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 economic 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 estimating 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 innovation 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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