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2 Impact of Photonics on the National Economy INTRODUCTION The vast diversity of applications enabled by photonics poses both economic promise and policy challenges. On the one hand, technical advances in funda- mental principles of photonics may have broad impacts in many applications and economic sectors. On the other hand, this diversity means that monitoring public and private investment, employment, output, and other economic aspects of photonics is difficult. Photonics is a broad technology rather than an industry, and the economic data assembled by U.S. government agencies do not support a straightforward assessment of the “economic impact” of photonics. For example, there are no North American Industry Classification System (NAICS) codes that enable the tracking of revenue, employment, and industrial research and develop- ment (R&D) spending in photonics-related fields, and we lack data on government R&D spending in photonics. The absence of such information reduces the visibility of photonics within the industrial community and impedes the development of more coherent public policies to support the development of this constellation of technologies and applications. This chapter takes the following form: First, a case study of lasers is used to introduce the field of photonics, and the conceptual challenges of developing estimates of the economic impact of photonics innovations are discussed. Next, company-level data are presented, and the challenges associated with using such data to provide indicators of the economic significance of the “photonics sector” within the U.S. economy are addressed. Next is a discussion of sources of R&D 20
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Impact of Photonics on the N at i o na l E c o n o m y 21 investment within photonics, including government and company funding of R&D, followed by an examination of the ways in which the changing structure of the innovation process within photonics (including sources of R&D funding) reflects broader shifts in the sources of innovation within the U.S. economy. That section motivates the subsequent discussions of the role of venture-capital finance in photonics innovation, the role of university licensing, and the implications of offshore growth in the production of optics and photonics products for innova- tion in the field. This discussion of the changing structure of innovation finance and performance in the United States leads to the next section, which considers the implications of recent experiments in public-private and inter-firm R&D collaboration in other high-technology sectors for the photonics sector. Finally, conclusions and recommendations are presented. THE ECONOMICS OF PHOTONICS: A CASE STUDY OF LASERS The laser is a central technology within photonics, and a brief history of its development and expanding applications provides some insights into the eco- nomic effects of the much broader field of photonics, as well as underscoring the difficulties of measuring the economic impact of such a diverse field. First demonstrated in 1960 by Theodore Maiman of Hughes Aircraft, the laser built on fundamental research on microwave technology by Charles Townes and Arthur Schawlow at Columbia University and Bell Labs, respectively. The laser exhibits many of the characteristics of a “general-purpose technology”1 (other examples include information technology [IT], steam power, and electrical power), in that laser technology itself has been transformed by a series of important innovations, with numerous new types of lasers developed over the past 50 years. Innovations in lasers have broadened the applications of this technology, many of which have produced dramatic improvements in the performance of technologies incorporat- 1 Rosenberg, N., and M. Trajtenberg. 2004. A general-purpose technology at work: The Corliss steam engine in the late-nineteenth-century United States. Journal of Economic History 64:61-99. In this paper, Rosenberg and Trajtenberg highlight four characteristics of a “general-purpose technol- ogy” (GPT): “first, it is a technology characterized by general applicability, that is, by the fact that it performs some generic function that is vital to the functioning of a large number of using products or production systems. Second, GPTs exhibit a great deal of technological dynamism: continuous innovational efforts increase over time the efficiency with which the generic function is performed, benefiting existing users, and prompting further sectors to adopt the improved GPT. Third, GPTs exhibit ‘innovational complementarities’ with the application sectors, in the sense that technical ad- vances in the GPT make it more profitable for its users to innovate and improve their own technolo- gies. Thus, technical advance in the GPT fosters or makes possible advances across a broad spectrum of application sectors. Improvements in those sectors increase in turn the demand for the GPT itself, which makes it worthwhile to further invest in improving it, thus closing up a positive loop that may result in faster, sustained growth for the economy as a whole” (p. 65).
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22 Optics and Photonics: Essential Technologies for O u r N at i o n ing lasers (e.g., fiber-optic communications). Over the course of the 50 years since its invention, the laser has been used in applications ranging from communications to welding to surgery. The Economic Impact of the Laser One measure of the economic impact of the laser is provided by Baer and Schlachter’s 2010 study for the Office of Science and Technology Policy (OSTP),2 which compiled data on the size of three economic sectors in which lasers have found important applications. Baer and Schlachter listed these as follows: • Transportation (production of transport equipment, etc.), estimated to account for $1 trillion in output during 2009-2010; • The biomedical sector ($2.5 trillion); and • Telecommunications, e-commerce, information technology ($4 trillion). The value of lasers deployed in each of these three sectors was respectively estimated at $1.3 billion (CO2 and fiber), $400 million (solid-state and excimer lasers), and $3.2 billion (diode and fiber lasers). It is important to distinguish between the role of lasers as “enabling” the growth of these three sectors and the role of this technology as “indispensable” to these sectors, because the distinction is central to analyses of the economic impact of any new technology. The fundamental question that arises in this context is, What would have happened in the absence of the laser? That is, what if substitutes had been employed to realize some if not all of the benefits associated with the laser’s applications in these sectors? What would have been the cost (both in terms of higher prices and reduced functionality) associated with using non-laser substi- tutes? In some areas (e.g., surgery, some fields of optical communication), substi- tutes might well have been unavailable or would have performed so poorly as to render them useless. In other fields such as welding, however, substitutes for lasers that presented fewer cost and performance penalties might well have appeared. In some cases, substitutes for lasers might well have improved their performance and reliability over time. In the case of the laser as with most major innovations, the data and the meth- odology necessary to conduct counterfactual thought experiments of this sort are lacking, which makes it difficult to develop credible estimates of economic impact. These analytic challenges are no less significant in assessing the impacts of other 2 Baer, T., and F. Schlachter. 2010. Lasers in Science and Industry: A Report to OSTP on the Contribu- tion of Lasers to American Jobs and the American Economy. Available at http://www.laserfest.org/lasers/ baer-schlachter.pdf. Accessed June 25, 2012.
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Impact of Photonics on the N at i o na l E c o n o m y 23 photonics technologies currently in use, and they are truly forbidding where one seeks to predict the economic impact of future applications that have only begun to emerge. Nonetheless, it seems clear that the laser has been adopted in a diverse ar- ray of applications, some of which have underpinned the growth of entirely new methods for the transmission of information.3 Equally important is the way in which continued innovation in laser technology has enabled and complemented innovation in technologies using lasers. This mutual enhancement further extends the adoption of these applications as performance improves and costs decline. Moreover, the appearance of new applications and markets for lasers has created strong incentives for further investment in innovation in lasers. All of this feedback and self-reinforcing dynamics are classic features of general-purpose technologies. Lasers are one example of such a technology within the field of photonics. Funding of Early Laser Development The development of laser technology shares a number of characteristics with other postwar U.S. innovations, in fields ranging from information technology to biotechnology. Like these other technologies, much of the research (especially the fundamental research) that underpinned the laser and its predecessor, the maser, relied on federal funding. Similar to the experience with IT, much of this federal R&D funding was motivated by the national security applications of lasers during a period of high geopolitical tension.4 Industry funded a considerable amount of laser-related R&D, much of which focused on development and applications, but 3 Interestingly, optical communication was the only foreseen application of the laser in 1958. See, for example, Sette, D. 1965. Laser applications to communication. Zeitschrift für angewandte Math- ematik und Physik ZAMP 16(1):156-169. 4 Bromberg, J.L. 1991. The Laser in America, 1950-1970. Cambridge, Mass.: MIT Press. In this study, Bromberg emphasizes another characteristic of federally and industrially financed R&D in the field of lasers: the extent of linkage among research and researchers in U.S. industry, federal laboratories, and academia during the 1945-1980 period: “Academic scientists were linked to industrial scientists through the consultancies that universities held in large and small firms, through the industrial spon- sorship of university fellowships, and through the placement of university graduates and postdoctoral fellows in industry. They were linked by joint projects, of which a major example here is the Townes- Schawlow paper of [sic] optical masers, and through sabbaticals that academics took in industry and industrial scientists took in universities. Academic scientists were linked with the Department of Defense R&D groups, and with other government agencies through tours of duty in research orga- nizations such as the Institute for Defense Analyses, through work at DoD-funded laboratories such as the Columbia Radiation Laboratory or the MIT Research Laboratory for Electronics, and through government study groups and consultancies. They were also linked by the fact that so much of their research was supported by the Department of Defense and NASA” (p. 224). Similar linkages among industry, government, and military research characterized the early years of development of the U.S. computer and semiconductor industries, in contrast to their European and Japanese counterparts.
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24 Optics and Photonics: Essential Technologies for O u r N at i o n much of this R&D investment (particularly in the early years of the laser’s develop- ment) was motivated by the prospect of significant federal procurement contracts for military applications of lasers. The early work in the 1950s of Townes at Columbia University on masers, for example, was financed in large part by the Joint Services Electronics Program, a multi-service military R&D program that sought to sustain after 1945 the wartime research activities of the Massachusetts Institute of Technology (MIT) and Colum- bia Radiation Laboratories, both established during World War II. Military fund- ing supported early work on masers and lasers at RCA, Stanford University, and Hughes Aircraft. R&D related to lasers at the National Bureau of Standards also was closely overseen by military representatives. By 1960, according to Bromberg,5 the Department of Defense (DOD) was investing roughly $1.5 million (1960 dollars) in extramural R&D on lasers, an amount that rose rapidly after Maiman’s demon- stration of the ruby laser at Hughes; by 1962, according to Bromberg’s estimates, the DOD was spending roughly $12 million on laser-related R&D, one-half of the total U.S. R&D investment in the technology. In 1963, total DOD R&D investment, including intramural projects, approached $24 million, which increased to just over $30 million in the late 1970s.6 Another tabulation of military R&D investment es- timates total military laser-related R&D spending through 1978 at more than $1.6 billion (all amounts in nominal dollars).7 The Early Laser Market The military also was a major source of demand in the early laser industry, although its share of the market declined over time as civilian applications and markets grew rapidly. According to Bromberg, the DOD share of the laser market fell from 63 percent in 1969 to 55 percent in 1971.8 Although the DOD dominated the government market for lasers, other federal agencies also were important pur- chasers, and Seidel estimates that total government purchases of lasers amounted to nearly 56 percent of the total market in 1975, increasing to slightly more than 60 percent by 1978.9 Commercial laser sales grew from $1.985 billion in 1983 to 5 Bromberg, J.L. 1991. The Laser in America, 1950-1970. Cambridge, Mass.: MIT Press. 6 Koizumi, K. 2008. AAAS Report XXXIII: Research & Development FY 2009, Chapter 5. Available at http://www.aaas.org/spp/rd/09pch5.htm. Accessed July 30, 2012. 7 Seidel, R. 1987. From glow to flow: A history of military laser research and development. Histori- cal Studies in the Physical and Biological Sciences 18:111-147. 8 Bromberg, J.L. 1991. The Laser in America, 1950-1970. 9 Seidel, R. 1987. From glow to flow: A history of military laser research and development. Histori- cal Studies in the Physical and Biological Sciences 18:111-147.
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Impact of Photonics on the N at i o na l E c o n o m y 25 $2.285 billion in 1984, according to DeMaria;10 government sales in these same 2 years amounted to $1.23 billion and $1.3 billion, respectively. The government share of laser sales almost certainly has continued to decline in more recent years. The dominance of the early laser market by the military services had important implications for the development of the embryonic laser industry. In contrast to the military services of other NATO member nations, U.S. military procurement officials rarely excluded new firms from procurement competitions, although in many cases these firms had to arrange for a “second source” of their products to avoid supply interruptions. The prospect of military procurement contracts there- fore attracted new firms to enter the laser industry and underlaid a growth in the total number of firms working with laser development. The number of new firms in the industry also grew rapidly because of the growth of new laser applications in diverse civilian markets, as well as the growth of new types of laser technologies. Clearly, the military contracts sped up the laser development. The appearance of the diode-pumped solid-state laser in 1988, however, may have triggered the exit from the industry of a large number of firms, and the number of active firms fell to 87 by 2007, during a period of rapidly increasing sales for the industry as a whole. International Comparison Although data allowing for a comparison of the structure of the laser industries of the United States and other nations are not readily available, it is likely that the number of independent producers of lasers in other nations exhibited less dramatic growth and decline. Assuming that this characterization of the laser industries of the United States and other nations is accurate, the differences reflected the prominent role of government demand for lasers in the United States, as well as the important role of U.S. venture capital in financing new-firm entrants into the laser industry. The origin of U.S. and Japanese scientific publications appearing in Applied Physics Letters from 1960 through 2009 on the topic of semiconductor lasers was analyzed by Shimzu (2011);11 data in the study by Shimzu suggest a contrast in the sources of leading-edge laser R&D during this period. Established U.S. firms in the areas of electronics, IT, and communications dominated semiconductor-laser pub- lications during 1960-1964, accounting for more than 80 percent of publications of U.S. origin. These firms’ share of publications dropped sharply after 1964, to 30 to 10 DeMaria, A.J. 1987. “Lasers in Modern Industries.” In Lasers: Invention to Application, J.H. Au- subel and H.D. Langford, eds. Report of the National Academy of Engineering. Washington, D.C.: National Academy Press. 11 Shimuzu, H. 2011. Scientific breakthroughs and networks in the case of semiconductor laser technology in the U.S. and Japan, 1960s-2000s. Australian Economic History Review 51:71-96.
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26 Optics and Photonics: Essential Technologies for O u r N at i o n 35 percent during 1965-1974, before increasing again to 61 percent during 1975- 1979 and 46 percent during 1980-1984. By 2005-2009, however, the established- firm share of U.S. scientific publications in semiconductor lasers had dropped to less than 5 percent. Start-up firms, which contributed no semiconductor-laser publications during 1960-1980, accounted for more than 10 percent of publica- tions during 1985-1989 and 9.25 percent during 2005-2009. U.S. university-based researchers accounted for the majority of U.S. semiconductor-laser publications throughout the 1965-2009 period, as their share grew from slightly more than 57 percent in 1965-1969 to almost 85 percent during 2005-2009. (See Figure 2.1.) The data in the Shimuzu study on publications of Japanese origin in semiconductor-laser research in Applied Physics Letters12 indicate a minimal role for start-up firms as sources of research. Although all papers published in this prestigious journal are reviewed by scientific peers, the burden of translation into English may well introduce some bias into this comparison—papers of Japanese origin effectively have to clear a higher “quality threshold” to appear in this journal. This potential source of bias should be kept in mind in comparing Japanese and U.S. publications. Established Japanese corporations, which accounted for no sci- entific papers during 1960-1969 (see Figure 2.1), contribute a declining share of scientific papers of Japanese origin in semiconductor lasers, although their share declined somewhat less significantly, from 75 percent during 1970-1974 to nearly 40 percent during 2005-2009. Japanese start-up firms, however, played almost no role as a source of scientific publications, appearing only after 2000 in Shimuzu’s data, with a share of 0.74 percent during 2000-2004 and 2.94 percent during 2005- 2009. Japanese universities, which accounted for less than 30 percent of papers of Japanese origin in this journal and field before 1990, by 2005-2009 contributed more than 55 percent. (See Figure 2.1.) Although covering only one area of laser technology and limited to one scien- tific journal, the data analyzed by Shimuzu clearly indicate that new-entrant firms in the United States accounted for a much larger share of scientific activity (as rep- resented by publications) in semiconductor lasers than was true of Japanese start- ups, whereas established Japanese firms have maintained a more prominent role as sources of scientific publications into the 21st century than have U.S. established firms in electronics, communications, or IT. The role of university researchers as sources of published scientific research, however, appears to have grown signifi- cantly in both nations, albeit more dramatically in the United States than in Japan. 12 Ibid.
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Impact of Photonics on the N at i o na l E c o n o m y 27 100% 90% Japan 80% University Startups 70% Other 60% Companies 50% USA 40% University 30% Startups 20% Other Companies 10% 0% 1960- 1965- 1970- 1975- 1980- 1985- 1990- 1995- 2000- 2005- 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 FIGURE 2.1 Comparison between the United States and Japan with respect to different sectors’ contributions to scientific publications that appeared in Applied Physics Letters from 1960 through 2009 on the topic of semi- conductor lasers. (In the set of two bars for each time period, U.S. data are on the left, and Japanese data are on the right.) SOURCE: Based on data in Shimuzu, H. 2011. Scientific breakthroughs and networks in the case of semiconductor laser technology in the U.S. and Japan, 1960s-2000s. Australian Economic History Review 51:71-96. Conclusions from the Laser Case Study This brief overview of the development of laser technology and the U.S. laser industry highlights several issues that are relevant to overall photonics technology. The difficulty of measuring the “economic impact” of lasers reflects the need for any such assessment to rely on assumptions about the availability or timing of the appearance of substitute technologies. These difficulties are more serious for predictions of the economic impact of technologies currently under development. Such predictions rely on guesses about the nature of substitutes and markets, as well as predictions concerning the pace and timing of the adoption of new technologies. The laser’s development also highlights several of the features of general-purpose technologies, namely, their widespread adoption, driven in many cases by contin- ued innovation and improvement in the focal technology, as well as the ways in which users of the technology in adopting sectors contribute to new applications that rely in part on incremental improvements in the technology. In the view of the committee, many other technologies in the field of photonics share these char- acteristics with lasers.
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28 Optics and Photonics: Essential Technologies for O u r N at i o n The development of laser technology and the laser industry in the United States also displays some contrasts with the experiences of other nations, particularly in the important direct and indirect role played by the federal government in the early stages of the technology’s development. Federal R&D and procurement spending, much of which was derived from military sources, influenced both the pace of development of laser technology and the structure of the laser industry, revealed most plainly in the contrasts between U.S. and Japanese scientific publications in laser technology. Moreover, the high levels of mobility of researchers, funding, and ideas among industry, government, and academia were important to the dynamism of the U.S. laser industry in its early years, with few formal policies geared toward “technology transfer” between government or university laboratories and industry such as those in place today. Although military R&D spending continues to account for roughly 50 percent of total federal R&D spending (which now accounts for roughly one-third of total national R&D investment, down significantly from its share during the period of laser-technology development),13 the share of long-term research within the military R&D budget has been under severe pressure in recent years, and congressional restorations of executive branch cuts in this spending have often taken the form of earmarks. Moreover, as the laser industry matures and nonmilitary markets exert much greater influence over the evolution of applica- tions for this technology, the ability of military R&D to guide broad technological advances in this field has declined. ESTIMATING THE ECONOMIC IMPACT OF PHOTONICS— INDUSTRY REVENUES, EMPLOYMENT, AND R&D INVESTMENT IN THE UNITED STATES This section employs estimates of revenues, employment, and R&D investment for a sample of firms that are active in the field of photonics to illustrate the breadth of photonics-based industrial activity in the U.S. economy. The data were provided by the International Society for Optics and Photonics (SPIE) and the Optical Society of America (OSA) and include 336 unique (avoiding double counting of corporations that appear on more than one membership list) corporate members in 2011; 1,009 unique companies that had exhibited at one of the two trade shows in 2011; and 1,785 unique companies listed as employers of 13 National Science Foundation. 2012. Chapter 4, “R&D: National Trends and International Comparison—Highlights.” In Science and Engineering Indicators 2012. Available at http://www.nsf. gov/statistics/seind12/c4/c4h.htm#s6. Accessed July 30, 2012.
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Impact of Photonics on the N at i o na l E c o n o m y 29 professional societies’ individual members in 2011.14 Table 2.1 lists the number of publicly traded and privately held companies in each of these three groups. Note that although the companies listed within each of the three groups described above appear only once, there is overlap among companies appearing on each of the three lists (i.e., a single firm may be listed as a member of one or the other society, as well as an exhibitor and an employer of society members). Aggregating all unique companies across the three groups produces a list of 2,442 unique U.S. companies active in some way within photonics, 285 of which are public and 2,157 of which are privately held, as shown in Figure 2.2. As a point of comparison, there were approximately 5.9 million “employer” firms (firms with payroll) in the United States in 2008, and approximately 17,000 publicly traded companies.15 Thus the present study’s count of companies across the three lists comprises approximately 0.04 percent of all U.S. employer firms and 1.7 percent of all U.S. publicly traded companies. Data on revenues, employment, and R&D spending in 2009 and 2010 for 282 of the 285 publicly traded companies that are listed as members, employers, or exhibitors can be seen in Table 2.2.16 The total revenues associated with these 282 public companies in 2010 amounted to $3.085 trillion, they invested $166 bil- lion on R&D (amounting to 5.4 percent of revenues), and employed 7.4 million individuals. As a comparison point, “employer” firms in the United States in 2008 created an aggregate of $29.7 trillion in revenues and employed an aggregate of 120 14 NAICS or other industry-specific public databases on economic activity in photonics do not currently exist. In an attempt to create a rough estimate of economic activity in photonics, the com- mittee collected three types of information with help from the two largest professional societies in photonics: SPIE and the Optical Society of America (OSA). This information included (1) a list of all U.S.-headquartered member companies for each society, (2) a list of U.S.-headquartered exhibiting companies at the largest trade conference for each society, and (3) a list of all U.S.-headquartered companies associated with individual members of the professional society. The information provided by these societies covers only 2011. In the analysis of this information, the list of member companies was considered to be a rough estimate of companies with strong participation in optics and pho- tonics in 2011, the list of exhibiting companies as a rough estimate of companies selling products involving photonics in 2011, and the list of companies associated with individual members of the professional society a rough estimate of companies with some activities in photonics in 2011. This list of firms also served as the basis for compiling estimates of economic activity during 2010 for the subset of firms for which data were available (see text). It is important to emphasize that each of these estimates is very rough, and it is plausible that some photonics-specialist firms are not captured by these estimates, while other firms for which photonics represents a small share of overall revenues, employment, or R&D investment may be included. 15 According to the U.S. Census Bureau. 2008. “Statistics about Business Size.” Available at http:// www.census.gov/econ/susb/introduction.html. Accessed June 25, 2012. 16 Data from Standard & Poor’s Compustat. Available at http://www.compustat.com/. Accessed June 25, 2012.
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30 Optics and Photonics: Essential Technologies for O u r N at i o n TABLE 2.1 Number of Unique Companies in 2011 That Were Corporate Members, Partici- pated in One of the Two Largest Trade Shows, or Were Associated with Individual Members Across the Two Largest Professional Societies in Photonics Public Private Total By Type No. % No. % No. Corporate members 45 13 291 87 336 Exhibited at trade shows 107 11 902 89 1,009 Employed professional society members 243 14 1,542 86 1,785 SOURCE: Data contributed by SPIE and the Optical Society of America, compiled by Carey Chen, Board on Sci- ence, Technology, and Economic Policy of the National Academies. FIGURE 2.2 Percentage in 2011 of public versus private companies across the 2,442 unique com- panies recorded within the SPIE and OSA databases. SOURCE: Data contributed by SPIE and OSA, and subsequently collated by Carey Chen, Board on Science, Technology, and Economic Policy of the National Academies. million individuals.17 Thus, the public firms listed as active in photonics accounted for approximately 10 percent of U.S.-based employer firms’ revenues and 6 percent of U.S.-based employer firms’ aggregate employment in 2010. Data were also used from Dun and Bradstreet to estimate revenue and R&D expenditures for the publicly traded and privately held firms listed as corporate 17 Public company listings contributed by SPIE and the Optical Society of America. Revenue, employee, and research and development (R&D) expenditure data subsequently collected from Compustat.
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Impact of Photonics on the N at i o na l E c o n o m y 53 benefits) of R&D is public-private partnerships or research.47,48 Past research has found a positive impact of Japanese consortia and of ATP-funded U.S. government- industry joint ventures on the research productivity of participants in the tech- nological areas targeted by the consortia.49,50,51 Indeed, in addition to the support provided by the government’s funding, research consortia can play an important role in supporting network formation, thus increasing knowledge flows among participants,52,53,54,55 and supporting skills56,57 and the creation of new industries.58 In addition to considering research consortia, this section looks at several less widely researched models of coordinated technology development. As Bergh discusses in his paper “Manufacturing Infrastructure for Optoelectronics,”59 it considers three models for the coordination of technology development for a shorter or longer term and with more or less government funding. The first model, SEMATECH, is a not-for-profit research consortium established in 1987 to provide a research facility in which member companies could improve their semiconductor manufacturing process technology. The second, the Optoelectronics Industry De- velopment Association (OIDA), is a not-for-profit partnership of North American suppliers and users of optoelectronic components, established in 1991 to improve the competitiveness of the North American optoelectronics industry with public 47 Spence, A.M. 1984. Cost reduction, competition, and industry performance. Econometrica 52(1): 101-121. 48 Katz, M.L. 1986. An analysis of cooperative research and development. RAND Journal of Eco- nomics 17(4):527-543. 49 Branstetter, L., and M. Sakakibara. 1998. Japanese research consortia: A microeconometric analysis of industrial policy. Journal of Industrial Economics 46(2):207-233. 50 Branstetter, L., and M. Sakakibara. 2002. When do research consortia work well and why? Evi- dence from Japanese panel data. American Economic Review 92(1):143-159. 51 Sakakibara, M. 2003. Knowledge sharing in cooperative research and development. Managerial and Decision Economics 24:117-132. 52 Tripsas, M., S. Schrader, and M. Sobrero. 1995. Discouraging opportunistic behavior in collab- orative R&D: A new role for government. Research Policy 24:367-389. 53 McEvily, B., and A. Zaheer. 1999. Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal 20:1133-1156. 54 Whitford, J. 2005. The New Old Economy: Networks, Institutions, and the Organizational Trans- formation of American Manufacturing. Oxford, U.K.: Oxford University Press. 55 Fuchs, E. 2010. Rethinking the role of the state in technology development: DARPA and the case for embedded network governance. Research Policy 39:1133-1147. 56 McEvily, B., and A. Zaheer. 1999. Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal 20:1133-1156. 57 Whitford, J. 2005. The New Old Economy. 58 Fuchs, E. 2010. Rethinking the role of the state in technology development: DARPA and the case for embedded network governance. Research Policy 39:1133-1147. 59 Bergh, A. 1996. Manufacturing infrastructure for optoelectronics. Lasers and Electro-Optics Society Annual Meeting Conference Proceedings. IEEE. Lasers and Electro-Optics Society LEOS-96. November 18-21, 1996.
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54 Optics and Photonics: Essential Technologies for O u r N at i o n funding from various agencies as well as private membership funding. The third, the National Nanotechnology Initiative (NNI), is one of the largest federal inter- agency R&D programs; established in 2000, today it coordinates funding from 25 federal departments and agencies for nanotechnology research and development. An effective industry coalition would take time and resources to develop and therefore would need staunch commitment by stakeholders. One goal would be to create a collective voice that is knowledgeable and credible to center activities in photonics, to provide a positive influence to the industry, and to keep government agencies and the public informed. The examples below provide insights into how these goals have been achieved through institutions in the United States historically. The model provided by the German Fraunhofer Institutes is discussed in Box 2.2. Semiconductor Manufacturing Technology (SEMATECH) As noted above, SEMATECH was established in 1987 to provide a research facility in which member companies could develop next-generation manufac- BOX 2.2 Fraunhofer Institutes The committee heard reports about the unique and successful photonics activities of the German Fraunhofer Institutes. These institutes represent a novel approach to fostering leading- edge research by a combination of universities, companies, and government. In this approach (1) the government provides an overarching forum and core funding, (2) the industry provides a healthy percentage of the funding but is focused on key areas in which the industry has interest, and (3) the universities provide the intellectual workforce to achieve technological advances. Although it is debated whether this model would be effective in the U.S. institutional structure, this combination has been successful in providing leadership, maintaining interest, and producing impressive technical advances within the German context. Even if the full model is not transferable, aspects of these highly respected Fraunhofer Institutes might be valuable models for the United States, given that these institutes have been playing a pivotal role in technology commercialization and enabling Germany to have a leader- ship position in photonics. For example, this model was instrumental in the recent formation of the €360 million High-Tech Foundation Fund. This fund includes industry and government participation to provide seed capital for start-up companies to commercialize technologies that are spun out of the Fraunhofer Institutes. This fund also enables industry leaders to steer critically needed seed capital to worthy photonics start-up companies without requiring govern- ment agencies to make the selections. SOURCES: Fraunhofer. 2012. Available at http://www.fraunhofer.de/en/html. Accessed June 26, 2012. See also German Center for Research and Innovation. 2012. Available at http://www. germaninnovation.org/about-us. Accessed June 26, 2012.
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Impact of Photonics on the N at i o na l E c o n o m y 55 turing technology.60,61 SEMATECH sought to support horizontal collaboration among U.S. semiconductor producers on the development of process technology. This initial focus, however, proved to be infeasible because of the importance of firm-specific process expertise for the competitive advantage of individual semi- conductor manufacturers.62,63 As a consequence, SEMATECH altered its research agenda to a vertical collaboration model that sought to improve the technological capabilities of U.S. suppliers of semiconductor manufacturing equipment.64 This shift in its research agenda was associated with a shift in SEMATECH’s intellectual property policies—from licensing research results to member firms on an exclusive basis for 2 years, to member firms’ receiving priority in ordering and receiving new models of equipment resulting from SEMATECH-funded research.65 By the mid- 1990s, SEMATECH’s interactions with equipment and material suppliers fell into four main categories: joint development projects, equipment improvement proj- ects, provision of technology “roadmaps,” and expanded communication between suppliers and member firms.66 Although SEMATECH’s role in the improvement of the U.S. industry’s com- petitiveness may be difficult to prove, SEMATECH met most of its revised objec- tives in the development of process technology, the supply of manufacturing equip- ment, and collaboration between manufacturers, suppliers, and research centers.67 Some research suggests that SEMATECH reduced the duplication of member R&D spending 68,69 and that economic returns to member companies outweighed their membership costs.70 Several lessons for the design and structure of public-private consortia can be drawn from the experience of SEMATECH. First, SEMATECH focused primarily on short-term research, with 80 percent of all R&D efforts 60 Grindley, P., D. Mowery, and B. Silverman. 1994. SEMATECH and collaborative research: Lessons in the design of high-technology consortia. Journal of Policy Analysis and Management 13(4):723-758. 61 Link, A., D. Teece, and W. Finan. 1996. Estimating the benefits from collaboration: The case of SEMATECH. Review of Industrial Organization 11:737-751. 62 Grindley et al. 1994. SEMATECH and collaborative research. 63 Carayannis, E., and J. Alexander. 2004. Strategy, structure, and performance issues of precom- petitive R&D consortia: Insights and lessons learned from SEMATECH. IEEE Transactions on Engi- neering Management 51(2):226-232. 64 Grindley et al. 1994. SEMATECH and collaborative research. 65 Grindley et al. 1994. SEMATECH and collaborative research. 66 Grindley et al. 1994. SEMATECH and collaborative research. 67 Grindley et al. 1994. SEMATECH and collaborative research. 68 Irwin, D., and P. Klenow. 1996. High-tech R&D subsidies: Estimating the effects of SEMATECH. Journal of International Economics 40:323-344. 69 Irwin, D., and P. Klenow. 1996. SEMATECH: Purpose and performance. Proceedings of the N ational Academy of Sciences 93:12739-12742. 70 Link, A., D. Teece, and W. Finan. 1996. Estimating the benefits from collaboration: The case of SEMATECH. Review of Industrial Organization 11:737-751.
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56 Optics and Photonics: Essential Technologies for O u r N at i o n focused on outcomes within 1 to 3 years.71 Second, SEMATECH was organized originally by industry, its operations were led and its decisions directed by industry, and it retained substantial support in the form of funding from industry.72 Third, SEMATECH operated with a fairly centralized organizational structure rather than as an umbrella consortium of independent projects (although this characterization is less true for the equipment projects), which facilitated adjustment of its research agenda and operations in response to the changing needs of the industry.73,74 Fourth, SEMATECH drew top executives from member firms into organizational decisions and management.75,76 Fifth, SEMATECH was a consortium of established companies with underlying strengths in product and process technology.77 Optoelectronics Industry Development Association (OIDA) Similar to the situation in the semiconductor industry, the value of a photonics community coalition is apparent in providing leadership to help interface with in- dustry and government on policy matters, as well as in informing the general public and the investment community on current matters. However, previous attempts to form photonics industry trade associations have had limited success, possibly because these organizations did not receive sufficiently broad industry participa- tion. For example, the Laser Electro-Optics Manufacturers Association and OIDA were composed largely of photonics technology manufacturers and tended not to have support from the applications for those outcomes from industry. The case of OIDA is further discussed here. In 1988, a National Research Council study entitled Photonics: Maintaining Competitiveness in the Information Era recommended the formation of “an indus- try association that could help organize consortia to conduct cooperative research and address technical problems and policy issues beyond the scope of any one 71 It is important to point out that the R&D activities of SEMATECH were complemented by two other initiatives. SEMI/SEMATECH represented the U.S. semiconductor equipment producers within SEMATECH, and operated with a modest funding base contributed by the members of the Semiconductor Equipment Manufacturing Industry Association (SEMI); and the Semiconductor Research Corporation (SRC), which enlisted the members of SEMATECH and other U.S. semicon- ductor firms, supported long-term R&D at U.S. universities. 72 Grindley et al. 1994. SEMATECH and collaborative research. 73 Browning, L., J. Beyer, and J. Shelter. 1995. Building cooperation in a competitive industry: S EMATECH and the semiconductor industry. Academy of Management Journal 38(1):113-151. 74 Grindley et al. 1994. SEMATECH and collaborative research. 75 Browning et al. 1995. Building cooperation in a competitive industry. 76 Grindley et al. 1994. SEMATECH and collaborative research. 77 Grindley et al. 1994. SEMATECH and collaborative research.
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Impact of Photonics on the N at i o na l E c o n o m y 57 organization.”78 In 1991, OIDA was founded as a North American partnership of suppliers and users of optoelectronics components to improve the competitiveness of the North American optoelectronics industry.79 Early on, OIDA undertook an Optoelectronic Technology Roadmap Program, intended to identify the critical paths for the development of enabling optoelectronic technologies. This roadmap exercise concluded in 1996 that mastering volume manufacturing was essential to its members’ ability to reduce costs and improve competitiveness.80 The U.S. optoelectronics industry and OIDA have a long-standing association with NIST as well as with the Department of Defense. In October 1997, at the request of OIDA leaders, NIST organized a photonics manufacturing competition within the Advanced Technology Program (ATP) that led to the funding by ATP of 10 proposals from industry.81 In 1992, DARPA began a series of programs, which continued through 2009, to promote the development of new optoelectronics tech- nologies, including direct funding for OIDA workshops and operating expenses. In 1994, NIST’s Optoelectronics Division was founded “to provide the optoelectronics industry and its suppliers and customers with comprehensive and technically ad- vanced measurement capabilities, standards, and traceability to those standards.”82 As indicated by NIST,83 the division’s mission was to maintain close contact with the optoelectronics industry through major industry associations, including the Optoelectronics Industry Development Association, and to represent NIST at the major domestic and international standards organizations in optoelectronics such as the Telecommunications Industry Association and the American National Standards Institute. This division is now part of the new Quantum Electronics and Photonics Division.84 OIDA remains active in technology roadmapping and in the improvement of member-firm capabilities in high-volume manufacturing, including support for such “R&D infrastructure” as an optoelectronics foundry.85 Although the found- 78 National Research Council. 1988. Photonics: Maintaining Competitiveness in the Information Era. Washington, D.C.: National Academy Press. 79 Bergh, A. 1996. Manufacturing Infrastructure for Optoelectronics. 80 Bergh, A. 1996. Manufacturing Infrastructure for Optoelectronics. 81 Kammer, R., Director, National Institute of Standards and Technology. 1998. Prepared Remarks. Optoelectronics Industry Development Association. Washington, D.C., October 2. 82 National Research Council. 1999. An Assessment of the National Institute of Standards and Technology Measurement and Standards Laboratories: Fiscal Year 1999. Washington, D.C.: National Academy Press. 83 More information is available from the NIST Physical Measurement Laboratory at http://www. nist.gov/pml/. Accessed August 6, 2012. 84 Quantum Electronics and Photonics Division. Physical Measurement Laboratory, National In- stitute of Standards and Technology (NIST), website. Available at http://www.nist.gov/pml/div686/. Accessed July 25, 2012. 85 These efforts have produced few measureable outcomes.
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58 Optics and Photonics: Essential Technologies for O u r N at i o n ing membership of OIDA included larger companies, such as AT&T, Bellcore, Corning, IBM, 3M, Hewlett-Packard Company, and Motorola, the number of member companies has declined over the course of OIDA’s history. Further, in contrast to SEMATECH membership, many OIDA member firms are smaller, with less developed technologies, and membership fees for all are low compared to SEMATECH—in the low thousands to tens of thousands. Along with its modest industry funding, a key challenge for OIDA is that of enlisting the participation of senior industry executives in managerial positions. Perhaps most importantly, in contrast to SEMATECH, OIDA has lacked a clear R&D agenda. This consortium’s inability to develop such a focus reflects the diversity of applications characteristic of photonic semiconductors, which complicates agreement among member firms on technological goals. Inasmuch as photonics manufacturing technology is less mature than semiconductor process technologies, the optoelectronics industry might be better served by a university-government-private partnership that focuses more intensively on early-stage R&D. The Semiconductor Research Corporation (SRC) is an interesting contrast to SEMATECH in this respect. (See Box 2.3.) BOX 2.3 Semiconductor Research Corporation The Semiconductor Research Corporation (SRC) is another semiconductor research and development consortium whose structure contrasts with that of SEMATECH. In 1982, the Semiconductor Industry Association launched the Semiconductor Research Association as a cooperative research organization to “enhance basic research in semiconductor related disciplines” by funding “long-term, pre-competitive research in semiconductor technology at U.S. universities.” In contrast to SEMATECH—which was created in 1987 out of an SRC initia- tive—SRC uses horizontal collaborations between member firms and academic researchers to define and fund long-term technology developments central to the survival and success of the semiconductor industry. In addition to SRC’s receiving funding from member firms, SRC program directors also seek matching funds from federal, state, and local governments. Federal-level collaborators have included the U.S. Army Research Office, the Defense Advanced Research Projects Agen- cy, the National Institute of Standards and Technology, and the National Science Foundation. In 2000, the SRC board committed to globalizing the SRC membership and research base. To date, however, little empirical research exists on the history, processes, or successes of SRC. SRC is viewed by several of its member companies as an ongoing success and war- rants further study as an interesting model for research consortia focused on long-term pre- competitive research. SOURCE: Semiconductor Research Corporation. 2012. “About Semiconductor Research Corporation.” Available at http://www.src.org/about/. Accessed August 3, 2012.
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Impact of Photonics on the N at i o na l E c o n o m y 59 National Nanotechnology Initiative In September 1998, the Interagency Working Group on Nanotechnology (IWGN) was formed within the National Science and Technology Council of the Office of Sci- ence and Technology Policy.86 As described in the National Research Council’s 2002 report Small Wonders, Endless Frontiers: A Review of the National Nanoechnology t Initiative (from which material in this paragraph is drawn substantially and, in some cases, extracted), this group formalized the operations of a set of staff members from several agencies that in November 1996 had begun to meet regularly to dis- cuss their plans and programs in nanoscale science and technology. In August 1999, IWGN’s plan for an initiative in nanoscale science and technology was approved by the President’s Council of Advisors on Science and Technology (PCAST) and OSTP, and in its 2001 budget submission to Congress, the Clinton administration raised nanoscale science and technology to a federal initiative, referring to it as the National Nanotechnology Initiative (NNI). The National Science and Technology Council (a cabinet-level committee with membership drawn from federal agencies across the government) formed the Nanoscale Science, Engineering, and Technology (NSET) Subcommittee to focus on NNI activities. The National Nanotechnology Coordi- nation Office, established in 2001, provides technical guidance and administrative support to the NSET Subcommittee, facilitates multiagency planning, conducts activities and workshops, and prepares information and reports. The NRC also provides feedback to NNI through its triennial review of NNI;87 such a review is currently ongoing.88 Today NNI is one of the largest federal interagency R&D programs, coordinat- ing funding for nanotechnology research and development among 25 participating federal departments and agencies. Its federal funding grew from $225 million in FY 1999 to $464 million in 200189 and an estimated $1.639 billion in 2010.90,91 As 86 National Research Council. 2002. Small Wonders, Endless Frontiers: A Review of the National Nanotechnology Initiative. Washington, D.C.: National Academy Press. 87 National Research Council. 2006. A Matter of Size: Triennial Review of the National Nanotechnol- ogy Initiative. Washington, D.C.: The National Academies Press. 88 See National Research Council. 2012. “Interim Report for the Triennial Review of the National Nanotechnology Initiative, Phase II.” Prepublication copy. Washington, D.C.: The National Academies Press. Available at http://www.nap.edu/catalog.php?record_id=13517. Accessed October 23, 2012. 89 National Research Council. 2002. Small Wonders, Endless Frontiers. 90 National Research Council. 2002. Small Wonders, Endless Frontiers. 91 Office of Science and Technology Policy (OSTP): A Decade of Investments in Innovation Co- ordinated Through the National Nanotechnology Initiative. National Nanotechnology Initiative Investments by Agency from FY 2001 through FY 2010. OSTP’s “High Value Data Sets.” The White House. Available at http://www.whitehouse.gov/administration/eop/ostp/library/highvalue. Accessed December 26, 2011.
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60 Optics and Photonics: Essential Technologies for O u r N at i o n stated on the NNI webpage,92 NNI has four goals: (1) maintain a world-class re- search and development program aimed at realizing the full potential of nanotech- nology; (2) facilitate the transfer of new technologies into products for economic growth, jobs, and other public benefit; (3) develop educational resources, a skilled workforce, and the supporting infrastructure and tools to advance nanotechnol- ogy; and (4) support responsible development of nanotechnology. NNI has facilitated several developments to enhance dialogue and coordination among nanoscale R&D programs at federal agencies; these include working groups, an infrastructure network involving an integrated partnership of user facilities at 13 campuses across the United States, centers to support the development of tools for fabrication and analysis at the nanoscale, and NNI-industry consultative boards to facilitate networking among industry, government, and academic researchers, analyze policy impacts at the state level, and support programmatic and budget redirection within agencies. In contrast to either OIDA or SEMATECH, NNI is focused more intensively on priority setting and support for more fundamental, long-term research in this emerging technology. Given the diversity of applications characteristic of photonics and the relative immaturity both of much of the science and much of the industry, the National Nanotechnology Initiative may provide an interesting model for the increased coordination and tracking of long-term funding of research in photonics. Since the writing of the 1998 NRC report Harnessing Light: Optical Sciences and Engi- neering for the 21st Century,93 there has been an explosion of new applications for photonics. Indeed, in spite of the maturity of some of the constituent elements of photonics (e.g., optics), the committee believes that photonics as a whole is likely to experience a period of growth in opportunities and applications that more nearly resembles what might be expected of a vibrantly young technology. SUMMARY COMMENTS The preceding overview of some recent experiments in collaborative R&D makes apparent several implications for similar efforts in photonics. First, industry participation and leadership, both intellectual and financial, are essential. Second, such an industry commitment to collaborative R&D may be more difficult in a sec- tor that spans a diverse array of applications and is populated mainly by new, rela- tively small firms. Finally, consortia (such as SEMATECH) in which industry plays a major role in establishing and funding the R&D agenda may not be well suited for supporting long-term research. An interesting exception may be the model 92 National Nanotechnology Initiative. Available at http://www.nano.gov/. Accessed August 6, 2012. 93 National Research Council. 1998. Harnessing Light: Optical Science and Engineering for the 21st Century. Washington, D.C.: National Academy Press.
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Impact of Photonics on the N at i o na l E c o n o m y 61 presented by the Semiconductor Research Corporation (see Box 2.3), which has supported work by academic researchers in the United States. Nonetheless, given that SRC programs tend to focus on developing technologies to achieve specific end goals that involve stakeholders from a single industry, the long-term precompetitive research agenda supported by the SRC may be insufficient by itself to deal with the diversity of applications that are the focus of R&D within the field of photonics. Rather than endorsing any single structure for the support of R&D that in- volves collaboration among industry, government, and academic researchers, the committee believes that a higher-level venue for discussion and assessment of R&D priorities is needed. Any such structure could include among its activities R&D consortia of the type represented by SRC, or SEMATECH, or still other models for collaborative R&D. A research consortium is more likely to succeed in a focused application of the optics and photonics landscape. In the absence of some coordi- nating initiative, it will prove difficult to develop an effective strategy for public and private R&D investment that seeks to support longer-term R&D and to translate innovation into economic opportunities for U.S. firms and employees across the diversity of emerging photonics applications. Accordingly, the committee’s judg- ment is that the time is overdue for a federal initiative in photonics that seeks to engage industry, academic, and government researchers and policy makers in the design and oversight of R&D and related programs that include federal as well as industry funding. Proposed National Photonics Initiative A national photonics initiative would coordinate agency-level investment in photonics-related R&D and could provide partial support for other technology- development initiatives, including R&D consortia funded by federal and industry sources. The committee believes that a number of experiments in coordinating across industry-government-academia in different fields of R&D and technology development are warranted. As pointed out in the next chapter, “Communications, Information Processing, and Data Storage,” one application area that may be par- ticularly ripe for such a public-private consortium is large-scale data communica- tions and storage, now the focus of an initiative overseen by OSTP.94 Finally, as with NNI, a national photonics initiative would assume responsibility for developing, coordinating, and measuring federal funding and national outputs (such as eco- nomic indicators) in photonics, to help inform national policy. 94 Office of Science and Technology Policy. 2012. “Big Data Press Release.” Available at http://www. whitehouse.gov/sites/default/files/microsites/ostp/big_data_press_release_final_2.pdf. Accessed July 30, 2012.
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62 Optics and Photonics: Essential Technologies for O u r N at i o n FINDINGS Key Finding: Photonics is a key enabling technology with broad applications in numerous sectors of the U.S. economy. The diversity of applications associated with photonics technologies makes it difficult to quantify accurately the economic impacts of photonics in the past and even more difficult to predict the future eco- nomic and employment impacts of photonics. Key Finding: Given the diversity of its applications and the enabling character of photonics technology, data on photonics industry output, employment, and firm- financed R&D investment are not currently reported by U.S. government statistical agencies, further complicating analysis of this technology’s economic impact and prospects. Although the 1998 National Research Council study Harnessing Light: Optical Science and Engineering for the 21st Century reached a similar conclusion and recommended that members of the photonics community be involved in the next round of Standard Industrial Classification (SIC) or North American Industry Classification System (NAICS) development, no such action was taken by federal statistical agencies. Finding: Another significant gap in the economic data on photonics is a lack of systematic collection or reporting by the federal government of its significant investment in photonics R&D. As a result, the most basic data are lacking for esti- mating the overall federal R&D investment in this technology field or the allocation of federal photonics R&D investments among different fields and applications. Finding: The private organizations that monitor U.S. venture-capital investment trends also do not collect information on the full spectrum of photonics-related venture-capital investments. Changes in the structure of the U.S. R&D and in- novation systems mean that the importance of venture-capital funding for the formation of new firms in photonics, as well as for these firms’ investments in R&D and technology commercialization, has grown; thus these gaps in data on venture-capital investment hamper the ability to monitor innovation in photonics. Finding: Many of the important early U.S. innovations in photonics relied on R&D performed in large industrial laboratories and benefited as well from defense- related R&D and procurement spending. The structure of the R&D and innovation processes in photonics, similar to other U.S. high-technology industries, appears to have changed somewhat, with universities, smaller firms, and venture-capital finance playing more prominent roles. These changes in the structure of R&D funding and performance within photonics increase the potential importance of inter-firm collaboration and public-private collaboration in photonics innovation.
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Impact of Photonics on the N at i o na l E c o n o m y 63 RECOMMENDATIONS Key Recommendation: The committee recommends that the federal govern- ment develop an integrated initiative in photonics (similar in many respects to the National Nanotechnology Initiative) that seeks to bring together academic, industrial, and government researchers, managers, and policy makers to develop a more integrated approach to managing industrial and government photonics R&D spending and related investments. This recommendation is based on the committee’s judgment that the photonics field is experiencing rapid technical progress and rapidly expanding applications that span a growing range of technologies, markets, and industries. Indeed, in spite of the maturity of some of the constituent elements of photonics (e.g., optics), the committee believes that the field as a whole is likely to experience a period of growth in opportunities and applications that more nearly resembles what might be expected of a vibrantly young technology. But the sheer breadth of these ap- plications and technologies has impeded the formulation by both government and industry of coherent strategies for technology development and deployment. A national photonics initiative would identify critical technical priorities for long-term federal R&D funding. In addition to offering a basis for coordinating federal spending across agencies, such an initiative could provide matching funds for industry-led research consortia (of users, producers, and material and equip- ment suppliers) focused on specific applications, such as those described in Chap- ter 3 of this report. In light of near-term pressures to limit the growth of or even reduce federal R&D spending, the committee believes that a coordinated initiative in photonics is especially important. The committee assesses as deplorable the state of data collection and analysis of photonics R&D spending, photonics employment, and sales. The development of better historical and current data collection and analysis is another task for which a national photonics initiative is well suited. Key Recommendation: The committee recommends that the proposed national photonics initiative spearhead a collaborative effort to improve the collection and reporting of R&D and economic data on the optics and photonics sector, includ- ing the development of a set of North American Industry Classification System (NAICS) codes that cover photonics; the collection of data on employment, output, and privately funded R&D in photonics; and the reporting of federal photonics- related R&D investment for all federal agencies and programs. It is essential that an initiative such as the proposed national photonics initia- tive be supported by coordinated measurement of the inputs and outputs in the sector such that national policy in the area can be informed by the technical and economic realities on the ground in the nation.