Welcome

Charles Wessner
The National Academies

Dr. Wessner welcomed participants to the National Academies. The Academies Board on Science, Technology, and Economic Policy (STEP) has, over the past two decades, addressed the importance of innovation as a driver of economic growth and competitiveness and the challenges of transitioning new ideas to the commercial marketplace. The occasion of this meeting, he said, was to launch STEP’s review the role of the Manufacturing Extension Partnership (MEP). MEP was initiated in 1989 by the Department of Commerce’s National Institute of Standards and Technology (NIST). He said that the aim of this workshop was to review, clarify, and publicize the value of the MEP for U.S. manufacturing, and to recommend improvements to the program and to its assessment mechanisms.

In its reviews of innovation policies and programs around the world, said Dr. Wessner, the STEP Board had come to understand the importance of collaboration among the public and private sectors in promoting economic development.1 Seeking to become more competitive and to grow their economies, many other countries are creating effective public-private partnerships involving universities, research centers, private innovation and manufacturing firms; state and federal governments; and foundations.2 This global push for innovation, he said, is characterized by the recognition that:

•  Innovation is a key to growing and maintaining a country’s competitive position in the global economy;

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1National Research Council, Government-Industry Partnerships for the Development of New Technologies, C. W. Wessner, ed., Washington, DC: The National Academies Press 2003.

2National Research Council, Rising to the Challenge: U.S. Innovation Policy for the Global Economy, C. W. Wessner and A. Wm. Wolff, eds., Washington, DC: The National Academies Press, 2012.



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Welcome Charles Wessner The National Academies Dr. Wessner welcomed participants to the National Academies. The Academies Board on Science, Technology, and Economic Policy (STEP) has, over the past two decades, addressed the importance of innovation as a driver of economic growth and competitiveness and the challenges of transitioning new ideas to the commercial marketplace. The occasion of this meeting, he said, was to launch STEP’s review the role of the Manufacturing Extension Partnership (MEP). MEP was initiated in 1989 by the Department of Commerce’s National Institute of Standards and Technology (NIST). He said that the aim of this workshop was to review, clarify, and publicize the value of the MEP for U.S. manufacturing, and to recommend improvements to the program and to its assessment mechanisms. In its reviews of innovation policies and programs around the world, said Dr. Wessner, the STEP Board had come to understand the importance of collaboration among the public and private sectors in promoting economic development.1 Seeking to become more competitive and to grow their economies, many other countries are creating effective public-private partnerships involving universities, research centers, private innovation and manufacturing firms; state and federal governments; and foundations.2 This global push for innovation, he said, is characterized by the recognition that: Innovation is a key to growing and maintaining a country’s competitive position in the global economy; 1 National Research Council, Government-Industry Partnerships for the Development of New Technologies, C. W. Wessner, ed., Washington, DC: The National Academies Press 2003. 2 National Research Council, Rising to the Challenge: U.S. Innovation Policy for the Global Economy, C. W. Wessner and A. Wm. Wolff, eds., Washington, DC: The National Academies Press, 2012. 29

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30 STRENGTHENING AMERICAN MANUFACTURING Collaboration among small and large businesses, universities, and research institutes is essential for innovation; Proven innovation programs, such as the Small Business Innovation Research program (SBIR), can play an important role in supporting this collaboration. Leading countries and regions are responding to the innovation challenge, he said, through similar strategies.3 First, they are focused on growth and strength through— Sustained support for universities. Rapidly growing funding for research. Support for innovative small businesses. A focus on manufacturing. Public-private partnerships to hasten the movement of new products and services to market. In addition, they are investing substantial resources to create, attract, and retain the industries of today and tomorrow. A COMMITMENT TO INNOVATION AROUND THE GLOBE The commitment to innovation around the world had shifted, he said, as indicated by R&D expenditures as a share of economic output. He offered an illustration of this measure for selected countries from 1996 to 2007, with steady increases shown for South Korea, Japan, and China, which had doubled its expenditures on basic research between 2004 and 2007; in comparison, the United States and European Union evinced slow or no R&D growth.4 He also singled out the rapid rise of innovation hotspots like Shanghai and Singapore. The investments of the latter, he said, were “absolutely remarkable,” especially the construction of new science parks and a strategy of attracting and supporting top academic achievers through high salaries.5 Similarly, he said, the government of Australia had begun a program to strengthen research facilities, mobilize capital for young high-tech firms, use public procurement to stimulate commercialization, reach out more to other institutions, and strengthen the institutional framework that supports 3 Ibid. 4 National Science Board, Science and Engineering Indicators 2010, Arlington, VA: National Science Foundation, 2010. 5 In addition to building the major new S&T parks Biopolis and Fusionopolis, Singapore has spent about $5 billion in innovation funding for a population of some 4.5 million.

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PROCEEDINGS 31 FIGURE 1 Global R&D: Measuring commitment to innovation. SOURCE: National Science Board, Science and Engineering Indicators, 2010, Arlington, VA: National Science Foundation, 2010. innovation.6 The Australians were not yet “completely successful,” he said, but they were “focused, investing, and paying attention.” In Germany, he said, the government understood “that if you invest in job training, and if you generate enough productivity, you can offset the high wages paid for manufacturing jobs.” Germany’s notable achievement, he said, is a trade surplus, “which is very impressive.” German manufacturers are even succeeding in exporting manufactured goods to China, Dr. Wessner added, with a 55 percent rise in overall exports to that country in 2011. One reason is that Chinese consumers see German goods as superior in quality to Chinese goods.7 THE PLAYING FIELD IS NOT LEVEL How can the U.S. compete in this environment? Dr. Wessner said that a popular view was that “on a level playing field, the United States can out- 6 Commonwealth of Australia, Powering Ideas: An Innovation Agenda for the 21st Century, 2009. 7 Washington Post, “Made in Germany, Sold in China,” September 17, 2010.

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32 STRENGTHENING AMERICAN MANUFACTURING compete anyone in the world.” He said that there are two errors in this view. The first is that the playing field is not level. “The rest of the world is committed to not having a level playing field,” he said, “particularly where the U.S. might win.” He quoted a foreign official who had once said to him: “Why would we give an American company like Intel a level playing field? They’d beat us every time.” The second problem is the presumption that U.S. workers would necessarily out-compete the rest of the world without sufficient investments in their education and skills development. AN EFFECTIVE INNOVATION POLICY MUST BE HOLISTIC Another lesson from countries with a with successful innovation strategies, he said, is how holistic they are. They are investing more in research and development (R&D), training a skilled workforce, and investing in their nation’s technology infrastructure, including the roads, utilities, and transportation needed for new manufacturing plants. They also focus on clean energy, incentives for entrepreneurship, and pro-manufacturing policies.8 Dr. Wessner said that the recent innovation strategy prepared by the Obama administration was one of the most comprehensive and well-though-out policies the country had ever had, featuring the following elements9: Invest more in R&D. Grow and attract a skilled workforce. Invest in infrastructure for innovation. Invest in clean energy innovation. Reform the patent system [now partially accomplished]. Encourage entrepreneurship. Strengthen manufacturing. He observed that this integrated, coherent approach offers great promise on the condition that it is enacted and funded in the current budgetary environment. AN ASSESSMENT OF U.S. MANUFACTURING IN THE 21ST CENTURY The National Academies assessment of Manufacturing Extension Partnership, Dr. Wessner said, provides us an opportunity to review and 8 National Research Council, Rising to the Challenge: U.S. Innovation Policy for the Global Economy, op. cit. 9 National Economic Council, A Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs, Washington, DC: The White House, 2011.

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PROCEEDINGS 33 document the program's current achievements, challenges, and new opportunities; identify and review similar national programs from abroad in order to draw on foreign practices, funding levels, and accomplishments as a point of reference; and discuss current needs and initiatives in light of the global focus on advanced manufacturing. He closed by introducing the chair of the MEP study, Philip Shapira, a Professor in the School of Public Policy at Georgia Institute of Technology and Professor of Management, Innovation and Policy at the University of Manchester. Dr. Wessner observed that Professor Shapira’s interests “encompass science and technology policy, economic and regional development, innovation management and policy, industrial competitiveness, technology trajectories and assessment, innovation measurement, and policy evaluation.”