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Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
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Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
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Page 4
Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
×
Page 5
Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
×
Page 6
Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
×
Page 7
Suggested Citation:"The German and U.S. R&D Systems." National Academy of Engineering. 1997. Technology Transfer Systems in the United States and Germany: Lessons and Perspectives. Washington, DC: The National Academies Press. doi: 10.17226/5271.
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Page 8

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OVERVIEW AND COMPARISON 3 patenting, copyright licensing, and contract research. Technology transfer may be confined to specific regions, or it may span regions or nations within one continent or across several continents. This definition of technology transfer encompasses direct and indirect forms. Direct technology transfer is linked to specific technologies or ideas and to more visible channels such as contract or cooperative research projects. Indirect tech- nology transfer concerns the exchange of knowledge through such channels as informal meetings, publications, or workshops.2 In early stages of the technol- ogy life cycle, indirect technology transfer predominates, so that it is often diffi- cult to trace the origins of specific technologies or ideas. In the public debate, there is a strong tendency to look only at direct technology transfer. However, indirect and direct technology transfer are closely intertwined, and for the com- petitiveness of a country, it is important that both types of transfer be efficient. The following analysis is based on a broad interpretation of technology transfer and is not limited a priori to specific mechanisms. Factors Shaping National Technology Transfer Systems Technology transfer activities within a country are shaped by many different factors. Among the most important of these are the scale and technological inten- sity of the country’s “home” market; the performance of domestic labor and capi- tal markets; the volume and composition of public and private spending on R&D and technology transfer activities within the country; the extent of linkages to foreign sources of technology; the domestic intellectual-property regime; the en- dowment of human capital and R&D/technology transfer institutions; and a broad range of public policies and private practices and attitudes that shape a nation’s collective outlook on innovation, change, and risk. To examine comparatively the organization and performance of the two na- tional systems, both the overview and the country reports focus on factors, poli- cies, practices, and institutions most directly linked to R&D and technology trans- fer. It is important, however, not to overlook major international differences in the scale and nature of domestic markets, in the organization and performance of markets for labor and capital, and in other production factors that have profound consequences for domestic technology transfer systems. This report tries to ad- dress briefly at least the most significant of these issues, but a more detailed analysis of these structural economic factors is beyond the scope of the study.3 THE GERMAN AND U.S. R&D SYSTEMS A comparison of the general size and structure of the German and American national R&D systems reveals a number of fundamental structural similarities and differences. These are the foundation for a more detailed examination of technology transfer activities and institutions within the two countries.

4 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY Major Similarities Germany and the United States invested 2.3 and 2.5 percent, respectively, of their gross domestic product in R&D activity in 1994. Public and private shares of total R&D funding were similar in the two countries in 1994 (roughly 40 percent public and 60 percent private in each) as were the shares of total R&D performed by industry and by higher education and affiliated institutions (66 to 71 percent by industry and 15 to 19 percent by higher education and affiliated institutions) (Table 1.1). Both countries have roughly the same broad institutional categories of R&D and technology transfer performers: universi- ties, government laboratories, public and private affiliated and independent “in- termediary” R&D institutions; and a range of organizations that do not perform R&D but do facilitate technology transfer. Moreover, both countries possess highly diversified public- and private-sector R&D portfolios that span the full spectrum of science and engineering disciplines and a wide range of technologi- cally evolving industries. TABLE 1.1 German and U.S. R&D Expenditures, Percentage by Source of Funds and Performing Sector, 1994 Germany United States R&D Fund R&D R&D Fund R&D Sector Sources Performers Sources Performers Industry 61.5 66.9 58.9 70.8a Government 38.0b 15.2c 37.0d 10.2 Higher Education — 17.5 2.3e 15.5f Private nonprofit 0.5 0.4 1.8 3.5g aIncludes industry-administered federally funded research and development centers (FFRDCs). bStateand federal government funds, as well as funds of the German Research Association and other quasipublic organizations. cIncludes Helmholtz Centers, the Max Planck Society, the Fraunhofer Society, Blue List institutes, departmental institutes, state institutes, and similar publicly chartered institutions. dIncludes $61 billion of federal funds and $1.6 billion of state and local funds specifically targeted for R&D. eIncludes general-purpose state or local government appropriations, general-purpose grants from industry, foundations and other outside sources, tuitions and fees, endowment income, and unre- stricted gifts. fIncludes university-administered FFRDCs. gIncludes FFRDCs administered by other nonprofit institutions. SOURCES: Bundesministerium für Bildung, Wissenschaft, Forschung und Technologie (1996) and National Science Board (1996).

OVERVIEW AND COMPARISON 5 Major Differences The U.S. R&D and technology transfer system is roughly four times the absolute size of its German counterpart, whether measured by the volume of R&D spending, the number of R&D-performing institutions, the size of the R&D workforce, or the volume of high-technology production, patenting, and research publications (Table 1.2). This difference in scale reflects the relative size of the two nations’ economies and populations.4 This size difference does not mean that the two countries are not comparable. Behind the United States and Japan, Germany is the third-largest country in the world in terms of the absolute size of its R&D budget. With that investment, Germany is able to exploit all relevant areas of science and technology, unlike many smaller countries. Nevertheless, the larger scale of the U.S. research enter- prise has certain advantages. Compared with its German counterpart, the large U.S. population of R&D performers means more opportunities for synergy5 and specialization among R&D institutions as well as more intense competition for research funds. The U.S. domestic market has many large-scale, technology- intensive segments that are much more homogeneous than those in the German market in terms of regulation and consumer demand. Thus, the U.S. market offers more opportunities for new high-tech products. The Common Market of the European Union has an absolute volume comparable to the U.S. market, but the actual integration of the different European national markets is still quite limited in comparison with the U.S. market. In the United States, operational responsibility for R&D and technology transfer is more widely distributed among a larger and more diverse population of institutions than it is in Germany. There also appears to be greater diversity and autonomy among U.S. technology transfer agents within each of the major tech- nology transfer sectors than is true in Germany. This diversity is manifested in terms of size (research budgets, staff), ownership and management types (private, TABLE 1.2 The Relative Scale of the German and U.S. Technology Transfer Systems in Context Germany United States R&D Employment (1993) 229,800 962,700 R&D Spending (1994a) $36.8 billion $168.5 billion High-technology manufacturing production (1992b) $175.2 billion $640.2 billion Domestic utility patent applications by nationals (1994) 36,800 107,233 Scientific and technical articles, all fields (1993) 27,902 140,588 aCalculated with purchasing power parity exchange rates. bMeasured in constant 1980 dollars. SOURCES: Deutsches Patentamt (1995), National Science Board (1993, 1996), Organization for Economic Cooperation and Development (1996b,c), U.S. Patent and Trademark Office (1995).

6 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY public, state, federal, for profit, not for profit, etc.), research and technology trans- fer portfolios, and productivity. In other words, the German system is more uni- form across industrial sectors, scientific fields, and regions than its U.S. counter- part. It is also relatively more uniform than the American system in terms of the patterns of federal, state, and private shared funding practices across these sec- tors, fields, and regions. INDUSTRIAL R&D PORTFOLIOS There are important differences in the industrial R&D portfolios of the two countries. As the data in Figure 1.1 indicate, for the past 20 years, German indus- trial R&D has remained concentrated in traditional manufacturing industries in which German firms have long excelled, namely the automotive, electrical and nonelectrical machinery, electronic and communication equipment, and indus- trial-chemicals sectors. Over the same period, the distribution of U.S. industrial R&D activity among sectors has changed significantly (Figure 1.1). U.S. indus- trial R&D has long been more heavily concentrated in high-tech (R&D-intensive) industries than that of its German counterpart. Nevertheless, the U.S. industrial R&D enterprise has seen a rapid increase in the share of total industrial R&D accounted for by several major nonmanufacturing industries6 as well as a dra- matic decline in the share accounted for by the electrical machinery and aero- space sectors, particularly since the mid-1980s. These differences in industrial R&D activity are reflected in the industrial output, exports, and patent portfolios of the two nations. According to patent and trade statistics, U.S. industry excels in the fields of information technology, chem- istry and chemical engineering, biomedical engineering, pharmaceuticals, and biotechnology. German industry specializes in several types of mechanical engi- neering, as well as in civil engineering and some types of chemistry and chemical engineering (Gehrke and Grupp, 1994). ALLOCATION OF PUBLIC R&D FUNDS There are several important differences between the two countries in terms of how they allocate public R&D monies. In the United States, more than half of all public R&D spending is committed to national defense, and an additional 11 percent of the total supports civilian space exploration. By contrast, defense and FIGURE 1.1 (opposite) German and U.S. industry R&D expenditures, percentage by industrial sector, 1973, 1983, 1993. NOTE: The category “electrical machinery and appa- ratus” includes electrical motors, transformers, distribution, accumulators, and lighting. “Electronic and communication equipment” is comprised of electronic components, tele- vision and radio equipment, telecommunications, and audio-visual apparatus. SOURCE: Organization for Economic Cooperation and Development (1996a).

OVERVIEW AND COMPARISON 7 Germany Industrial Chemicals Pharmaceuticals Fabricated Metal Products Nonelectrical Machinery Motor Vehicles 1993 1983 Aerospace 1973 Electrical Machinery and Apparatus Office Machinery and Computers Electronic and Communi- cation Equipment Instruments Other Manufacturing Total Services 0 5 10 15 20 25 30 Percent United States Industrial Chemicals Pharmaceuticals 1993 Fabricated Metal Products 1983 Nonelectrical 1973 Machinery Motor Vehicles Aerospace Electrical Machinery and Apparatus Office Machinery and Computers Electronic and Communi- cation Equipment Instruments Other Manufacturing Total Services 0 5 10 15 20 25 30 Percent

8 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY TABLE 1.3 Distribution of Government R&D Budget Appropriations in the United States and Germany, by Socioeconomic Objective, 1994 Percent of Public R&D Funds Total Funds Civilian Funds Objective United States Germany United States Germany Agriculture 2.5 2.6 5.6 3.0 Industrial development 0.6 15–20 1.3 17–23 Energy 4.2 3.8 9.4 4.4 Infrastructure 2.9 1.5 6.5 1.7 Environmental protection 0.8 4.2 1.8 4.9 Health 16.5 13 36.9 15 Civilian space 10.9 5.6 24.4 6.5 Defense 55.3 8.4 — — Advancement of research 4.0 13.8 8.9 16.0 General university funds — 22–27 — 25–31 Not elsewhere classified 2.3 5.2 5.1 6.0 SOURCES: Bundesministerium für Bildung, Wissenschaft, Forschung und Technologie (1996), National Science Board (1996), calculations by the Fraunhofer Institute for Systems and Innovation Research. space exploration claim only 8 percent and 6 percent, respectively, of total German public R&D expenditures (Table 1.3). In the United States, the areas of computer science and information technology, microelectronics, and aeronautics, in par- ticular, have benefited from the high volume of public defense-related R&D.7 A special focus of German public R&D spending is “industrial development,” which receives 15 to 20 percent of public R&D monies. Less than 1 percent of U.S. public R&D support goes toward such activity. This difference reflects a more direct engagement of German research policy in civilian industrial technol- ogy, which in the United States, with a few notable exceptions, is generally con- sidered to be the province of private institutions. Furthermore, public funding of industrially relevant R&D in Germany appears to be more targeted to particular industries than it is in the United States. Health-related R&D accounts for comparable shares of total public R&D expenditures in the two countries: 16.5 percent in the United States and 13 per- cent in Germany. It should be noted, however, that health-related R&D claims a much larger fraction of the U.S. government’s nondefense R&D spending (37 percent) than it does of the German government’s nondefense R&D budget (15 percent). Publicly funded health-related research has greatly benefited the bio- medical device and instrumentation sector as well as the pharmaceutical indus- tries in both countries. However, in the United States, the therapeutics and diag- nostics biotechnology sector also has been a major beneficiary of government R&D investments.

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This book explores major similarities and differences in the structure, conduct, and performance of the national technology transfer systems of Germany and the United States. It maps the technology transfer landscape in each country in detail, uses case studies to examine the dynamics of technology transfer in four major technology areas, and identifies areas and opportunities for further mutual learning between the two national systems.

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