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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Preface

The appropriate role of the government in the economy has been a source of controversy in the United States from its very origins. Perhaps the earliest articulation of the government's nurturing role with regard to the composition of the economy was Alexander Hamilton's 1791 Report on Manufactures in which he urged an activist approach by the federal government. At the time, Hamilton's views were controversial, although subsequent U.S. policy has largely reflected his beliefs.

Driven both by the exigencies of national defense and the requirements of transportation and communication across the American continent, the federal government has played an instrumental role in the development of new production techniques and technologies. In the early years of the republic, the federal government laid the foundation for the first machine tool industry with a contract for interchangeable musket parts.1 A few decades later, in 1842, a hesitant Congress appropriate funds to demonstrate the feasibility of Samuel Morse's telegraph. 2

1  

The 1798 contract with Eli Whitney is briefly discussed in the Introduction to this report. Whitney missed his first delivery date and encountered what we now call substantial cost overruns. However, his invention of interchangeable parts, and the machine tools to make them, was ultimately successful. The muskets were delivered and the foundation of a new industry was in place. As early as the 1850s, the United States had begun to export specialized machine tools to the Enfield Arsenal in Great Britain. The British described the large-scale production of firearms, made with interchangeable parts, as "the American system of manufactures" (David C. Mowery and Nathan Rosenberg, Paths of Innovation: Technological Change in 20th Century America. Cambridge University Press, New York, 1998, p 6).

2  

For a discussion of Samuel Morse's 1837 application for a grant and the congressional

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

During the twentieth century, the federal government has had an enormous impact on the structure and composition of the economy through regulation, procurement, and a vast array of policies to support industrial and agricultural development. Between World War I and World War II, these policies included support for the development of key industries, which we would now call dual-use, such as radio and aircraft frames and engines. The requirements of World War II generated a huge increase in government procurement and support for high-technology industries. At the industrial level, there were "major collaborative initiatives in pharmaceutical manufacturing, petrochemicals, synthetic rubber, and atomic weapons."3 An impressive array of weapons based on new technologies was developed during the war, ranging from radar and improved aircraft, to missiles and, not least, the atomic bomb. World War II also marked a change in government's relationship with universities in the area of basic research. Following the war, the federal government began to fund basic research at universities on a significant scale, first through the Office of Naval Research and later through the National Science Foundation.4

During the Cold War, the United States continued to emphasize technological superiority as a means of ensuring U.S. security. Government funds and costplus contracts helped to support systems and enabling technologies such as semiconductors and new materials, radar, jet engines, computer hardware and software, and missiles. For example, the government played a central role in the creation of the first electronic digital computer, the ENIAC.5 In the post-Cold War period, the evolution of the American economy continues to be profoundly marked by government-funded research in areas

   

debate, see Irwin Lebow, Information Highways and Byways. Institute of Electrical and Electronics Engineers, New York, 1995, pp. 9-12. For a more detailed account, see Robert Luther Thompson, Wiring a Continent: The History of the Telegraph Industry in the United States 1823-1836. Princeton University Press, Princeton, N.J., 1947.

3  

David Mowery, "Collaborative R&D: how effective is it?" Issues in Science and Technology. 1998, p. 37.

4  

The National Science Foundation was initially seen as the agency that would fund basic scientific research at universities after World War II. However, disagreements over the degree of Executive Branch control over the NSF delayed passage of its authorizing legislation until 1950, even though the concept for the agency was first put forth in 1945 in Vannevar Bush's report Science: The Endless Frontier . The Office of Naval Research bridged the gap in basic research funding during these years. For an account of the politics of the NSF's creation, see G. Paschal Zachary, Endless Frontier: Vannevar Bush, Engineer of the American Century, New York: The Free Press, 1997, pp. 231. See also Daniel Lee Kleinman, Politics on the Endless Frontier: Postwar Research Policy in the United States, Durham, NC: Duke University Press, 1995.

5  

Kenneth Flamm, Creating the Computer. Washington, DC: The Brookings Institution, 1988, chapters 1-3.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

such as microelectronics, robotics, biotechnology, the human genome, and through investments such as ARPANET, the forerunner of today's Internet.

Despite the important role the U.S. government has played in the development of the American economy, there is little consensus concerning the principle of government participation and there is often considerable debate about the appropriate mechanisms of participation. At the same time, in light of the rising costs, substantial risks and the breadth of potential applications of new technologies, some believe that a supportive policy framework by the government is necessary if new, welfare-enhancing and wealth-generating technologies are to be developed and brought to the market.

Since 1991 the National Research Council's Board on Science, Technology, and Economic Policy (STEP) has undertaken a program of activities to improve policy makers' understanding of the interconnections of science, technology, and economic policy and their importance for the American economy and its international competitive position. The Board's activities have corresponded with increased policy recognition of the importance of technology to economic growth. The new economic growth theory emphasizes the role of technology creation, which is believed to be characterized by significant growth externalities. 6 A consequence of the renewed appreciation of growth externalities is recognition of the economic geography of economic development. With growth externalities coming about in part from the exchanges of knowledge among innovators, certain regions become centers for particular types of high growth activities. Innovators are able to take advantage of knowledge that is "in the air" which addresses technology and other business development issues.7

In addition, some economists have suggested limitations to traditional trade theory, particularly with respect to the reality of imperfect international competition.8 Recent economic analysis suggests that high-technology is often characterized by increasing rather than decreasing returns, justifying to some the proposition that governments can capture permanent advantage in key industries by providing relatively small, but potentially decisive support to bring national industries up the learning curve and down the cost curve. The increasing theoretical recognition of the dynamic element of technological innovation, in particular its cumulative nature, has provided

6  

Paul Romer, "Endogenous technological change," Journal of Political Economy, Vol. 98, 1990, p. 71-102. See also Gene Grossman and Elhanan Helpman, Innovation and Growth in the Global Economy, Cambridge, Mass., MIT Press, 1993.

7  

Paul Krugman, Geography and Trade, Cambridge, Mass., MIT Press, 1991, p. 23, points out how the British economist Alfred Marshall initially observed in his classic Principles of Economics how geographic clusters of specific economic activities arose from the exchange of "tacit" knowledge among business people.

8  

Paul Krugman, Rethinking International Trade, Cambridge, Mass., MIT Press, 1990.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

an intellectual underpinning for strategic trade concepts that emphasize the dynamic nature of international competition in high-technology industries.9

Project Origins

The growth in government programs to support high technology industry within national economies and their impact on international science and technology cooperation and on the multilateral trading system are of considerable interest worldwide. Accordingly, these topics were taken up by STEP in a study carried out in conjunction with the Hamburg Institute for Economic Research and the Institute for World Economics in Kiel. One of the principal recommendations for further work emerging from that study was a call for an analysis of the principles of effective cooperation in technology development, to include lessons from national and international consortia, including eligibility standards and assessments of what new cooperative mechanisms might be developed to meet the challenges of international cooperation in high-technology products.10

In many high-technology industries, the burgeoning development costs for new technologies, the dispersal of technological expertise, and the growing importance of regulatory and environmental issues have provided powerful incentives for public-private cooperation. Notwithstanding the unsettled policy environment in Washington, collaborative programs have expanded substantially. Under the Reagan administration, SEMATECH was established after much debate.11 The Bush administration saw the creation of the Advanced Technology Program (ATP) in the National Institute of Standards and Technology. The Clinton administration came to office with an emphasis on civilian technology programs, substantially expanding the ATP and creating the Technology Reinvestment Program (TRP).12 The rapid

9  

For a discussion of governments' efforts to capture new technologies and the industries they spawn for their national economies, see National Research Council, Conflict and Cooperation in National Competition for High-Technology Industry, National Academy Press, Washington, D.C. 1996, pp. 28-40.

10  

The summary report of the project (National Research Council, op. cit.) recommends further analytical work concerning principles for effective cooperation in technology development (see Recommendation 24, p. 8). More recently, David Mowery has noted the rapid expansion of collaborative activities and emphasized the need for comprehensive assessment. David Mowery, "Collaborative R&D: how effective is it?" op. cit., p. 44.

11  

For a review of SEMATECH, see the National Research Council, 1996, op. cit., pp. 141-151. For one of the most comprehensive assessments of SEMATECH, see John B. Horrigan, "Cooperating Competitors: A Comparison of MCC and SEMATECH," monograph, National Research Council, Washington, D.C. forthcoming.

12  

For an analysis of ATP, see Christopher T. Hill, "The Advanced Technology Program: opportunities for enhancement," in Lewis Branscomb and James Keller, eds. Investing in Innovation: Creating a Research and Innovation Policy. Cambridge, Mass., MIT Press, 1998, pp.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

expansion of these programs encountered significant opposition, rekindling the national debate on the appropriate role of the government in fostering new technologies. Indeed, broader philosophical questions about the appropriate role for government in collaborating with industry have tended to obscure the need for policy makers to draw lessons from current and previous collaborative efforts.

Given the considerable change in federal research and development budgets since the end of the Cold War, and the reduced role of many centralized laboratories in the private sector, government-industry collaboration is of growing importance, yet it has seen remarkably little objective analysis. At one level, analysis may contribute to a better appreciation of the role of collaboration between government and industry in the development of the U.S. economy. Writing twenty years ago, one well-known American economist observed that Americans are still remarkably uninformed about the long history of policies aimed at stimulating innovation.13 Today, many Americans appreciate the contribution of technology to the current period of robust economic growth, however, there is little evidence that Americans are aware of the history of federal support for technological innovation, from radio to the Internet.

Perhaps a more compelling argument for assessment is the simple fact that government intervention in the market is fraught with risk. There are cases of major success resulting from federal support to the computer or semiconductor industries, where the Department of Defense served as a source of R&D and as a reliable, early buyer of products.14 There are also cases of major frustration. Landmarks would include projects such as the Supersonic Transport, the Synfuels Corporation, and the Clinch River Breeder reactor.15 Regular assessment is vital to ensure continued technical viability,

   

143-173. For an excellent analysis of the TRP, see Jay Stowsky, "Politics and Policy: The Technology Reinvestment Program and the Dilemmas of Dual Use." Mimeo, University of California, 1996. See also, Linda R. Cohen, "Dual-use and the Technology Reinvestment Project." in Branscomb and Keller, op. cit., pp. 174-193.

13  

Otis L. Graham, Losing Time: The Industrial Policy Debate. Harvard University Press, Cambridge, Mass., 1992, p. 250. Graham cites Richard Nelson's observations at the end of the Carter Administration. The situation may not have improved. Writing in 1994, James Fallows makes a similar observation (see Looking into the Sun: The Rise of the New East Asian Economic and Political System. New York: Pantheon Books, 1994, p. 196). See also Thomas McCraw's "Mercantilism and the market: antecedents of American industrial policy," in The Politics of Industrial Policy, Claude E. Barfield and William A. Schambra, eds., American Enterprise Institute for Public Policy Research, Washington, D.C., 1986, pp. 33-62.

14  

Graham, op. cit., p. 2

15  

See Linda R. Cohen and Roger G. Noll, The Technology Pork Barrel , The Brookings Institution, Washington, D.C., 1991, pp. 97, 178, 259-320, 217-258. An interesting review of technology development programs, mainly from the 1970s, the analysis is less negative than the title suggests. The volume identifies some successful R&D projects such as the photovoltaic electricity program. The programs of the 1980s were structured differently.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

though cost-sharing requirements can be an effective safeguard. Assessment can also help avoid "political capture" of projects, especially large commercial demonstration efforts.16 Even successful collaborations face the challenge of adapting programs to rapidly changing technologies. 17 Assessment thus becomes a means of keeping programs relevant. Assessment can also have the virtue of reminding policy makers of the need for humility before the "black box" of innovation. As one observer notes, ''experience argues for hedged commitments, constant reappraisal, maintenance of options, pluralism of advice and decision makers.''18

From an international perspective, understanding the benefits and challenges of these programs is also important insofar as they have been, and remain, a central element in the national development strategies of both industrial and industrializing countries. Governments have shown a great deal of imagination in their choice of mechanisms designed to support industry. They have adopted a wide range of policies from trade regulations designed to protect domestic products from foreign competition, to tax rebates intended to stimulate the export of selected domestic products. They provide government R&D funding for enterprises of particular interest, and sometimes give overt support through direct grants, loans, and equity investments or more opaque support through mechanisms such as tax deferral.19 Data collected by the Paris-based Organization for Economic Cooperation and Development suggest that worldwide government expenditures on support for high-technology industries involve significant resources and are increasingly focused on what policy makers consider to be strategic industries.20

The United States is an active, if unavowed, participant in this global competition, at both the state and the federal level. Indeed, the United States has a remarkably wide range of public-private partnerships in high-technology sectors.21 In addition to the well-known cases mentioned above,

16  

Cohen and Noll stress that political capture by distributive congressional politics and industrial interests are one of the principal risks for government-supported commercialization projects. In cases such as the Clinch River project, they extensively document the disconnect between declining technical feasibility and increasing political support (see op. cit., p. VII and pp. 242-257.

17  

One of the strengths of SEMATECH was its ability to redefine goals in the face of changing conditions. See National Research Council, 1996, op .cit., p. 148. See also Grindley, et. al., "SEMATECH and collaborative research: lessons in the design of high-technology consortia." Journal of Policy Analysis and Management, 1994, p. 724.

18  

Otis Graham, op. cit., p. 251. Graham is referring to work by Richard R. Nelson in Government and Technological Progress, Pergamon Press, New York, 1982, p. 454-455.

19  

National Research Council, 1996, op. cit., Box B., pp. 39-40.

20  

Ibid.

21  

See Chris Coburn and Dan Bergland, Partnerships. Batelle Press, Columbus, Ohio, 1995.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

there are public-private consortia of many types. They can be classified in a number of ways, such as by the economic objective of the partnership, that is, to leverage the social benefits associated with federal R&D activity, to enhance the position of a national industry, or to deploy industrial R&D to meet military or other government missions. 22 An illustrative list would include partnerships in sectors such as electronic storage, flat panel displays, turbine technologies, new textile manufacturing techniques, new materials, magnetic storage, next-generation vehicles, batteries, biotechnology, optoelectronics, and ship construction. The list would also include programs such as the national manufacturing initiative, National Science Foundation's (NSF) engineering research centers, NSF's science and technology centers, the National Institute of Science and Technology's Manufacturing Extension Program, and the multi-agency Small Business Innovation Research Program, among others. University-industry cooperation is also on the upswing, with a significant percentage of university R&D now provided by industry and through innovative cooperation efforts such as Semiconductor Industry Association's MARCO program. In addition, there are extensive cooperative agreements with the national laboratories. The proliferation of these programs provides a rich base of experience for assessment.

Project Steering Committee

The expansion of cooperative activities highlights the need for better understanding of the opportunities and limitations of these programs and the conditions most likely to ensure success. Reflecting the interest of policy makers in this topic, the STEP Board initiated the project on "Government-Industry Partnerships for the Development of New Technologies," which has benefited from broad support among federal agencies. These include the U.S. Department of Defense, the U.S. Department of Energy, the National Science Foundation, the National Institutes of Health, the National Aeronautics and Space Administration, the National Institute of Standards and Technology, as well as a diverse group of private corporations. To carry out this analysis, the STEP Board has assembled a distinguished multidisciplinary steering committee for government-industry partnerships, listed in the front of this report. The committee's principal tasks are to provide overall direc-

22  

See Albert Link, "Public/Private Partnerships as a Tool to Support Industrial R&D: Experiences in the United States." Paper prepared for the working group on Innovation and Technology Policy of the OECD Committee for Science and Technology Policy, Paris, 1998, p. 20. Partnerships can also be differentiated by the nature of public support. Some partnerships involve a direct transfer of funds to an industry consortium. Others focus on the shared use of infrastructure, such as laboratory facilities.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

tion and relevant expertise in the assessment of the issues raised by the project. At the conclusion of the project, the steering committee will develop a consensus report outlining their findings and recommendations on the issues reviewed by the project.

As a basis for the consensus report, the steering committee has undertaken to commission research and convene a series of fact-finding meetings in the form of workshops, symposia, and conferences as a means of informing its deliberations. This symposium represents one element of this fact finding effort. It is the second in a series of fact-finding meetings convened under the auspices of the STEP Board and under the direction of the steering committee.23

A number of distinguished individuals deserve recognition for their willingness to review this report. These individuals were chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC's Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making the published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their participation in the review process: Harold Agnew, University of California; David Bruce Audretsch, Indiana University; Albert N. Link, UNC Greensboro; Michael L. Luger, UNC-Chapel Hill; Jurgen Schmandt, University of Texas, Austin; Richard M. Thayer, TTI Inc.; and especially the report coordinator, Alexander H. Flax. Although these individuals have provided constructive comments and suggestions, it must be emphasized that responsibility for the final content of this report rests entirely with the STEP Board and the NRC.

Given the quality and number of presentations at this second symposium, summarizing the proceedings was a challenge. Every effort was made to capture the main points made during presentations and ensuing discussions, within the constraints imposed by the nature of a symposium summary. We apologize in advance for inadvertent errors and omissions in the summary. We also take this opportunity to thank our speakers and participants for

23  

The first meeting of this series resulted in the National Research Council report The SBIR Program: Challenges and Opportunities. National Academy Press, Washington, D.C., 1999. Other reports include The SBIR Program: An Assessment of Do D's Fast Track Initiative. National Academy Press, Washington, D.C., 1999 and The Advanced Technology Program: Challenges and Opportunities. National Academy Press, Washington, D.C., 1999. With respect to the international dimension of the project, see New Vistas in Transatlantic Science and Technology Cooperation . National Academy Press, Washington, D.C., 1999.

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

making their experience and expertise available to Sandia and our project. Finally, we emphasize that the proceedings that follow do not make findings or recommendations; rather, they seek to capture the different perspectives of the participants on the Sandia proposal for a science and technology park.

CHARLES W. WESSNER

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
×

II
INTRODUCTION

Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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Suggested Citation:"I. Preface." National Research Council. 1999. Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative. Washington, DC: The National Academies Press. doi: 10.17226/9661.
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The Sandia National Laboratories asked the Board on Science, Technology, and Economic Policy (STEP) to hold a one-day symposium to review Sandia's proposal to develop a science and technology park. In light of the importance of industry-laboratory cooperation for the STEP Board's project on Government-Industry Partnerships for the Development of New Technologies, the Board convened a workshop bringing together executive branch officials, congressional staff, representatives from the private sector, and regional economists to discuss the Sandia S&T park initiative. The Sandia S&T Park, which Sandia National Laboratories, the City of Albuquerque, and the State of New Mexico are jointly developing, is a 285 acre site located adjacent to Sandia National Laboratories. Groundbreaking for the park took place in May, 1999.

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