Recommended Strategies for the United States
The committee’s survey of Japan, Brazil, Russia, India, China, and Singapore, or JBRICS, has it made abundantly clear that both developed and developing countries are actively seeking to expand their science, technology, research, and engineering capacities to enhance their national science and technology (S&T) innovation environments, much along the lines of that in the United States. National efforts in the JBRICS countries and others are influenced by the ever-increasing globalization of production, research and development (R&D), and basic science as universities and multinational corporations expand their global presences. Thus, what started as the international expansion of manufacturing through outsourcing has transformed naturally into the globalization of R&D. The historic national progression up the economic ladder seen so often in developing countries—from assembly, to design, to creation—is now being played out in the increasingly globally connected S&T community as countries invest in their areas of greatest S&T competence.
In addition to the effects of globalization and to the realization of diminishing global resources (e.g., water, minerals, energy, space), critical mainstays of the United States’ S&T asset base are becoming increasingly susceptible to disruptive innovations. A prime example is the semiconductor industry, which has been a principal driver of information technology (IT)-sector technologies from supercomputers to the Internet that serve the interests of U.S. national security and economic competitiveness. The physical limits to transistor scaling and form-factor reductions require new, disruptive technological innovations for continued miniaturization of electronics. Countries that are first to create them will gain advantage or possibly even dominance in the IT sector of the future.
21st-CENTURY GLOBAL SCIENCE AND TECHNOLOGY INNOVATION ENVIRONMENT
During the second half of the 20th century the United States had the most enviable national S&T innovation environment worldwide. Providing opportunities for and investing in innovation at the level of individuals, national corporations/organizations, and national laboratories, with high levels of government support (e.g., in areas such as security, health, education, research, and S&T infrastructure), proved to be a very successful approach. America’s entrepreneurial culture aligned with financial incentives, the availability of capital, and strong patent laws to spur innovation. Critical to the successes of this remarkable period were the recruitment of top global talent
to the United States, the building of a world-leading research infrastructure, and the growth of a robust economy underpinned by successful technology developments. A half century ago this unbeatable asset base led to U.S. dominance in the global S&T community. Many countries have tried to emulate the U.S. system, but only a few have partially succeeded.
However, over the past half-century the foundation of the U.S. S&T asset base has eroded relative to those of other countries in significant ways. Now there are other major global players in an increasingly integrated global S&T arena, and more are expected to arrive. U.S. national corporations have all given way to multinationals with multiple allegiances. Within the JBRICS countries, planners are steadily upgrading higher education and S&T research capabilities, and support for connections to industry and innovation is increasing. Although the United States continues its leadership in areas, it is by ever-decreasing margins. Top talent from around the world, who once would have come to the United States for higher education or for postdoctoral or permanent positions in S&T, are being recruited aggressively to other countries with attractive salaries, high-quality research infrastructures, a frontier vision of exciting prospects, and a welcoming attitude. The United States, on the other hand, discourages or simply prevents the emigration of top talent. With more than 95 percent of the world’s talent residing outside the United States, recruiting internationally is essential, and will remain so even if our domestic compulsory education system becomes enviable. The research infrastructures in Singapore and throughout China, although not yet among the best overall, are developing rapidly. They are being built by both multinational corporations and national investments. Top facilities, competitive with those in the United States, are also being located in the other JBRICS countries studied.
Leadership in the more effective countries is looking beyond the national, U.S.-type S&T innovation environment of the past to create global S&T innovation environments. Such environments extend the national environments by embracing partnerships and collaborations of global enterprises, the benefits derived from open S&T environment created by global communications, and the importance of S&T innovation that is driven top-down by government as well as bottom-up by individuals, academia, and industry.
Finding 10-1. The 20th-century national S&T innovation environment that has been a hallmark of the United States since World War II, and the model for the world, is evolving into a new 21st-century global S&T innovation environment in which R&D talent, financial resources, and manufacturing facilitated by global communications are geographically dispersed and globally sourced.
Top-down innovation environments are led by governments that provide the large investments required for facilities and capabilities that the private sector will not support (e.g., national electricity grid, large research infrastructure, education). Governments can initiate work on the great problems (e.g., clean energy, climate change, pandemics); develop human resources from the global talent pool through education, immigration policies, and recruitment strategies; and ensure the building of necessary top-class facilities.
Bottom-up innovation environments are led by individuals and organizations with independent leaders who engage in the inventive ideas, scientific discovery, engineering creation, and innovative implementations that produce products and services that are commercially viable and globally competitive. Governments can actively encourage bottom-up innovation with efficient intellectual property (IP) policies, transparent and consistent regulations, and tax laws favorable to R&D investment.
Finding 10-2. The S&T innovation environments in the more successful countries possess both top-down innovation environments led by government and bottom-up innovation environments led by individuals and organizations. Of the countries studied, China and Singapore are furthest along in this direction and are progressing toward global innovation environments. The likelihood of their continued, substantial progress is high. Singapore uses its small size and top-down planning to engage the global community, recruit international scholars, provide unique facilities, and offer extended funding commitments to top R&D talent. China’s top-down strategy, which involves the central government plus the provincial and major city governments, uses its vast market opportunity to engage multinational corporations in meeting its goals. Its policies seek to enhance the absorption, assimilation, and re-innovation of imported technologies.
Finding 10-3. Although of vastly different sizes, China and Singapore have similar S&T strategies. Both countries invest heavily in top-down higher education and research, create research parks near universities, and promote international collaborations. Both heavily subsidize study abroad for Ph.D. students. Both recruit talent globally, using high-quality facilities and research support as incentives. Both move quickly and with authority when decisions are made. Both utilize strong top-down leadership to adapt their cultures to facilitate their S&T goals. Both will find ways to achieve their goals, even if later than planned.
Singapore has done very well in realizing its five-year goals, which indicates that its national goals for defense, renewable energy, climate change and sustainability, urbanization, infectious disease management, and food security and water supplies are realistic. If the past is the prologue, China will find a way to achieve its S&T aspirations, although probably not within the stated timelines, except for those related to its highest, national security priorities. Key obstacles for China are likely to be its inadequate educational system, insufficient numbers of qualified domestic S&T personnel, a bureaucratic scientific and market environment that is systemically prone to corruption, continuing dependence on a high economic growth rate, continued reliance on the acquiescence by multinationals and foreign governments to invest in the country and transfer their technology, and a highly centralized political system that is opaque to outside influences. The latter point contrasts with Singapore, which although highly centralized, has recruited outside assistance throughout its planning processes. China’s anti-monopoly law compels multinational corporations to transfer proprietary technology to their Chinese subsidiaries, and its IP regime is poorly regarded. These could be substantial self-inflicted wounds if multinationals become reluctant to locate cutting-edge R&D facilities in China, focusing instead on application-specific, mostly development facilities.
Japan has restructured its university system to facilitate faculty participation in its S&T innovation environment. But after about 20 years of reforming its top-down and bottom-up innovation environments, progress in reform has been slow, possibly because of cultural issues that limit recruitment of talent, restrict immigration, discourage women in the workforce, and create an opaque leadership. Its decreasing population and decreasing student interest in S&T may also be factors. Little change in Japan’s S&T innovation environment can be expected in the near term, although a downward shift in its relative strength compared to other countries is more likely than an upward shift. Nonetheless, if the value attributed to multinational corporations in China and India is discounted, Japan will remain the strongest competitor of the United States in S&T for the next decade. The United States should position itself to capture value from Japan’s R&D efforts in the niche areas of energy, food and resource security, and environmental protection.
Following the South Korean model, Brazil is determined to become a world power in agricultural research, deep-sea oil production, and remote sensing based on its S&T innovation environment and its careful, conservative planning and investing. Its top-down S&T innovation environment includes clear plans and investments. Most research is undertaken in universities, but the country has not yet developed adequate mechanisms for technology transfer to industry, which is the principal voice and financer for S&T investments. Brazil supports economic development in business through tax revenues, rather than debt. In many states, including Sao Paulo, 1 percent of corporate revenues is collected and pooled for re-investment in industrial development. The shortages of workers and students in S&T, the absence of research and research opportunities in industry and consequently the absence of university-industry research collaborations, the low efficiency of goods and labor markets, and the disconnect within the national S&T community itself hamper the development of Brazil’s bottom-up S&T innovation environment. These limitations will likely be addressed over time, leading to a steady, although not rapid, strengthening of a global S&T innovation environment. A significant change in Brazil’s S&T innovation environment and global leadership position is not expected over the next three to five years.
Through its national S&T innovation environment, India’s goal is to become a self-reliant, developed country by 2020. Attainment of that goal is doubtful. India’s strengths are its large domestic market, young and growing population optimistic about the future, private sector with experience in market institutions, well-developed legal and financial systems, and critical mass of English-speaking S&T and other professionals. India now solicits and encourages foreign participation in its industries. India hosts 150 of the Fortune 500 companies, and expatriates are returning to contribute to India’s development. However, India has no apparent public strategy beyond its five-year plans. Its progress has been steady, with its most significant, top-down S&T commitments being directed
toward space and nuclear energy and driven by fear of technology denial by foreign countries. Indian industry is not sufficiently engaged in the S&T innovation environment; it supports only 25 percent of the nation’s research expenditures and does not proactively support basic research. In turn, academic initiations value basic research much more than applied research. National goals to increase research expenditures from 0.9 percent to 2 percent of GDP, and education expenditures from 4 percent to 6 percent of GDP, are unlikely to be met within five years. Widespread poverty, rapid population growth, deficient infrastructure, and insufficient high-quality, higher education opportunities are persistent problems unlikely to be solved in the near to mid terms. Although continued steady progress toward a global S&T innovation environment in India is expected, these major problems impede the development of a broad-based, bottom-up S&T innovation environment in the short term. It should be noted, however, that democratic institutions and processes may be inherently slow and inefficient in the short term, but they are inherently larger and more stable in the long term. India is expected to become a strong S&T player in the medium to long term.
Russia is the least likely of the JBRICS countries to develop a global S&T innovation environment within 5 years, and most likely not within 10 years, even though the country has a strong top-down national S&T innovation environment centered on space and energy resources, including its massive expansion of nuclear power. It has no bottom-up innovation environment of significance. For the longer term, significant improvements will require profound policy and cultural changes. Russian universities lack a robust research culture, which limits the nurturing of innovators and the engagement of universities with industry in the development and commercialization of innovations. Traditionally, engagement with industry has not been considered an appropriate activity for university faculty. The Russian government is the principal consumer of its national products. This isolation is further reflected in the lack of global engagement and collaboration in the Russian research community and of international participation and investment. Of the six countries examined, corruption, bureaucracy, the lack of political transparency, and the breakdown in the rule of law stood out in Russia as discouraging foreign investment and the pursuit of innovation by the private sector.
Finding 10-4. Little change is expected in Japan’s sophisticated innovation environment in the near term, although over time a downward shift relative to other countries is more likely to occur than an upward shift. However, its current position as having the second-strongest S&T innovation environment after the United States ensures a continued strong position over the decade even with little change. A modest change in Brazil’s innovation environment is expected within the next three to five years, although it will steadily improve over time. Strengthening of its S&T innovation environment must be preceded by overcoming shortages in S&T students and workforce and the paucity of industry research. India’s innovation environment has both substantial strengths and weaknesses. A modest change is expected in the next three to five years; substantial progress in strengthening its innovation environment is constrained by political (institutional), societal, and financial realities.
Finding 10-5. Russia will not develop a global innovation environment, and its national innovation environment will not develop significantly within the next 10 years. Its strong top-down innovation environment will target traditional areas of current strength (energy, space, nuclear, military).
Finding 10-6. The presence of multinational corporations provides mechanisms for transfer of technology and IP into foreign domestic markets and governments. China, for instance, requires transfer of technology as a condition for doing business with the government. IP can also simply leak through permeable processes—even if illegal. The increasing presence and growth of multinational corporations abroad facilitates the transfer of technologies into countries from which they did not originate.
Recommendation 10-1. Because a successful global S&T innovation environment portends future prosperity and security for all countries, monitoring the transformation from a national to a global S&T innovation environment should be undertaken on a regular basis for the United States and all countries of interest. Because this transformation can take place before a national S&T environment is fully developed, monitoring should be conducted independent of a country’s current achievement.
Recommendation 10-2. The transfer of intellectual property by multinational corporations into domestic companies through S&T activities should be monitored in key countries, particularly India and China. The United States could join with Japan, and possibly the European Union, to establish a united front against such practices.
Recommendation 10-3. The United States should assess its own preparation for, and transformation to, a successful global S&T innovation environment to ensure that it remains in a preeminent S&T position for continued prosperity and national security. Specific areas for assessment should include global exchanges in education and R&D talent, international as well as national recruitment of R&D talent, multinational corporate collaborations, and public policies that facilitate or restrain the leadership of the United States in global S&T innovation.
INDICATORS OF SCIENCE AND TECHNOLOGY ACHIEVEMENT ARE COUNTRY SPECIFIC
Although sometimes useful, traditional supply and output metrics alone are insufficient to predict future S&T development in a country and may mask other important trends. The roles of knowledge markets and international networks, intellectual assets for value creation, emergence of new players in S&T (social entrepreneurs, nongovernmental organizations, user groups, new financial incentives and sources of investment, etc.), and increasing national priority accorded to innovation in economic strategy (as well as S&T) impact the future of S&T in all countries. Innovation systems are becoming ever more complex and international as well as national in scope.
Consider for example, patent filings as a measure of S&T innovation. Patents for work in developing countries, such as Brazil, by multinational corporations are often filed in other countries, such as the United States. In this case a patent filing count by country gives the United States credit for a Brazilian innovation. Interpretation of patent filing numbers also unduly emphasizes technologies for which patents are common and bypasses technologies for which they are not. No measure of technology value is provided in either case. Publications are similarly untrustworthy as a blanket measure of S&T strength and potential growth. Aside from the real concerns about uneven and untrustworthy publication standards, various R&D communities also use and value journal and conference publications differently.
One technology-specific indicator that assures quality of work without additional expert review is the identification of forums within a discipline in which the best work is presented in open meetings. For instance, in the semiconductor arena (involving design and production of integrated circuits for computers, cell phones, and medical applications) the annual “International Solid State Circuits Conference” (ISSCC) presents about 200 papers, split evenly between industry and academia (Americas 40 percent, Far East 35 percent, and Europe 25 percent). Acceptance of a paper for the ISSCC ranks as the highest recognition of research impact and quality. (In 2009 Hong Kong and Mainland China presented 2 papers each, Singapore and India 1 paper each, Russia and Brazil 0 papers, Japan 33 papers, and the United States 73 papers.) This technology-specific indicator gives a relatively accurate picture of the S&T standing of these countries in this specific technology. Other international forums, coupling rigorous review and selection methods spanning an S&T area, may provide similarly meaningful measures of national prominence and global standing.
Nontraditional indicators of the S&T innovation environment emerge from the cultural context of a country and can often be principal drivers or anchors for the future S&T innovation environment in the country. Examples of such indicators are as follows: encouragement of women in the S&T workforce, welcoming immigration policies for S&T workers, promotion of collaborations between universities and industry, independence of innovators to create and profit from their work, wealth inequality and social instability as rate limiters, influence of crime and corruption, level of governmental control over the bottom-up innovation environment, attractiveness for foreign investment, exodus or influx of domestic and international talent, international engagement, and population decline or expansion.
Japan has the second best S&T innovation system in the world and is host to large, well-funded research laboratories established by private industry. They are addressing the weak engagement of universities in S&T value creation. Japan’s slow progress to date in developing a global S&T innovation environment appears largely related to issues flagged by nontraditional indicators. Brazil and India are working through similar issues, and Russia’s limited prospects reflect them.
Indicators of Russian progress in S&T beyond the short term should include monitoring the percentage of S&T funded privately versus by government; the change in direct foreign S&T investment within Russia; the age, qualification, and field of S&T personnel; the change in the entry of Russian commercial products into global markets; the changes in the numbers of foreign researchers entering Russia and of Russians leaving Russia; and the change in the national stature of Russian S&T personnel.
The rate and scale of cultural changes that China has implemented to build its S&T innovation environment are notable, especially when compared to the other countries studied. Continued improvements in its S&T innovation environment depend on its continued facilitation of cultural changes, making cultural change an important nontraditional indicator when evaluating China’s progress. Singapore’s challenge lies in balancing its tightly controlled culture with the influx of foreign workers (31 percent of the total employment), new ideas, a more highly educated citizenry, and the potential for terrorist attacks.
Finding 10-7. Country-specific, traditional and nontraditional indicators can provide a meaningful measure of national S&T strength and prospects for future change. No single set of common indicators across all countries was found to provide such a measure. Nontraditional indicators are country-specific and are essential to understanding each country’s S&T innovation environment and especially to predicting future change.
Finding 10-8. Nontraditional national indicators of the S&T innovation environment include those that emerge from the cultural context of a country and impact the future S&T innovation environment of the country. These indicators are especially important for predicting future change in the S&T innovation environment. The cultural contexts of Brazil, Japan, India, and Russia have hindered their S&T innovation developments and will continue to do so for at least the near term and likely longer. Singapore has taken advantage of its small size and highly centralized government to launch ambitious initiatives and instigate changes rapidly. Similarly, China has used its authoritarian political system to define a national S&T plan.
Finding 10-9. When a country can facilitate the cultural changes needed for its S&T innovation environment goals, its capability to achieve them increases significantly. It is among the best indicators of future success. China and Singapore have demonstrated high capability to change cultural norms to achieve their S&T goals, although encouraging individual creativity and independence remains an unrealized need for both of them. Brazil has demonstrated the capability to change cultural norms. India has demonstrated culture changes also, but its democratic society imposes limitations on its actions. Japan has demonstrated less of a capability, and Russia the least capability, for cultural change among the countries.
Recommendation 10-4. For each country of interest, the United States should identify country-specific measures of S&T innovation environments, including nontraditional indicators that are appropriate for targeted technologies and developments. The United States should monitor each country’s capacity to facilitate the cultural changes needed to achieve its global S&T innovation goals. These indicators are especially important for predicting future changes in S&T innovation environments.
S&T TALENT IN HIGH DEMAND IN ALL COUNTRIES
A global competition for S&T talent is underway. Countries are using a variety of strategies to recruit talent, including luring expatriates and experts from abroad with superior financial support, offering top working conditions and research facilities, expanding higher education opportunities to attract internal and external students, and recruiting multinational companies to open S&T facilities. Each country understands that talent is the coin of the S&T realm, although they differ in their effectiveness in satisfying the need.
China and Singapore offer exciting opportunities, incentives for S&T careers, superior and specialized facilities, top infrastructure, and financial supports to attract talent from abroad and at home. With an eye on the long term, they are investing heavily in doctoral S&T education, key universities, and research parks at universities. Multinational corporations are also engaged in both countries, even if they are attracted to China and Singapore for
different reasons. They are attracted to China by access to the very large marketplace and talent pool, despite the open risk of losing intellectual property and technology acquisition. In comparison, Singapore offers an exceptional S&T infrastructure, laws and a culture that are friendly to global business, political stability, lack of corruption, an English-speaking environment, and relatively high salaries. As a consequence, however, multinational corporate research experiences are educating their domestic workforces.
Japan faces reduced interest in S&T by Japanese students, discouragement of women in the workforce, a declining and aging population, and a national distrust of immigration. These challenging realities slow expansion of the talent pool. India plans to expand educational opportunities at universities, but for financial reasons cannot do so on a large scale for the near term. Expatriates are returning to India, and substantial numbers of multinational companies are welcome there. However, the near-term growth of the talent pool for S&T through education and international recruitment is positive but limited. Brazil currently has an S&T talent shortage, relatively low interest in S&T in its university students, a disconnect between industry and universities, and little research opportunity in industry. No significant immigration of S&T talent occurs. These circumstances, along with a conservative development philosophy, indicate that the S&T talent shortage in Brazil will continue for at least the next five years. Russia is experiencing an aging S&T workforce, a decreasing national population, an exodus of S&T talent, and low immigration rates. Although its higher education is superior, it remains disconnected from research and S&T innovation in industry. Its older R&D talent pool serves its current S&T strengths (space, energy, nuclear, military) but displays low prospects for assuming leadership in other recent technologies.
Finding 10-10. Each of the six countries studied understands the value of top talent in its S&T innovation environment, but only China and Singapore have been able to greatly expand S&T education nationally, although China remains a work in progress for both quality and the quantity of higher education opportunities. China, Singapore, and India actively recruit multinational corporations to bring talent from abroad, and create opportunities for talent from abroad to work in their country using recruiting tools like state-of-the-art research facilities, competitive salaries, and research opportunities.
Recommendation 10-5. The most successful global S&T innovation environments will recruit S&T talent into attractive positions with excellent facilities and research support. The United States should track the quality and availability of research facilities and research support as a significant indicator of any country’s attractiveness to the world’s S&T talent.
Recommendation 10-6. The United States should continue to gauge the efficiency of research, measured by the effective uses of research talent and research facilities, which portends the future of a county’s innovation environment. Efficiency ultimately guides the use of research talent and facilities. For instance, the monitoring of non-research responsibilities of scientists (such as administration and proposal writing) and the quality of research infrastructure could be incorporated into measures of efficiency. Highly efficient S&T systems support the most attractive research careers for talented S&T contributors.