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Globalization of Materials R&D: Time for a National Strategy (2005)

Chapter: 5 Assessing the Impacts of Materials Science and Engineering R&D Globalization

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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
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5
Assessing the Impacts of Materials Science and Engineering R&D Globalization

MSE R&D becomes globalized through a variety of mechanisms: domestic R&D activities, academic exchanges, international trade,1 and foreign direct investment, as well as associated spillovers.2 All the evidence indicates globalization of MSE R&D is well under way, so the question is how the United States should react to this phenomenon. Responding to this question requires an understanding of the possible impacts of the phenomenon.3

ECONOMIC IMPACT

Background

Assessing the economic impact of MSE R&D globalization is a challenging task given the complexity of the economic forces driving globalization and the inherent uncertainty surrounding economic outcomes. Quantifying the impact of

1  

R&D is considered a business service in national and balance of payments accounts.

2  

The concept of spillovers is that one invention might speed up other inventions or a country might acquire technological knowledge through imports of intermediate and capital goods. Spillovers can result in a situation where R&D investment creates benefits not only for the inventor but also for others.

3  

The charge for this study limits its scope to the impacts of the globalization of R&D in the MSE sector. It does not call for analyzing the impact of the globalization of the MSE sector as a whole—that is, from R&D, to processing, to manufacturing.

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

BOX 5.1 Economic Impact of R&D Outsourcing

A few studies estimating the economic impact of outsourcing appear to be directly relevant to the study of globalization of MSE R&D. Most of them were carried out using European data and focused more on the outsourcing of intermediate goods and not so much on services.a The most well-known analysis for the United Statesb focused on the outsourcing of intermediate inputs and its effects on the wage premium for skilled workers. The studies did not, however, consider outsourcing of services. A back-of-the-envelope estimate for the IT industryc suggests that the potential benefits of outsourcing services are high and concludes that IT outsourcing led to an annual increase in productivity of 0.3 percent points from 1995 to 2002, or $230 billion in additional GDP.

European studiesd used plant-level data for the electronics industry in Ireland from 1990 to 1995 to show that international outsourcing of services had a positive, albeit not very

a  

Several studies identify cost-saving as the primary motive for outsourcing intermediate goods, among them, Hartmut Egger and Peter Egger, “International Outsourcing and the Productivity of Low-Skilled Labor in the EU,” WIFO-Working Paper 152 (2001), available at http://publikationen.wifo.ac.at/pls/wifosite/wifosite.wifo_search.frameset?p_filename=WIFOWORKINGPAPERS/PRIVATE5397/WP152.PDF; Hartmut Egger and Peter Egger, “Outsourcing and Skill-Specific Employment in a Small Economy: Austria After the Fall of the Iron Curtain,” Oxford Economic Papers 55(4) (2003): 625–643; and Sourafel Girma and Holger Görg, “Evaluating the Causal Effects of Foreign Acquisition on Domestic Skilled and Unskilled Wages,” Bonn: IZA-Institute for the Study of Labor (2003).

b  

Robert C. Feenstra and Gordon H. Hanson, “Global Production Sharing and Rising Inequality: A Survey of Trade and Wages,” National Bureau of Economic Research Working Paper No. 8372 (2001). Feenstra and Hanson construct industry-by-industry estimates of outsourcing (of intermediate products) from 1972 to 1992. Looking at these data, they find that outsourcing contributed substantially to an increase in domestic demand for high-skilled nonproduction workers and in their wages.

c  

Catherine L. Mann, “Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth,” International Economics Policy Briefs 3-11: Institute of International Economics (2003), available at http://www.iie.com/publications/pb/pb03-11.pdf.

d  

Holger Görg, Aoife Hanley, and Eric Strobl, “International Outsourcing and Productivity: Evidence from Plant Level Data,” GEP Research Paper 04/08, Nottingham: University of Nottingham (2004), available at http://www.nottingham.ac.uk/economics/staff/details/papers/holgerweb7.pdf.

MSE R&D globalization requires data gathered over time on (1) domestic and international R&D in various MSE subfields and (2) the contribution of MSE R&D to the production of other goods and services in the economy. Such data are not readily available at present. The objective of this study is therefore more modest: to identify the key factors that are likely to determine the impact of materials R&D globalization on the U.S. economy. Understanding such factors is crucial to making an informed decision about whether any policy intervention is needed and, if so, what form it should take.

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

robust, effect on productivity growth.e Likewise, Girma and Görgf find a positive impact for outsourcing of industrial servicesg on productivity in the U.K. manufacturing industries from 1980 to 1992, although they are unable to distinguish between international and domestic outsourcing.

Turning more narrowly to the issue of R&D, it appears that R&D outsourcing abroad is still relatively small for the subfields considered. However, based on the benchmarking analysis and supported by the analysis of patent data and case studies, the United States seems to be losing the technological lead in some materials subfields. Europe and Japan are already strong competitors for the United States in a number of subfields, and emerging-market countries such as China and India, while not yet major players across the spectrum of MSE R&D, have the potential to become so in some subfields.

e  

The authors find that international outsourcing generally had a positive effect on productivity, most of which could be attributed to outsourcing of material inputs. Similarly, P. Egger, M. Pfaffermayr, and Y. Wolfmayr-Schnitzer, “The International Fragmentation of Austrian Manufacturing: The Effects of Outsourcing on Productivity and Wages,” North American Journal of Economics and Finance 12 (2001): 257–272, find outsourcing of material inputs by Austrian manufacturing firms to Eastern transition economies increases domestic growth in total factor productivity, more so in capital-intensive industries than in labor-intensive ones. Egger and Egger (2003) find that a 1 percent increase in outsourcing of intermediate inputs to East European countries relative to gross production induces a shift in relative employment by about 0.1 percent in favor of high-skilled labor. Egger and Egger (2001) find that outsourcing of intermediate products by EU manufacturing firms reduces the productivity of low-skilled workers in the short run and increases it in the long run, an effect the authors attribute to imperfections in the EU labor and goods markets. (An updated version of Egger and Egger (2001) is in press at the time of finalization of this report for publication in Economic Inquiry in 2005.)

f  

S. Girma and H. Görg, “Outsourcing, Foreign Ownership, and Productivity: Evidence from UK Establishment-Level Data,” Review of International Economics 12(5) (2004): 817–832.

g  

This study defines “industrial services” as “activities such as processing of inputs which are then sent back to the establishment for final assembly or sales, maintenance of production machinery, engineering or drafting services, etc.” They do not include nonindustrial services such as accounting, consulting, cleaning, or transportation. It is not clear where R&D would fit under this definition. The Girma and Görg paper (2003) provides some estimates on the extent of outsourcing by industry.

Some Key Economic Factors

Over the last 20 years or so economists have carried out numerous studies that are helpful when considering the impacts of the globalization of MSE R&D (see Box 5.1, “Economic Impact of R&D Outsourcing)”. The analysis frameworks developed in the course of these studies focus on R&D-based economic growth, international technology diffusion, economic catch-up, international trade, and

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

foreign direct investment.4 The conclusions of these analyses point to some key factors that are likely to determine the impact of MSE R&D globalization on the U.S. economy.

Innovation is an engine of economic growth. Along with labor and capital, it is a key source of growth in the long run. A country with a large stock of human capital and heavy investment in R&D activities has the potential to develop a comparative advantage in high-technology products, to capture a large share of the markets for them, and to run a trade surplus in this category of products. Not only the innovating country but also its trading partners can benefit from the increasing variety and higher quality of products available through international trade.

The global knowledge economy is fueled by an ever-faster information flow, accelerating knowledge generation, and the emergence of new, highly networked ways to handle and disseminate information and knowledge. Almost all industries and sectors have been and are being affected, broadly and specifically, by the globalization in technology. In broad terms, the global landscape can be characterized by shorter R&D and product life cycles, greater productivity, and the consolidation and globalization of production. Globalization of R&D is just one facet of a broader globalization phenomenon exemplified in increasing international flows of goods, services, capital, people, and information.

Government policies on trade, on R&D, and on production subsidies can affect international patterns of specialization, trade, and technology diffusion. In some cases, R&D subsidies—and, more generally, incentives associated with national innovation strategies—might help promote new R&D activities in a country that otherwise would not have had them and create a comparative advantage in a particular R&D area. In other cases, however, R&D subsidies might be counter-productive, because they shift scarce human resources away from more productive activities, such as the manufacture of technology-intensive products.

International technology diffusion—whether through trade, direct foreign investment, or more indirect means—can enhance innovation and economic growth by fostering competition in R&D and by providing successful innovators with greater access to markets. However, to the extent that diffusion might reduce returns to domestic innovators, it would tend to discourage domestic innovation

4  

For recent reviews of the pertinent literature, see, for example, Wolfgang Keller, “International Technology Diffusion,” Journal of Economic Literature XLII (September 2004): 752–782; Jonathan Temple, “The New Growth Evidence,” Journal of Economic Literature XXXVII (March 1999): 112–156; and Gene M. Grossman and Elhanan Helpman, Innovation and Growth in the Global Economy, Cambridge, Mass.: MIT Press (1991); and Gene M. Grossman and Kenneth Rogoff, eds. Handbook of International Economics, Volume 3, Amsterdam: North Holland (1995).

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

and hinder growth. International technology diffusion is not automatic, because some knowledge generated in the course of R&D is tacit and cannot be codified. Countries with better educated workers and greater R&D capacity in specific fields are typically better able to absorb foreign technology and build on it in subsequent R&D activities. Thus, education and R&D capacity are important to ensure that international technology diffusion has a positive impact on domestic innovation and growth.

Countries tend to derive mutual benefit from specializing in goods and services which they trade and can produce at the lowest cost relative to other products—that is, goods and services where they have a comparative advantage. However, if one country manages to improve productivity for an export good that is the specialty of a trading partner, that partner might suffer and find itself worse off, with a resultant loss in wages and jobs.

Government funding is an important factor in R&D levels and patterns in many high-technology fields. The market in R&D services can be skewed by U.S. government support for U.S. corporations whose products have limited immediate commercial value (although they might in the long run generate important spin-offs or have dual applications) but are perceived as crucial for national security.

Some Key Trends

Some key trends in MSE R&D, discussed in more detail in other chapters of this report, are likely to determine the impact of MSE R&D globalization on the U.S. economy.

  • The U.S. economy in general and MSE in particular do not stand alone. Following years of government and corporate policies aimed at opening the United States to the world market and improving access to foreign markets for U.S. firms, the economy is now much more linked to the economies of other countries.

  • International technology diffusion in MSE is facilitated by the fact that many materials are already produced abroad. In recent years, the offshoring of U.S. MSE R&D has been growing along with the increasing level of global activity in MSE R&D and other types of R&D. This offshoring phenomenon, however, appears to remain relatively small—suggesting that the economic impact will be limited in the short term. For a general discussion on offshoring, see Box 5.1.

  • R&D investments by foreign governments and firms, often supported by policy interventions aimed at promoting R&D in materials, are contributing to the emergence of new centers of materials R&D, such as Singapore,

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

China, South Korea, and Taiwan. Some industrialized and emerging market economies have developed an educated labor force and materials production facilities (many of which moved from the United States in the 1980s), improving their ability to close the gap with the world innovation leaders and benefit from materials R&D undertaken in the leading countries. However, the ultimate effectiveness of these incentive measures is unclear.

The evidence suggests that the overall economic impact of materials R&D globalization on the United States has been limited so far, while its medium-term impact is more uncertain. In terms of R&D output, as measured by patent applications in all classes, the U.S. global leadership position remains intact. However, the margin by which it leads, as measured by patent and literature production, has narrowed. While the United States has lost competitive advantage in some materials subfields, such as catalysts, it has maintained it in others—for example, semiconductor research. The overall economic impact of globalization of materials R&D will depend on whether these trends continue and on the relative contribution of various materials subfields to the U.S. economy. In a broader sense, these trends for national security (see below) would also have a bearing on the economic impact.

Discussion

The economic impact of MSE R&D globalization is likely to differ from one subfield to another. A decline in domestic MSE R&D in selected subfields might have a negative effect on domestic growth, wages, and jobs not only in these subfields but in other MSE R&D subfields and industries dependent on materials research. However, a relative decline in one subfield might release resources to be invested in another more promising subfield where the United States enjoys a comparative advantage.

As competitive pressures from the globalization of R&D activities increase, U.S. companies should develop strategies to improve the efficiency of their domestic R&D and focus their domestic efforts on high-value, cutting-edge R&D, such as next-generation technologies and niche materials, and so on. By investing gains from cost-saving actions in new projects, the U.S. companies could generate new knowledge, products, and growth in the medium term. Relocating overseas those R&D activities in which they are relatively less efficient than their foreign counterparts could help U.S. firms to become more efficient overall and to expand domestic R&D activities. By doing so, the United States could also gain from the growing global knowledge base, which will stimulate innovation in all the leading coun-

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

tries. It follows that globalization could facilitate U.S. companies developing new comparative advantages in the integration of various R&D outputs, both domestic and global, into a final product. Experience in the semiconductors industry shows, for example, that the loss of U.S. dominance in DRAM memory chips was accompanied by the development of more sophisticated and lucrative microprocessors, an area in which the United States dominates.

On balance, the United States might well gain from the globalization of MSE, provided that U.S. firms and the government position themselves strategically in the new global R&D environment. The objective is to create conditions at the private and public levels whereby globalization of MSE R&D increases U.S. productivity, efficiency, and innovation capacity. U.S. companies eager to secure continued access to critical R&D and leverage domestic activities must fully integrate and take advantage of foreign R&D and international R&D relationships into their domestic R&D programs.

In summary, the global MSE R&D system is evolving rapidly, in line with broader globalization trends. The general lack of data on global flows of R&D activity and of activity in MSE R&D in particular limits analysis of economic impact. In addition, the lack of a comprehensive empirical framework for the analysis limits a robust understanding of possible impacts. Apparently, however, the impact on the relative position of the United States in MSE research has been limited so far. The medium-term impact is highly uncertain and conditional on the effective management of various risks associated with the globalization of MSE R&D at the corporate, industry, and government levels. If this can be achieved, R&D globalization can have an important positive impact on the nation’s economy.

Conclusion. At this stage, economic analysis is limited by a dearth of data and by the lack of a comprehensive empirical framework. Although available evidence suggests that the globalization of MSE R&D has had a limited impact on the U.S. economy so far, the medium-term impact is highly uncertain. A positive impact will depend on globalized MSE R&D leading to increased U.S. productivity and contributing positively to U.S. domestic innovation.

NATIONAL SECURITY IMPACT

Background and Some Key Trends

After World War II and throughout the Cold War, the nation’s defense services and intelligence communities were successful in their mission of protecting the United States, because in critical technologies the country maintained a one-

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
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to two-generation lead over potential adversaries. U.S. security was maintained through leadership in many fields of R&D and innovation, which together gave the nation a significant lead in military technologies.

The Hart-Rudman Commission5 wrote as follows:6 “The scale and nature of the ongoing revolution in science and technology, and what this implies for the quality of human capital in the 21st century, pose critical national security challenges for the United States.” The commission noted that America’s strength has always been tied to “the spirit and entrepreneurial energies of its people” and that “the U.S. remains the model of creativity and experimentation, inspiring other nations to recognize the true sources of power and wealth in science, technology, and higher education.” It warned, however, that U.S. performance is not keeping up with its reputation and that other countries are striving hard, and, with discipline, they will outstrip America.

A number of studies over the last 5 years have considered how new threats, new adversaries, and new emerging disruptive technologies led to new challenges to which the nation and, specifically, the Departments of Defense and Homeland Security must respond. For summaries of a number of key reports, see Appendix H. The needs identified below are based on the conclusions of those reports.

It is widely accepted that the military in the 21st century will need to communicate faster, more reliably, and on a global scale. New threats require new materials for their detection. New tasks will require new weapons and new materials to make possible new and better delivery platforms. The new systems of the 21st century military will also need to demonstrate multifuctionality, self-diagnosis and self-healing, low cost, low maintenance, environmental acceptability, and high reliability. Some trends in warfare can be expected to continue: The need will increase for a precision strike force that can maneuver rapidly and effectively and survive an attack, all while distant from its command post and base. In addition, the force must be able to conceal its activities from an enemy while detecting enemy activities. Advances in information technology will increase coordination among forces, and global awareness—through real-time networked sensors and communications—will facilitate command and control and enable precision strikes. With the use of unmanned vehicles, military power will be delivered re-

5  

Officially the U.S. Commission on National Security/21st Century (USCNS/21). It was chartered in 1998 by the Secretary of Defense to carry out what was termed the most comprehensive review of American security since the National Security Act of 1947. The commission was asked to deliver a security strategy and implementation plan designed to meet the emerging challenges of the 21st century. It released three reports.

6  

Road Map for National Security: Imperative for Change, February 2001, http://www.nssg.gov/Reports/reports.htm.

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

motely and casualties will be reduced. Fighting in urban areas will increase, requiring entirely different strategies and equipment, and guerilla warfare will require new strategies and weapons.

Some high-priority military areas where it has been recommended that DOD focus its activities on several capabilities are defending against biological warfare; finding and correctly identifying difficult targets; supporting high-risk operations with systems capable of high-risk tactical operations; missile defense; affordable precision munitions that are resilient to countermeasures; enhanced human performance; rapid deployment and employment of forces globally against responsive threats; and the rapid delivery, anywhere, of “global effects.” In addition, the continuing stewardship of the U.S. strategic nuclear arsenal and efforts to counteract the proliferation of nuclear materials across the globe remain a national security priority of the highest order.

Since September 11, 2001, there has been a refocusing of the nation’s attention to national and homeland security. The highest priority is given to developing and utilizing robust systems for the protection, control, and accounting of nuclear weapons and special nuclear materials at their sources; ensuring the production and distribution of known treatments and preventatives for pathogens; designing, testing, and installing coherent, layered security systems for all transportation modes; protecting energy distribution services; reducing the vulnerability of ventilation systems and improving the effectiveness of air filtration in them; deploying known technologies and standards for allowing emergency responders to reliably communicate with one another; and ensuring that trusted spokespersons will be able to inform the public promptly and with technical authority whenever the technical aspects of an emergency dominate the public’s concerns.

Meeting the defense needs of the country in 21st century will rely on R&D in materials and processes to improve existing materials and achieve breakthroughs in new materials and combinations. Some of the materials needed are these:

  • Lightweight materials that provide functionality equivalent to that of heavier analogs,

  • Materials that enhance protection and survivability,

  • Stealth materials,

  • Electronic and photonic materials for high-speed communications,

  • Sensor and actuator materials,

  • High-energy-density materials, and

  • Materials that improve propulsion technology.

Future defense systems would employ advanced materials that are self-healing, that can interact independently with the local environment, and that can

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

monitor the health of a structure or component during operation. Some advanced materials could serve as hosts for embedded sensors and integrated antennas. Others could deliver high performance in structures by protecting against corrosion, fouling, erosion, and fire; controlling fractures; and serving as fuels, lubricants, and hydraulic fluids. The next 20 years will present the materials community with daunting challenges and opportunities. Material producibility, cost, and availability requirements will be much more demanding than they are today. On the other hand, spurred by the rapid pace of advances in electronics and computation, the performance, life span, and maintainability of materials will be greatly enhanced.

Discussion

The margin of U.S. leadership in MSE R&D is eroding because knowledge and the intellectual capacity to generate new knowledge are proliferating around the globe. China, Korea, India, Japan, and the EU are making substantial investments in their R&D infrastructure, in science and engineering education, and in a variety of major R&D programs. Some nations are developing strategies for the promotion and support of innovation societies. Furthermore, U.S. companies are shifting a portion of their MSE R&D overseas as product development and technical support follow manufacturing. This process is driven by several forces, not the least of which is the substantial and growing availability of intellectual resources offshore, often at less cost, as well as by the increasing availability of unique technologies not found in the United States.

The global shifts in MSE R&D cannot be reversed or stopped. Even if the United States were to make great efforts to keep American technologies, knowledge, and capabilities under its control, the investments that other governments are making in their own domestic knowledge-creation capabilities will challenge America’s military, homeland defense, and intelligence communities in their attempts to lead in technology. The loss of a national capacity in materials research, and of the manufacturing capability to take advantage of that research, is not just a matter of national pride or international image. In a knowledge-based future, only an America that continues to have access to and, in many cases, to generate cutting-edge science and technology will sustain its current world leadership in national-security and homeland-defense capabilities.

Arguably, there is a strong connection between national security and the health of the national economy. As discussed in this report, the impact of globalization on the nation’s economy will depend on a reliable supply of competent knowledge workers who can produce and direct innovation in key areas. The supply of this

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

knowledge base, however, is critical, not only for the health of the U.S. economy but also for the continued health of the country’s national security.

It is possible that the globalization of MSE R&D will be like the rising tide that raises all boats—that is, increased global activity will lead to innovations, discoveries, and technologies that drive new economies and industries and open new paths for the United States to acquire access to the best materials and technologies required for national security and homeland defense. In addition, it is widely accepted that economic growth around the world, and the growth of international trade, can help underpin global security. In this sense, the globalization of research might benefit U.S. national security.

However, the benefits are not certain and neither are the risks. The following questions and suggested responses, while speculative in places, highlight important issues surrounding this uncertainty:

Will the globalization of MSE R&D reduce U.S. national capability in materials subfields of national importance?

The narrowing of U.S. leadership in certain MSE subfields is evident from the shifting trends in literature and patent statistics; flat or falling enrollments and the evolution of curricula in U.S. universities; and the loss of manufacturing and industrial-research capabilities. Some of the key trends are evident in the subfields of metallurgy—particularly in superalloys, so critical to national security—and catalysis. While the strength of these trends varies from one subfield to another, the trends themselves are clear and point to a loss in national capability in materials subfields of national importance.

Do the shift of R&D to new centers of research around the globe and the associated diminishing U.S. supply of educated workers and innovators across the spectrum of materials activity pose a risk to national security?

With low numbers of American-citizen MSE researchers, experts, and innovators being produced, research of critical national importance has become reliant on scientists and engineers trained outside the United States or on U.S.-trained noncitizens. The emergence of new centers of high-value research across the globe has led to competition for the world’s best students and experts and impacts the nation’s ability to attract top researchers. Any reduction in the supply of non-U.S. experts along with the acknowledged difficulty of attracting U.S. citizens to MSE will affect the overall supply of top scientists and engineers within the United States ready to conduct the MSE R&D needed for national security. Any such loss in expertise will diminish not only the value of the U.S. research output but also, in the long term, the nation’s capacity to recognize, understand, and exploit the research output of the rest of the world.

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

What are the risks of any loss of research, innovation, human capital, or technology-deployment capability?

The risks of losses in U.S. capacity in critical areas of technology, research, and innovation and in human capital are clear. The United States has led the world in national-security-oriented R&D since the days of the Manhattan Project. A loss of leadership in U.S.-based capability will have serious implications for national security, increasing the country’s dependence on technology developed (and perhaps manufactured) outside the United States and decreasing the capacity gap between the United States and the rest of the world.

What are the longer-term implications of changes in the balance of national U.S. expertise and knowledge in subfields of materials?

From a worst-case scenario perspective, would a loss in capacity in one or many MSE R&D subfields affect the ability of the United States to define what the continuing needs of the nation are? Is the capacity for the United States to continue to identify national needs in MSE at risk if U.S. experts are not being produced in sufficient numbers and with sufficient expertise? Is the ability of the United States to continue to be a leading participant in the global research effort in jeopardy? Is there a risk to the future ability of the United States to successfully analyze what the rest of the world is doing? If the answer to these questions is yes, then there is a real risk that the one- to two-generation lead the United States has enjoyed in national security technology will be eroded. However, a national effort can mitigate these risks. What is needed is a flexible strategy that recognizes that the nation’s advantage may not always prevail and that adjusts accordingly.

In summary, MSE continues to be important by virtue of its contributions to the national-security and homeland-defense capabilities of the country. It is clear, therefore, that the evolution of MSE research will impact U.S. capabilities to defend against emerging threats.

Conclusion. The results of MSE R&D continue to enhance U.S. national security and homeland defense by adding improved materials capabilities to the weapons and protective systems used by today’s warfighters. The evolution of materials research in the United States and abroad will affect the nation’s ability not only to defend against emerging threats of the 21st century but also to ensure a healthy economy as a basic underpinning of national security. Because knowledge and the intellectual capacity to generate new knowledge are proliferating across the world, because innovation and development cycles are becoming shorter, and because U.S. dependence on foreign sources of innovation is increasing, the lead in critical technologies enjoyed thus far by

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×

the U.S. defense and intelligence communities will be seriously eroded without mitigating action.

ACCESS AND CONTROL

A key question for this study is, How can the United States ensure continued access to critical materials R&D? The nation can no longer assume that the most important MSE innovations will take place in the United States or be developed by U.S. companies in a foreign regulatory environment that allows for U.S. control of the innovations and their use.

It is easy to equate access with control. The United States has an array of regulatory environments for controlling access to information and technology related to national security. Until now, the controls on intellectual property and technologies and knowledge deemed by the federal government as critical to national security have managed to guarantee access to the results of R&D associated with this knowledge. In addition, these regulatory regimes have an impact on international cooperative R&D. Now, however, the regulations are not sensitive to the changing geopolitical environment of the 21st century and are not necessarily supportive of private-sector decisions on where to locate R&D. Faced with the globalization of MSE R&D, a one-dimensional approach to retaining access may no longer be in the national interest.

With the globalization of MSE R&D, cutting-edge innovation can be expected to emerge from both traditional centers of research—such as the United States, Japan, and Europe—and countries such as China, India, Singapore, and Korea, which have not so far been centers of important and substantive materials innovation. Many of these countries have yet to fully develop their own IP regimes to meet accepted international norms and export-control regimes for the technologies and know-how produced within their borders.

With increasing globalization, a situation can be envisioned whereby a country that has not been a traditional ally of the United States could institute control over a new and critical technology developed within its borders. Although this control might be motivated by economic rather than national security concerns, the impact could nevertheless be felt in the United States and could lose the United States a critical military or national-security advantage. In the extreme case, if continuing globalization results in the loss of a critical level of knowledge and expertise in the United States, critical innovations might go undetected and unevaluated. In the short term, the uncertainties surrounding control and ownership of knowledge and innovation might deter corporate investments in these emerging centers of R&D activity. However, in the long term the development and

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
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institutionalization of national control regimes in these countries might become an even greater concern for the United States.

Controlling and limiting access to U.S. knowledge will not, in itself, prevent the emergence of technology from new centers, and it will not guarantee the emergence of similar and equivalent innovation here in the United States, nor will it facilitate access to these new innovations. Therefore, a different approach to guaranteeing access is needed that is not based solely on control. The idea of maintaining access is at the core of the forward-looking conclusions and recommendations contained in Chapter 6 of this report.

Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 108
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
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Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 111
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 112
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 113
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 114
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 115
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 116
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 117
Suggested Citation:"5 Assessing the Impacts of Materials Science and Engineering R&D Globalization." National Research Council. 2005. Globalization of Materials R&D: Time for a National Strategy. Washington, DC: The National Academies Press. doi: 10.17226/11395.
×
Page 118
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Materials Science and Engineering (MSE) R&D is spreading globally at an accelerating rate. As a result, the relative U.S. position in a number of MSE subfields is in a state of flux. To understand better this trend and its implications for the U.S. economy and national security, the Department of Defense (DOD) asked the NRC to assess the status and impacts of the global spread of MSE R&D. This report presents a discussion of drivers affecting U.S. companies' decisions about location of MSE R&D, an analysis of impacts on the U.S. economy and national security, and recommendations to ensure continued U.S. access to critical MSE R&D.

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