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RISING TO THE CHALLENGE
U.S. Innovation Policy
for the Global Economy
Committee on
Comparative National Innovation Policies:
Best Practice for the 21st Century
Board on Science, Technology, and Economic Policy
Policy and Global Affairs
Charles W. Wessner and Alan Wm. Wolff, Editors
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001
NOTICE: The project that is the subject of this report was approved by the
Governing Board of the National Research Council, whose members are drawn
from the councils of the National Academy of Sciences, the National Academy
of Engineering, and the Institute of Medicine. The members of the committee
responsible for the report were chosen for their special competences and with
regard for appropriate balance.
This study was supported by Contract/Grant No. N01-OD-4-2139, TO #245,
between the National Academy of Sciences and the National Institutes of
Health; Contract/Grant No. DE-PI0000010, TO #15, between the National
Academy of Sciences and the U.S. Department of Energy; Contract/Grant No.
SB1341-03-C-0032 between the National Academy of Sciences and the
National Institute of Standards and Technology of the U.S. Department of
Commerce; Contract/Grant No. OFED-858931 between the National Academy
of Sciences and Sandia National Laboratories; and Contract/Grant No. NAVY-
N00014-05-G-0288, DO #2, between the National Academy of Sciences and the
Office of Naval Research. Any opinions, findings, conclusions, or
recommendations expressed in this publication are those of the author(s) and do
not necessarily reflect the views of the organizations or agencies that provided
support for the project.
International Standard Book Number 13: 978-0-309-25551-6
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Printed in the United States of America
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of
distinguished scholars engaged in scientific and engineering research, dedicated to the
furtherance of science and technology and to their use for the general welfare. Upon the
authority of the charter granted to it by the Congress in 1863, the Academy has a mandate
that requires it to advise the federal government on scientific and technical matters. Dr.
Ralph J. Cicerone is president of the National Academy of Sciences.
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Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in
1916 to associate the broad community of science and technology with the Academy’s
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the principal operating agency of both the National Academy of Sciences and the
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Vest are chair and vice chair, respectively, of the National Research Council.
www.national-academies.org
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Committee on
Comparative National Innovation Policies:
Best Practice for the 21st Century*
Alan Wm. Wolff, Chair Mary L. Good (NAE), Vice Chair
Senior Counsel Dean Emeritus, Donaghey College
McKenna Long & Aldridge LLP of Engineering and Information
and Technology
STEP Board Special Advisor to the Chancellor
for Economic Development
University of Arkansas
Michael G. Borrus
Founding General Partner at Little Rock
X/Seed Capital Management and
STEP Board
Gail H. Cassell (IOM)
Visiting Professor Kent H. Hughes
Department of Global Health Director
and Social Medicine Program on America
Harvard Medical School and the Global Economy
Woodrow Wilson International
Center for Scholars
Carl J. Dahlman
Henry R. Luce Associate Professor
Edmund A. Walsh School Gregory Kats
of Foreign Service President
Georgetown University Capital E
Charles K. Ebinger
Director, Energy Security Initiative
Senior Fellow, Foreign Policy
The Brookings Institution
*As of June 2012.
v
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Project Staff
Charles W. Wessner Sujai J. Shivakumar
Study Director Senior Program Officer
McAlister T. Clabaugh Peter J. Engardio
Program Officer Consultant
David S. Dawson Thomas R. Howell
Senior Program Assistant Consultant
David E. Dierksheide William A. Noellert
Program Officer Consultant
vi
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For the National Research Council (NRC), this project was overseen by
the Board on Science, Technology and Economic Policy (STEP), a standing
board of the NRC established by the National Academies of Sciences and
Engineering and the Institute of Medicine in 1991. The mandate of the Board
on Science, Technology, and Economic Policy is to advise federal, state, and
local governments and inform the public about economic and related public
policies to promote the creation, diffusion, and application of new scientific and
technical knowledge to enhance the productivity and competitiveness of the U.S.
economy and foster economic prosperity for all Americans. The STEP Board
and its committees marshal research and the expertise of scholars, industrial
managers, investors, and former public officials in a wide range of policy areas
that affect the speed and direction of scientific and technological change and
their contributions to the growth of the U.S. and global economies. Results are
communicated through reports, conferences, workshops, briefings, and
electronic media subject to the procedures of the National Academies to ensure
their authoritativeness, independence, and objectivity. The members of the
STEP Board* and the NRC staff are listed below:
Paul L. Joskow, Chair Mary L. Good (NAE)
President Dean Emeritus, Donaghey College
Alfred P. Sloan Foundation of Engineering and Information
Technology
Special Advisor to the Chancellor
Ernst R. Berndt
Louis E. Seley Professor for Economic Development
in Applied Economics University of Arkansas
Massachusetts Institute at Little Rock
of Technology
William H. Janeway
Partner
John Donovan
Chief Technology Officer Warburg Pincus, LLC
AT&T Inc.
Richard K. Lester
Japan Steel Industry Professor
Alan M. Garber (IOM)
Provost Head, Nuclear Science
Harvard University and Engineering
Founding Director, Industrial
Performance Center
Ralph E. Gomory (NAS/NAE)
Research Professor Massachusetts Institute
Stern School of Business of Technology
New York University
continued
*As of June 2012.
vii
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William F. Meehan III Kathryn L. Shaw
Lecturer in Strategic Management Ernest C. Arbuckle Professor
Raccoon Partners Lecturer of Economics
in Management Graduate School of Business
Graduate School of Business Stanford University
Stanford University
and Laura D’Andrea Tyson
Director Emeritus S.K. and Angela Chan Professor
McKinsey and Co., Inc. of Global Management
Haas School of Business
University of California, Berkeley
David T. Morgenthaler
Founding Partner
Morgenthaler Ventures Harold R. Varian
Chief Economist
Google, Inc.
Arati Prabhakar
Atherton, CA
Alan Wm. Wolff
Senior Counsel
Luis M. Proenza
McKenna Long & Aldridge LLP
President
The University of Akron
William J. Raduchel
Chairman
Opera Software ASA
STEP Staff
Stephen A. Merrill Charles W. Wessner
Executive Director Program Director
Paul T. Beaton David S. Dawson
Program Officer Senior Program Assistant
McAlister T. Clabaugh David E. Dierksheide
Program Officer Program Officer
Aqila A. Coulthurst Sujai J. Shivakumar
Program Coordinator Senior Program Officer
viii
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Contents
PREFACE xiii
OVERVIEW 1
PART I: THE INNOVATION CHALLENGE 15
Chapter 1: The Innovation Challenge 17
AMERICA’S INNOVATION CHALLENGES, 18
Capturing the Economic Value of Innovation, 19
Coping with the Growth of New Competitors, 21
NEW TRENDS IN GLOBAL INNOVATION, 23
Strong Policy Focus on Innovation, 23
Rapid Growth in R&D Spending, 25
21st Century Mercantilism, 30
The Search for Talent, 36
The Growth of Foreign Research Centers
of U.S. Multinationals, 37
The Rise of Open Innovation, 39
Growth of Innovative Regions Around the World, 40
THE PILLARS OF U.S. INNOVATIVE STRENGTH, 41
Strong Protection of Intellectual Property, 43
Federal Funding of Research, 44
Research Universities, 44
National Laboratories, 45
The Private Sector, 46
Public-Private Partnerships, 46
RESPONDING TO THE INNOVATION CHALLENGE, 49
Policies to Capture the Value of Innovation
in Some Leading Countries and Regions, 51
The Growing U.S. Response: Federal Government, 53
The Growing U.S. Response: State and Regional Initiatives, 56
Looking Ahead, 59
ix
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x CONTENTS
Chapter 2: Sustaining Leadership in Innovation 61
IMPROVING FRAMEWORK CONDITIONS, 61
SUBSTANTIALLY INCREASING R&D FUNDING, 65
INSTITUTIONAL SUPPORT FOR APPLIED RESEARCH, 72
Germany’s Fraunhofer, 72
Taiwan’s ITRI, 73
South Korea’s ETRI, 73
U.S. Applied Engineering Programs, 74
State Programs, 76
Lessons and Calls for New U.S. Institutions, 77
Recent Initiatives, 78
STRENGTHENING MANUFACTURING, 79
The Link between Manufacturing and Innovation, 84
Support for Manufacturing Overseas, 86
U.S. Support for Manufacturing, 88
Why Manufacturing Matters for the U.S., 95
PROVIDING EARLY STAGE FINANCE, 97
DEVELOPING TWENTY-FIRST CENTURY UNIVERSITIES, 102
U.S. Universities Face Financial Challenges, 103
Growing Investments in Universities Abroad, 105
New Models of 21st Century Universities, 108
New Opportunities for Global Collaboration, 109
Collaboration with Industry, 110
INVESTING IN MODERN S&T PARKS, 111
GROWING INNOVATION CLUSTERS, 113
International Cluster Initiatives, 114
U.S. Regional Cluster Initiatives, 116
The U.S. Federal Role, 116
HUNTING FOR GLOBAL TALENT, 118
THE WAY FORWARD, 121
Chapter 3: Findings 127
Chapter 4: Recommendations 163
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CONTENTS xi
PART II: GLOBAL INNOVATION POLICIES 199
Chapter 5: The New Global Competitive Environment 201
EMERGING POWERS, 203
China’s Rapid Rise, 203
India’s Changing Innovation System, 239
NEWLY INDUSTRIALIZED ECONOMIES, 255
Taiwan, 255
Singapore’s Focus, 265
INDUSTRIALIZED NATION CASE STUDIES, 271
Germany, 271
Flanders, 289
Finland, 298
Canada, 302
Japan, 311
Chapter 6: National Support for Emerging Industries 321
SEMICONDUCTORS, 324
The Strategic Importance of Semiconductors, 328
A New Set of Challenges, 329
Industry Growth and U.S. Policy, 331
The Role of U.S. Trade Policy, 335
New U.S. Research Consortia, 337
Today’s Competitive Challenges, 339
Lessons, 352
THE PHOTOVOLTAIC INDUSTRY, 353
Solar Power’s Strategic Importance, 359
The Industry’s Origins, 360
Competing Technologies, 362
U.S. Advantages, 363
The New U.S. Solar Policy Thrust, 364
The Challenges Ahead, 367
Photovoltaic Policy Questions for the United States, 378
Conclusion, 383
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xiv PREFACE
movement toward freer markets in the 1990s became known as the Washington
Consensus, the second decade of the 21st century is witnessing the emergence of
what may be called the Innovation Consensus.
At the same time that the rest of the world is investing aggressively to
advance its innovation capacity, the pillars of America’s innovation system are
in peril. America’s public research universities are facing severe financial
constraints. High budget deficits and public debt are exerting extraordinary
pressure on federal and state lawmakers to cut spending on the very things that
made the United States the world’s innovation leader in the post-war era—and
that are needed to keep the U.S. economy competitive and productive.
Policymakers are being forced to make painful choices about funding
for universities, applied-research programs, help for small business, and new
energy technologies. While other nations race to build state-of-the-art
transportation systems and ubiquitous high-speed broadband networks,
America’s critical infrastructure suffers from a lack of sustained investment
needed to match rising world standards. Failure to invest in these areas threatens
to inflict long-term damage to America’s innovation ecosystem, and therefore to
its economy and security.
Formulating policy to shore up competitiveness is complicated by the
fact that the United States is one of the few industrialized nations whose
policymakers have traditionally not thought strategically about the composition
of the nation’s economy. America’s international competitiveness is based on its
capacity to innovate and manufacture new services and high-technology
products. While innovation is often thought to result from the operation of a
free market, in fact the government plays an instrumental role through its
investments in R&D, as well as through policies that foster the
commercialization of new ideas.
Since World War II, U.S. science and technology policy has been
conducted under the assumption that federally funded basic research will be
translated by the private sector into commercial products and new U.S.
industries. Indeed, sometimes this transfer to the private sector does occur as
expected. In many other cases, such as with nuclear power, computers,
semiconductors, and aerospace, early government support and procurement has
proved critical to the development of new industries. But the popular
mythology that the American economy has thrived for decades under solely a
laissez-faire tradition and linear approach to innovation policy tends to discount
both the complexity of innovation and the vigorous government role in the
development and deployment of new technologies. It is not just policies directly
addressing the development and deployment of new technologies but also
policies concerning tax, trade, intellectual property, education and training, and
immigration, among others that play a role in innovation. In an age where
Internet content is increasingly important to the economy, a broad range of skills
is needed to secure American capabilities in innovation and competitiveness.
Whatever its source, America’s preeminence no longer can be taken for
granted. New players that regard innovation as a matter of strategic importance
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PREFACE xv
are on the rise. Many governments are seeking to adapt the best features of
America’s innovation ecosystem, such as close collaboration between
universities and business, public and private pools of risk capital, and programs
that encourage researchers to start up their own companies.
Most other industrialized nations also are taking strong measures to
bolster industries in which they are or wish to be competitive and to gain the
benefits of jobs and growth afforded by established or emerging high-tech
industries. In this highly competitive environment, the U.S. needs, once again,
to devote policy attention and resources to the process of innovation because our
future competitiveness as a nation is at stake. This commitment is needed if
high paying jobs in sufficient numbers are to be created and if America's
security is to be assured. The U.S. must understand and urgently address the
underlying factors that may be weakening industries in which we might well
compete.2 The world of innovation is undergoing rapid and significant change,
and America must change with it if the nation is to continue to prosper.
But what exactly should a national innovation policy look like and aim
to achieve? In its essence, innovation is the alchemy of transforming ideas into
new goods, services, and processes. Fortunately, the United States remains very
strong in innovation as it is generally referred to—having ideas that have
economic value to the inventors and in many cases other social value. Yet to
create substantial value for the U.S. economy, policy must seek to achieve more
than to encourage discovery and invention. America’s tremendous investments
in research and development cannot just be seen as a global public good. The
fruits of innovation should translate into new marketable products, companies,
industries, and jobs—and better living standards for Americans. There was a
time when the proximity of U.S. companies' production to U.S. researchers was
sufficient to give U.S. companies a big advantage that made speed less critical.
Modern information and communications technologies have greatly reduced the
significance of proximity, and many countries are taking actions to increase the
pace of innovation.
Understanding how this process works—and how it can be advanced
with public policy—is no simple task. The transformation of ideas into
economic value occurs within adaptive networks of people and institutions that
interact in complex, often ad-hoc ways. National “innovation ecosystems”
typically include universities, private enterprises, public agencies, pools of
investors, and national laboratories. Cultural norms and policy frameworks
condition and shape interactions within and among these organizations. What’s
more, the innovation process can no longer be confined within geographic
boundaries. Globalization has ushered in a swiftly evolving new paradigm of
2
Chapter 6 of this report addresses America’s global competitive standing and policy approach in
emerging high-technology industries including advanced batteries, next-generation photovoltaics,
flexible electronics, and pharmaceutical and bio-medical products.
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xvi PREFACE
borderless collaboration among researchers, developers, institutions, and
entrepreneurs spanning the world.
Many nations and regions have developed strategies to commercialize
and industrialize technological advances. These efforts demand attention from
American policymakers. By investing in extensive applied technology programs,
for example, Germany and Taiwan have remained successful export
manufacturers in advanced industries despite relatively high labor costs.
European nations such as Finland and Belgium have demonstrated the power of
public-private partnerships. Through its steady investments in education and
infrastructure, Singapore is seeking to raise the bar of what it takes to compete
in knowledge industries. India is demonstrating how to drive economic growth
and exploit its intellectual capital by becoming an integral node in international
innovation networks—largely through creating the necessary human resource
base and avoiding excessive regulation of this entrepreneurial activity. The
sheer ambition and scale of China’s investments in science, technology, and
next-generation industries, as well as its less laudable interventions, seek to
redraw the map of the global economy.
STATEMENT OF TASK
The global economy is characterized by increasing locational
competition to attract the resources necessary to develop leading-edge
technologies as drivers of regional and national growth. One means of
facilitating such growth and improving national competitiveness is to improve
the operation of the national innovation system. This involves national
technology development and innovation programs designed to support research
on new technologies, enhance the commercial return on national research, and
facilitate the production of globally competitive products. The Board on
Science, Technology, and Economic Policy (STEP) proposes to study selected
foreign innovation programs and compare them with major U.S. programs. The
analysis, carried out under the direction of an ad hoc Committee, will include a
review of the goals, concept, structure, operation, funding levels, and evaluation
of foreign programs similar to major U.S. programs, e.g., innovation awards,
S&T parks, and consortia. This analysis will focus on key areas of future
growth, such as renewable energy, among others, to generate case-specific
recommendations where appropriate. The Committee will assess foreign
programs using a standard template, convene a series of meetings to gather data
from responsible officials and program managers, and encourage a systematic
dissemination of information and analysis as a means of better understanding the
transition of research into products and of improving the operation of U.S.
programs.
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PREFACE xvii
The first step toward understanding the implications for public policy
of these global trends is to inform ourselves about the new nature of global
competition for human and financial capital—not only between and within
companies but also between governments.3 To this end, the Committee on
Comparative National Innovation Policies (CIP) of the National Research
Council’s Board on Science, Technology, and Economic Policy (STEP)
convened a series of symposia from 2006 through 2011 examining select
innovation policies and programs of different nations and comparing them to
those of the United States. These conferences brought together leading
government officials, industrialists, academics, researchers, and economists
from advanced and emerging nations. The mission was to learn about national
strategies designed to meet the new competitive challenges of the 21st century
global economy and to identify best practices of private and public programs to
strengthen industries, advance new technologies, and meet critical national
needs.4 It is important to note that the Committee did not seek to quantify the
impact of these national strategies and programs. Nor did it seek to directly
compare them with each other, recognizing that these policies and programs
combine different levels of resources and organizational forms to seek different
sets of outcomes within the contexts of different national innovation systems.
Participants at these conferences addressed topics that included the
future of the solar power and advanced battery industries, the issues and
opportunities associated with the rise of China and India, successful applied-
technology and commercialization programs in Europe and Asia, regional
innovation cluster strategies, and the role of such early-stage finance programs
as the U.S. government’s Small Business Innovation Research (SBIR) program.
The National Research Council has recently conducted a number of
studies of U.S. competitiveness. Of particular note are the 2007 report Rising
Above the Gathering Storm5 and a follow-up report published in 2010.6 The
Gathering Storm reports focused heavily on the inputs into America’s
innovation system, such as K-12 science and math instruction, the supply of
scientists and engineers, and federal research funding. The report also included a
series of recommendations to address these deficiencies.
3
In multinational companies such as IBM, American workers often compete against Indian,
Chinese, and other employees that work in their offshore R&D and manufacturing facilities.
4
The National Academies Board on Science, Technology, and Innovation (STEP) has underway a
study examining Best Practices in State and Regional Innovation Systems across the United States.
The study is reviewing the practices and policies of particular regions as well as the synergies
between federal, state, and regional efforts to build high tech clusters of competency and growth.
5
National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine,
Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic
future, Washington, DC: The National Academies Press, 2007.
6
National Academy of Sciences, National Academy of Engineering, and Institute of Medicine,
Rising Above the Gathering Storm, Revisited: Rapidly Approach Category 5, Washington, DC: The
National Academies Press, 2010.
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xviii PREFACE
This report—the product of a series of international conferences,
review of the work of the National Academies and similar institutions, and
extensive discussion within the Committee on Comparative National Innovation
Policies—by contrast, focuses on the outputs of the innovation process. This
volume seeks to increase the understanding of the challenges the U.S. faces in
converting new ideas into new commercial products, companies, industries, and
jobs. While it endorses the findings of the Gathering Storm reports, the
emphasis is on policies and programs that can generate more economic value out
of the discoveries and inventions that flow from American taxpayers’ substantial
investments in research.
LIMITATIONS OF THIS STUDY
A report of this nature necessarily has limits to its scope. Recognizing
this early on, the Committee chose to focus on a limited set of countries and an
illustrative set of industries in its review. No single report can cover the full
range of issues and technologies on this complex topic.
Choice of Countries and Regions: As noted in the Statement of Task,
the purpose of the study is to take a selective review of important (notably
China, India, and Germany) as well as noteworthy policy initiatives (e.g.,
Flanders) to develop national innovation capacity and industrial
competitiveness. The intent is not to present an all encompassing overview such
as those produced by the OECD but to highlight major developments and
national strategies and consider their implications for the United States. The
selection of countries was also driven by the willingness of leading
policymakers, industrialists, and academics in these countries to engage with the
Committee in an in-depth dialogue on these issues.
Choice of Sectors: The Committee also could not look at all sectors in
adequate depth, within the necessarily limited scope of the study. It chose to
focus on advanced manufacturing because it serves to illustrate a broad set of
major challenges facing the U.S. in a highly globally competitive sector. We are
aware that the report does not provide an in-depth discussion of very large and
important sectors such as bio-medicine, aeronautics, and services, where the
U.S. continues to set the technological pace.
OVERVIEW OF THE BOOK
This volume draws together our findings from this extensive study
while also drawing upon existing research concerning the global
competitiveness challenge and the policies and programs that drive it. The
report is in two parts. Part I describes the role of innovation in addressing the
competitiveness challenge and highlights key policies and programs that leading
nations and regions are undertaking to address this challenge. Part I concludes
with the Committee’s consensus findings and recommendations. Part II of this
report provides supporting data, including in-depth case studies of policies and
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PREFACE xix
programs being promulgated in leading nations and regions of the world to
accelerate innovation, grow new industries, and foster knowledge-based
economic growth. The Overview at the front of this volume draws together the
key points.
Part I: The Innovation Challenge
Chapter 1 describes the policies implemented around the world and
the rapidly changing competitive landscape, reviewing the challenges they
present to America’s technological leadership and our ability to convert research
and invention into economic value in the form of new products, companies,
industries, and jobs.
Chapter 2 reviews the wide range of innovation policies adopted by
other nations and regions, as well as by U.S. states, to attract, retain, and nurture
the innovative industries of today and tomorrow. It identifies key trends in
foreign programs and contrasts them with the erosion of existing U.S. strengths.
Chapter 3 sets out the Findings of the Committee.
Chapter 4 sets out the Recommendations, the consensus view of the
Committee concerning steps the U.S. needs to take to address the challenges and
opportunities in research and innovation that the United States faces in the 21st
Century.
Part II: Global Innovation Policies
Chapter 5 provides case studies on several major emerging markets
(China and India), successful industrializing nations and regions (Singapore and
Taiwan), and more mature industrialized nations (Germany, Japan, the Flanders
region of Belgium, Finland, and Canada). Despite their wide differences in
terms of economic models and levels of development, the striking commonality
among the strategies adopted by these nations is that they have adopted national
innovation policies that often reflect the influence of U.S. practices, such as
greater encouragement for universities to work with industry and incentives to
spin off companies.
Chapter 6 of this report addresses America’s global competitive
standing and policy approach in emerging high-tech industries. Our case studies
are of advanced batteries, next-generation photovoltaic cells, semiconductor
manufacturing, and pharmaceutical and bio-medical products. In each of these
sectors, the U.S. has been at or near the forefront in terms of innovation and/or
the creation of promising start-ups. Translating this advantage into globally
competitive industries that create high-paying jobs and drive economic growth,
however, is a challenge that the United States must effectively address. The case
of semiconductors illustrates that U.S. policy can play a role in restoring and
preserving the competitiveness of a critical innovation-intensive industry. The
studies of the advanced-batteries and photovoltaic products assess policy
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xx PREFACE
strategies and options for bolstering U.S. competitiveness in these promising
industries.
Chapter 7 addresses the policy instruments adopted by countries and
regions around the world and across the U.S. to rise to the challenges of building
innovation-led economies. One method is through the research parks with
universities or national laboratories at their nucleus. The chapter explains how
new research parks in the U.S. and abroad are adapting to the demands and
opportunities of the 21st century global economy. The second part of this chapter
analyzes regional innovation cluster initiatives around the U.S. It also explains
the evolving role of the federal government in advancing regional innovation
clusters. Case studies include bold and innovative initiatives in upstate New
York, southeast Michigan, northern Ohio, South Carolina, West Virginia, and
New Mexico.
Caveat: A few words are in order on the nature of this report. Our
purpose in looking at other countries' innovation systems was to draw some
useful lessons for the shaping of U.S. policy. Our intended audience is
Congress, Executive Branch agencies, and all those interested in shaping U.S.
policies that affect innovation.
Each country examined is markedly different from the United States—
for example, Germany is the about the size of one and a half California's, China
and India are at very different stages of development—but each offers insights
into the thinking of policymakers as to what they think will be most effective to
spur innovation. It is through observation of other's policies in this globalized
world that the Committee members have informed their views as to what
adjustments should be considered in U.S. policies.
The challenges and opportunities being created by the worldwide drive
for innovation have never been greater in terms of jobs, income distribution, and
ultimately competitive strength and the health of the U.S. economy. There is no
single program or legislative enactment that will assure complete success;
indeed, there is no panacea. But we are able to identify a series of steps
necessary to improving the country's outlook in these regards. It has been said
that the right thing to do is often hard but seldom surprising.7 America has
great competitive strengths. It is our conviction that if the steps outlined in this
report were adopted, our country's future would indeed be brighter.
The responsibility lies fully with the Committee for the
recommendations contained in this report.
ACKNOWLEDGEMENTS
This Report would not have been possible without the collaboration
with numerous scientific academies, scholars, technology company executives,
7
Adam Gopnik in the New Yorker, April 9, 2012, on Albert Camus, in an essay entitled “Facing
History” about in part editorials that Camus wrote for Combat a resistance newsletter.
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PREFACE xxi
and public officials at home and abroad. It also depended heavily on the
volunteer efforts of CIP Committee members over an extended period of time.
In particular, special appreciation is due to Bill Spencer, the chair of the
Committee during the initial conferences. Special recognition is due to Pete
Engardio, formerly of Businessweek, for his drafting and reportorial skills. His
ability to synthesize a vast amount of material was essential for a report of this
scope. William Noellert deserves our special thanks for his review of data and
economic analysis, as does Thomas Howell for his many substantive
contributions. Both were important to the scope and quality of this report. This
project would not have occurred nor have been brought to its final report stage
without the leadership, knowledge of national and international programs, and
organizational skills of Dr. Charles Wessner. The commitment and support of
his team at the National Academies, including in particular Dr. Sujai
Shivakumar, has been central to the production of this report, as have the efforts
of David Dierkshiede, McAlister Clabaugh, and David Dawson for the many
international conferences that characterized this effort. This report would also
not have been possible without its initiation by the STEP Board and the
encouragement given to it by the Board and the National Academies, as well as
the prior and ongoing work of the Academies on which this report builds.
Sponsors
The National Academies Board on Science, Technology, and Economic
Policy would like to express its appreciation for the sustained support of the
following agencies and departments: Office of Naval Research, National
Institute of Standards and Technology, National Cancer Institute, Department of
Energy, Defense Advanced Research Projects Agency, Sandia National
Laboratories, and National Science Foundation Their contributions of time,
expertise, and financial support were essential to the success of the project.
We would also like to express our appreciation for the active
participation and contributions of the following companies and organizations,
who share a desire to better understand the changing competitive landscape of
the 21st Century: Intel Corporation; International Business Machines; Cisco
Systems; Volkswagen Group of America; Palo Alto Research Center; M Square,
the University of Maryland Research Park; and Association of University
Research Parks.
Acknowledgement of Reviewers
This report has been reviewed in draft form by individuals chosen for
their diverse perspectives and technical expertise, in accordance with procedures
approved by the National Academies’ Report Review Committee. The purpose
of this independent review is to provide candid and critical comments that will
assist the institution in making its published report as sound as possible and to
ensure that the report meets institutional standards for objectivity, evidence, and
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xxii PREFACE
responsiveness to the study charge. The review comments and draft manuscript
remain confidential to protect the process.
We wish to thank the following individuals for their review of this
report: William Bonvillian, Massachusetts Institute of Technology; James
Burns, Sanofi/Genzyme; Erica Fuchs, Carnegie Mellon University; Howard
Gobstein, Association of Public and Land-grant Universities; Manuel Heitor,
Technical University of Lisbon, Portugal; Ron Hira, Rochester Institute of
Technology; Krisztina Holly, University of Southern California; Mark Kryder,
Carnegie Mellon University; Richard Lester, Massachusetts Institute of
Technology; Raghunath Mashelkar, National Innovation Council of India;
Richard Nelson, Columbia University; Charles Phelps, University of Rochester;
Clyde Prestowitz, Jr., Economic Strategy Institute; Mu Rongping, Chinese
Academy of Sciences; Denis Simon, Arizona State University; James Stevens,
Dow Chemical Company; James Turner, Association of Public and Land-grant
Universities; and Richard Van Atta, Institute for Defense Analysis.
Although the reviewers listed above have provided many constructive
comments and suggestions, they were not asked to endorse the conclusions or
recommendations, nor did they see the final draft of the report before its release.
The review of this report was overseen by Christopher Hill, George Mason
University, and Granger Morgan, Carnegie Mellon University. Appointed by the
National Academies, they were responsible for making certain that an
independent examination of this report was carried out in accordance with
institutional procedures and that all review comments were carefully considered.
Responsibility for the final content of this report rests entirely with the authoring
committee and the institution.
FUTURE WORK PROGRAM
The international competition in innovation is increasing.
Globalization has accelerated the pace of change. There is much to be learned
from and about foreign measures and policies that will shape the U.S. economy,
the nation's security and the well-being of the U.S. workforce. Best practices
should be considered for adoption. Measures of foreign governments and
entities that distort international competition must be examined and responses
crafted. There is much to be gained from international cooperation with respect
to global challenges in energy, climate, and health, among others. It is the
strongest recommendation of the Committee that that an ongoing work program
to address these needs and opportunities be put into place.
To this end, the National Academies Board on Science, Technology,
and Economic Policy will establish a new Innovation Policy Forum. The
purpose of this forum is to act as a focal point for national and international
dialogue on innovation policy. The Forum will bring together representatives
from government, industry, national laboratories, research institutes, and
universities—foreign and domestic—to exchange views on current challenges
and opportunities for U.S. innovation policy and to learn about the goals,
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PREFACE xxiii
instruments, funding levels, and results of national and regional programs and
discuss their lessons for U.S. policy and potential impact on the composition of
the economy.
Alan Wm. Wolff
Chair, Committee on
Comparative National Innovation Policies
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