possible from political concerns; (4) include a diversified set of R&D objectives; (5) undergo rigorous project evaluation and review; and (6) be open to foreign firms characterized by substantial contribution to U.S. Gross Domestic Product (GDP).

Strengthening Government Technology Programs

The first step in building a new alliance between government and industry in civilian technology is action to strengthen federal programs that facilitate private sector research and development, and the transfer or adoption of technology. Specifically,

  • the Defense Advanced Research Projects Agency's role in dual-use technology development—especially in the area of information technology—should be reaffirmed;

  • a small number of the 700 federal laboratories should be selected to work with private firms in an effort to enhance technology transfer;

  • the scope of selected mission agency R&D programs should be enlarged to include pre-commercial projects;

  • funding for the Small Business Innovation Research program should be increased;

  • the Advanced Technology Program has had a promising start—although past budgets were insufficient to have a significant impact on technology commercialization—and should be evaluated, by an independent group, to determine the desirable size of the program; and

  • a new Industrial Extension Service should be created at the Department of Commerce to speed technology adoption by U.S. Industry.

Federal Responsibilities Beyond Current Programs

A new technology strategy for the post-Cold War era must include more than revisions in current federal programs. The government should act to correct the failure of private markets to support pre-commercial R&D. It should create incentives for private investment at this important point, where firms cannot appropriate (capture) the economic benefits of investment. Just as the government acts to prevent underinvestment in basic research through federal funding, policymakers must recognize and should alleviate market failure somewhat downstream in pre-commercial R&D, as well.

Promoting Investment in Pre-Commercial R&D

The most appropriate way to promote any substantial federal investment in pre-commercial R&D is through creation of a Civilian Technology

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