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The Government Role in Civilian Technology: Building a New Alliance
Corporation (CTC). The goal of a CTC would be to increase the rate at which products and processes are commercialized in the United States. This objective can be met by stimulating investment in the pre-commercial stage of technology development with high social rates of return, where firms cannot appropriate sufficient benefits of R&D work. Higher levels of investment at this stage of the innovation process will, over the long-term, translate into stronger U.S. performance in technology commercialization.
The CTC would be a quasi-governmental organization, funded through a one-time, $5 billion congressional appropriation. A board of directors, appointed by the president and subject to Senate confirmation, would manage the corporation. The performance and operation of the CTC would undergo an independent, thorough review after the fourth and tenth years of operation.
THE RATIONALE FOR CHANGE
By many measures, the United States remains strong in technology and continues to exhibit considerable industrial strength. We are the most productive nation in the world. Manufacturing output is increasing at a rapid rate; U.S. exports of manufactured goods are growing. As measured by indicators such as patents awarded and the balance of trade in high-technology goods and services, among others, the innovative capacity of the United States remains unsurpassed.
Although the nation's technological performance, relative to its past, is strong, this does not mean that U.S. policy should continue unaltered. The technological competence of our trading partners continues to increase. We need a better balance in technology policy, one that includes support not only for basic research but also for pre-commercial R&D. Moreover, the ability of U.S. companies to adopt new technologies, an important part of economic growth, is weak. As in pre-commercial R&D, market failure is evident in this stage of the technology development process. The federal government should act to address this deficiency.
The most important reason for a new technology policy, one that builds on our comparative strength in research and innovation, centers on productivity. Long-term productivity growth rates remain lower for this country than for our foreign competitors. The United States needs to improve its performance in all areas that promote productivity growth. Investment in civilian technology to achieve higher rates of technology commercialization and adoption is one part of the solution. We should move quickly to achieve this goal.