manufacturing technologies will be used to eliminate waste and make projects completely recyclable. GrinTech will be especially important in agriculture, mining, manufacturing, and transportation systems.

• Omnipresent computing. We will be in constant contact with very miniature, wireless, highly mobile, powerful, and highly personalized computing with network access. Such computers may first appear on the market as watches or jewelry with the power of a computer and cellular phone. Later, we will have computers embedded in our clothing and possibly implanted under our skin.

• Nanomachines. Microscopic machines, measured in atoms rather than millimeters, will revolutionize several industries and will perform a wide range of jobs for us—from heating our homes to curing cancer. Nanomachines could be used to deliver drugs to highly localized places in the body, to clean arteries, and to repair the heart, brain, and other organs without surgery.

• Personalized public transportation. The continuing growth of cities will further stress our transportation infrastructure. Traffic jams and road rage will decline substantially as people drive their cars to remote parking areas and take highly advanced—and comfortable—trains into central cities and between cities. Yet an aging population with concerns about safety, convenience, and independence will demand personal vehicles. The challenge will be to integrate many individual cars within a coordinated and optimized public transportation network.

• Designer foods and crops. Through genetic engineering, researchers will develop crops that resist diseases and pests, greatly reducing the need for pesticides and other chemicals. Battelle predicts that most food sold in supermarkets will come from genetically engineered fruits, vegetables, and livestock. And nearly all cotton and wool for our clothing will be genetically engineered.

• Intelligent goods and appliances. Advances in quantum computing will lead to smaller, more powerful computers and electronics that will add amazing intelligence to appliances and other projects. These projects will likely include telephones with extensive phone directories, intelligent food packaging that tells your oven how to cook the food inside, refrigerators that help make out your shopping list and tell where to get the best price on the food you need, and maybe even a toaster that won’t burn your toast.

• Worldwide inexpensive and safe water. Within the next 20 years, clean drinking water could become an expensive commodity. However, before water shortages become critical, technology will answer the challenge with advanced filtering, processing, and delivery of potable water. Desalination of water and water extraction from the air are two possibilities.

• Super senses. One of the hot technologies today is virtual reality. In 20 years, we will be marveling over “enhanced reality.” Using sensors and electronic or genetic technology, we will be able to implant devices that allow us to hear better than ever before or see farther or in the dark.

The Global Technology Revolution¹¹ was based on work conducted by RAND’s National Defense Research Institute for the National Intelligence Council’s report Global Trends 2015.¹² The content consists of “a quick fore-

sight into global technology trends in biotechnology, nanotechnology, and materials technology and their implications for information technology and the world in 2015” (p. iii). The foresight exercise considers potential scientific and technical advances, enabled applications, potential barriers, and global implications. It also identifies wild-card technologies that are not as promising or less likely to mature by 2015, but which would have a significant impact if they were developed.

Trends in the following technologies are discussed, with citations to a lengthy bibliography at the end of the report:

Genomics

Therapies and Drug Development

Biomedical Engineering

The Process of Materials Engineering

Smart Materials

Self-Assembly

Rapid Prototyping

Buildings

Transportation

Energy systems

New materials

Nanomaterials

Nanotechnology

Integrated Microsystems and MEMS

Molecular Manufacturing and Nanorobots

Of these trends, the authors expect certain technologies to have the most promise for significant global effects, although uncertainty is high. In biotechnology, better disease control, custom drugs, gene therapy, age mitigation and reversal, memory drugs, prosthetics, bionic implants, animal transplants, and many other advances should continue to increase the human life span and perhaps performance. And by 2015, it may be possible to use genetic engineering techniques to “improve” the human species and clone humans. The substantial controversy over the use of such techniques should be in full swing by 2015.

In the area of materials, devices, and manufacturing, the most promising advances will be in smart materials, agile manufacturing, nanofabricated semiconductors, and integrated microsystems.

The technology wild cards, advances that are unlikely to have much impact by 2015, include novel nanoscale computers using quantum effect or molecular electronics, molecular manufacturing, and self-assembly methods, including biological approaches.

The authors say their descriptions of technology trends give some indication of what might happen based on current movements and progress, but they acknowledge that the progress in and effect of those trends will be affected by enablers and barriers. They present three graphics showing high-growth and lowgrowth paths for three technologies—genetically modified foods, smart materials, and nanotechnology—and discuss key enabling factors and key barriers in each case.

They also present a number of meta trends based on reviewing the technology trends discussed above and discussions in the open literature:

• Increasingly multidisciplinary nature of technology, in which technology trends are enabled by the contributions of two or more intersecting technologies;

• Accelerating pace of technological advance and change;

• Accelerating social and ethical concerns;

• Increasing need for educational breadth and depth;

• Longer life spans;

• Increasing threats to privacy;

• Continued globalization; and

• Effects of international competition on technology development.

After discussing the possibilities for additive or even synergistic effects from simultaneous progress of multiple technologies and applications and the highly interactive nature of trend effects (e.g., social, economic, political, public opinion, environmental), the authors propose the possibility that the world is experiencing a multidisciplinary technology revolution, going beyond the agricultural, industrial, and information revolutions of the past. They provide a table (p. 46) on which Table E.1 is based.

As part of the technology revolution, the overall workforce will probably have to contribute to and understand increasingly interdisciplinary activities. Consumers and citizens should have a basic understanding of technology to make informed decisions. Scientists, engineers, and technologists will have a greater responsibility to understand and communicate the benefits and risks of technological innovations. Technology workers will probably need a deeper interdisciplinary education to enable teaming and understand when to bring in specialists from other disciplines. They will need to keep their skills current. Truly multidisciplinary teams will be needed for progress in some R&D areas. The old paradigm of hierarchical relations of technology is being replaced with one where a team searches for solutions in multiple disciplines. Finally, the technology revolution is changing the way people interact and live and work.

Science and Technology Issues of National Importance¹³ is a draft of a report on the outcome of a suite of projects designed to aid the incoming director

and staff of the Bush administration’s Office of Science and Technology Policy. After it has undergone RAND’s peer review process, the final version will become a RAND Issue Paper.

First, a team from the RAND Science & Technology Policy Institute worked with the Washington Advisory Group, a bipartisan organization of former senior federal S&T officials, including several presidential science advisors, to identify more than 50 science and technology policy issues of possible importance to the new administration. Second, an external advisory panel consisting of Erich Bloch, Ed David, Steve Dorman, Arati Prabakhar, Frank Press, and Robert White, went over the list and prioritized the issues. The result is 10 science and technology issues on which the new administration should focus policy attention.

1. Strengthening the national aviation system. By 2015, 40 percent of the international commercial fleet will be built by non-U.S. companies, a doubling of market share since 1995. Meanwhile, the flight system is becoming overburdened. Third, the fatal accident rate has not declined for 20 years and the nonfatal accident rate and number of close calls are both growing.

2. Reviewing U.S. export controls on sensitive technologies. Currently, the controls are “a patchwork of outdated laws and regulations that appear to be onerous, ineffective, and poorly suited to modern conditions. New approaches that balance economic and security concerns might better serve U.S. interests.”

3. Reassessing national missile defense options. “Proposals for a new national missile defense pose difficult scientific and technical issues quite apart from political and military considerations.” The President’s science adviser will probably be asked to examine the principal technical concerns.

4. Rethinking global climate change policy. “Evidence is mounting that greenhouse gases are changing the earth’s climate. Numerous alternative energy technologies show great promise for reducing the human impact on global climate without causing adverse economic impacts. However, the Kyoto Protocol’s targets and timetables for reducing greenhouse gas emissions around the world are producing stalemate rather than progress. A new, more flexible and adaptive approach appears in order.”

5. Anticipating energy crises. “The U.S. is facing energy shortages and price rises as well as questions of long-term strategy. Underlying these issues is a deeper set of infrastructure problems that span the energy spectrum. Accordingly, better monitoring and planning are needed to help the U.S. cope with current and likely future energy crises.”

6. Improving education research. “The federal government is the predominant force in education research. As many states adopt reforms and infuse massive new resources into their public schools, the federal government has a unique opportunity to strengthen the scientific research base in education. A more solid research base could, in turn, help states and districts use their resources more productively.”

7. Protecting critical infrastructures. “Critical infrastructures are information networks, infrastructures, and other systems that are vital to economic well being, national security, and public safety. Although these are controlled primarily by the private sector, the ‘public goods’ nature of these private infrastructures suggests a role for government working with the private sector to protect such assets for society at large.”

8. Managing the capabilities of genomic technologies. “Genomic technologies will confront the new administration with challenges no nation has yet faced. Human genetic research could soon offer capabilities never before possible. . . . Such capabilities will also raise serious questions. It will be important for the government to define the potential illegal use of genomic technologies and to provide adequate disincentives and safeguards against such use.”

9. Meeting the governance challenges posed by emerging technologies. “More generally, the pace of technological development in many areas raises fundamental governance challenges. Some of the emerging technology-related challenges include safety protocols and trade rules for the commercial sale of genetically modified foods; privacy of information sent over wireless networks; taxation equity between Internet-based businesses and traditional businesses; and intellectual property protection not only for software but also for new ‘business methods,’ such as online shipping or marketing, and even for strings of genetic codes. Success in governing these emerging issues will depend on cooperation among state and local governments, international organizations, and private industry.”

10. Coordinating federal research priorities to best serve the public interest. “Increasingly, science and technology investments are seen as central to U.S. national well being. Yet the large stake in federal investments—approximately $70 billion annually—is not managed as a coherent whole. To ensure balance across priorities, the administration should consider managing the federal research enterprise as an investment portfolio.”

First, there are different types of reports. Some look at the supply side of technology and project current trends into the future. This type includes the Battelle list of the top 10 strategic technologies for 2020 and the RAND report on trends in biotechnology, nanotechnology, and materials technology and their synergy with information technology from 2000 to 2015. Others look at the demand side. For example, the RAND report on science and technology issues of national importance focuses on societal needs. RAND has also conducted demand-side studies, not summarized here, that focus on industrial needs in the shorter term (e.g., the next 10 years).¹⁴

The national security reports by NIC and the Hart-Rudman Commission are another type of demand study. They look at what the United States needs to ensure national security over the next 15 years, although the emphasis is on how technologies are creating new vulnerabilities in U.S. security such as bioterrorism or attacks on the communications infrastructure.

Still other studies, including those by the Council on Competitiveness and RAND’s Foundations for Growth, focus on the continuing capacity of the U.S. national innovation system to be globally competitive rather than on the supply of (or the demand for) particular technologies. In this approach, trends in the health and performance of R&D institutions are the concern. This approach also highlights trends in the investment of other countries in scientific research, technological development, and education and training of scientists and engineers.

Second, there are some common themes. In those reports that talk about technologies, there is consensus that the main arenas of technological innovation in the United States will be in information technology and biotechnology. There is nearly as much agreement that advances in materials and in micro- and nanotechnology will also be globally important, although they may take longer than 15 to 25 years. More interestingly, the view is that the intersections of those technologies will be where the most innovative advances are made. There are several corollaries. One, innovation will more and more require true interdisciplinary work—not just assembling components from different technologies but designing entirely new products based on knowledge from several fields. Two, partnerships will be used more and more in science and technology innovation.

In those studies that focus on the capacity of the innovation system, there is consensus that the government plays a critical role. Although private R&D is increasing sharply, it does not provide all the elements needed for innovation. Some elements of the system—basic research, education and training, standards setting, and encouraging technology development in certain areas that are too

risky for individual companies to invest in—depend on government actions and resources.

There is also consensus that economic globalization will continue, which will require the United States to increase its capacity (e.g., invest in knowledge and people) to stay competitive.