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The Need for National Consensus to Improve Competitiveness ALBERT BOWERS Many Americans do not recognize the full significance and seri- ousness of the decline in this country's international economic com- petitiveness. Therefore, we do not as yet have sufficient national resolve to take the steps necessary to regain and sustain our inter- rzational technological and industrial leadership. In January 1985 I was cochairman, with Admiral Bob Inman, of a session on the transition from basic research to commercial application at a meeting of the Business-Higher Education Forum. (The Forum is a group of university presidents and business leaders who get together to discuss critical common issues.) The discussion in this chapter represents the collective wisdom of Be participants of that meeting and, in particular, the contnbunon by Denis Prager of the MacArthur Foundation. The ideas expressed at that meeting are relevant to the goals of this volume, in which many of the concerns voiced at the Forum meeting are raised. America's competitive decline in international markets can readily be seen by the increasing share of world markets being captured by our competitors. We see it in our traditional industries, such as automobiles and steel. We also see it in a wide range of high technology, entrepreneurial industries, such as semiconductors, computers, machine tools, consumer electronics, and many others As Robert A. Swanson (in this volume) points out, phar- maceuticals and biotechnology are areas that have been targeted by our competitors, particularly Japan. Ln attempting to identify some of the major factors responsible for this country's relative competitive decline, it is instructive to compare our nations 511

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512 ALBERT BOWERS environment with that of one of our principal competitors, Japan. The Jap- anese approach to international economic competition is marked by national commitment and dedication, cooperation, strong government leadership and involvement, and targeted strategies. How did Japan, with virtually no in- digenous natural resources, rise from the ashes of a devastating defeat at the end of World War II to become, in less than 40 years, the country to be reckoned with in international technology markets? They did it by Resolving to become the strongest nation economically. Placing that goal above all others and making the sacrifices and com- prom~ses necessary to make that goal a reality. Establishing, legal, regulatory, financial, and social environments that strongly support the efficient development and commercialization of tech- nolo~,y. Organizing government, industry, labor, banking, and higher education into an effective and efficient team to achieve that goal. Targeting specific markets, establishing, market-share goals, and ad- hering to stringent timetables for achieving those goals. Sticking tenaciously to a long-term strategy, even though it meant for- going immediate profits. Concentrating resources on the development of superior manufacturing technologies rather than on research. Establishing a f~rst-rate intelligence system to identify foreign scientific discoveries and technological innovations for appropriation and commer- cialization by Japanese industry. Acquiring the needed technologies through joint ventures and other arrangements. For example, between 1950 and 1978, Japanese companies entered into 32,000 such arrangements at a total cost of $9 billion a very small fiction of their actual worm. Japanese companies, helped by their government, bought technology at bargain prices. Infusing selected industries with plentiful, low-cost capital, which al- lowed them to offer to the world's markets products priced at levels well below Hose of their competitors. Inhibiting access to Japanese domestic markets by foreign competition. The American approach to international economic competition stands in marked contrast to that of the Japanese and reflects, to a large degree, the difference in the two cultures. In Japan, a very tiny, highly homogeneous country, a national consensus is relatively easily established and imple- mented. In the United States, a large, highly diverse country of independent- minded people, a national consensus on a complex issue is extremely difficult to achieve and even more difficult to implement. In the Japanese culture, He line dividing He public and private sectors is very fine. This allows strong government leadership and involvement in innovation. On He other hand, our free enterprise system requires a strict division between the public and

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THE NEED FOR NATIONS CONSENSUS TO IMPROVE COMPULSIVENESS 513 private sectors. There is little or no government involvement in industrial technology development or industrial competitiveness. These broad cultural characteristics of the United States explain why our large, resource-nch country, with its excellent scientific research, often finds itself increasingly less effective than its competitors in converting the results of its research into commercially competitive products. Many Americans do not recognize the full significance and seriousness of the decline in this country's international economic competitiveness. There remains a strong tendency among many people in the United States to believe that the situation is still much like it was after World War II a time when our potential competitors were worn down and our scientific and technolog- ica1 leadership was unchallenged. Therefore, we do not as yet have sufficient national resolve to take the steps necessary to regain and sustain our inter- national technological and industrial leadership. Daniel Yankelovich, pres- ident of the Public Agenda Foundation, refers to this lack of resolve as this country's "commitment gap." One reason for the decline in our international competitiveness is Hat He United States does not maintain an environment conducive to He efficient commercialization of technology. In fact, the process is often impeded. There are many legal, regulatory, and financial barriers to the efficient translation of new concepts and technologies into coTrunercially competitive products. It will be extremely difficult to organize and mobilize the resources required to regain and sustain our international competitiveness. The development of specific national strategies, such as targeting specific market sectors, is viewed as antithetical to the free enterprise system. We also suffer from the "not invented here" syndrome. Because of our intense chauvinism, many of those responsible for the development and commercialization of technology are oblivious to the scientific discoveries and technological innovations from other countries. As a nation, we fail to provide training in the languages, cultures, and practices of other coun- tries; and we clearly do not have a good commercial foreign intelligence system capable of identifying foreign innovations for possible use by our . . zinc ustnes. Another reason for our declining competitiveness is that American industry tends to manage by the bottom line making decisions on the basis of how they will affect next quarter's profits. Such decisions are often made at He expense of long-term benefits. Those cited above are only some of He reasons why there is a growing gap between the industrial competitiveness of this country and one of its principal economic rivals. However, looking at generalities such as these tends to mast: underlying differences and gradations among various industries and technologies. Each industry has strengths and weaknesses that determine He degree to which it succeeds or fails in international markets. Some industries translate research results into commercial application very eff~-

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514 ALBERT BOWERS ciently, collaborate closely with university scientists, manage with a long- term view, and develop effective means of penetrating foreign markets. Others do not. Some universities facilitate the translation process by devel- oping innovative research and training programs and actively pursue part- nerships win industries and governments. Others do not. Some government policies and practices facilitate efforts by industry to compete internationally. Others put up real roadblocks. Although international competitiveness is a complex issue, it appears that two elements are critical to improving our ability to compete. First, we must have an adequate pool of talented scientists and engineers. There is wide- spread agreement that both the quality and quantity of this country's future talent pool are in jeopardy. We need a concerted effort by academia, industry, and state and federal governments to change the situation. Much can and must be done if we are to solve this problem. Second, we have to recognize that the corporate, academic, legal, regulatory, and financial environments within which technological innovation takes place in this county often impede rather than stimulate the translation of new concepts and technologies into commercially competitive products. A number of suggestions have been made about how to improve our international competitiveness: We have to change our corporate culture into one that takes a long-term view of profitability. Industnes must recognize the need for higher investment levels in cor- porate research. Capital improvements in both research and production facilities must become a priority. Corporations must place greater emphasis on innovation in manufac- tllring technology. We must drive harder bargains in licensing technology to foreign com- petitors. We should establish intelligence networks Cat are capable of identifying foreign technologies which are appropriate for licensing and commerciali- zanon by U.S. companies. Corporations and universities must create innovative relationships to facilitate technology transfer. ~ Industry must work with the legislative and executive branches of both the federal and state governments, as partners rawer than adversaries, to try to develop policies that will increase our ability to compete. The role of the federal government in efforts to improve our international competitiveness will be critical. Major aspects of that role should include the following:

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THE NEED FOR NATIONS CONSENSUS TO IMPROVE COMPLETENESS 515 The federal government must continue to assume the primary respon- sibility for the support of basic science, and it must increase Hat level of support. The government should work on establishing access to foreign markets for U.S. companies rather than artificially protecting our markets against foreign competitors. The government should provide and sustain tax incentives and other ways to stimulate the establishment of small companies~ompanies that play an important role in the commercialization of emerging technologies. The government should adopt antirust laws and policies that reflect the realities of an internationally competitive marketplace. Perhaps most important, as government wrestles with assessments of the costs and benefits of environmental health and safety regulations, it must assess the impact of the various degrees of regulation on the international competitiveness of the affected industries. ~ In general, the federal government should be a partner, not an adversary. The discussions that took place at the meeting of the Business-Higher Education Forum were characterized by a certain sense of frustration and impatience. One participant said, "We know what to do. Why don't we get on with it?" The answer to that question seems to lie in our inability to reach a national consensus on the importance of restoring our competitiveness and then to make a commitment to do so. This volume represents a step toward devel- oping a national consensus and a public policy that might make it possible for this country to regain its leadership In high technology and the interna- tional marketplace.

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