Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Chapter IV R&D Activities Relevant to Regional Economic Development- Institutional Relationships Direct Contributions to the Regional Economy through Development of New and Improved Products, Processes, and Ways of Doing Things Research and development make their greatest direct contributions to the economy as sources of invention of new technology, both hardware and soft- ware. The institutions in which R&D aimed at such end products is carried out are typically mission-oriented laboratories, with a strong commitment to the solution of problems and the achievement of practical or economically justifiable objectives. Industrial R&D laboratories constitute by far the largest single contributor of such efforts, although important programs committed to such goals are also located in each of the other major categories of R&D institutions: govern- ment laboratories, not-for-profit corporations, and universities. Industry is the largest performer of federally sponsored as well as internally funded R&D. Since its mission is, generally speaking, to enhance the long-range profitability of the parent corporation, the typical industrial laboratory is committed to one or more of four major phases of industrial innovation: development of new products or processes for the marketplace; improvement or reduction in costs of existing products to meet competitive pressures or to increase profit margins; 43
44 improvement or reduction in costs of manufacturing processes for more or less standard products; and improvement of management techniques aimed at higher productivity or greater efficiency in corporate operations. Aside from its locational impact, which is discussed elsewhere in this re- port, an industrial development laboratory may have a selective impact on the economy of a given region as a consequence of the development of prod- ucts that make unique use of regionally located resourcesâespecially natural resources or human resources. Federally supported mission-oriented laboratories and in-house government laboratories have also made significant contributions to technological innova- tion. Though their initial commitment has typically been to products or prob- lem solutions for which the federal government itself is the sole or principal customer (e.g., military-space vehicles, air-traffic-control systems), they have also carried out important developments that ultimately were to be marketed in the private sector, particularly in ventures involving high risks and high development costs. Examples are the development of nuclear reactors for electrical power or ship propulsion, the development of communication sat- ellites and of jet aircraft engines, all of which have had important economic implications. In general, the federally sponsored laboratory is committed to a particular technological mission or the solution of a particular class of prob- lems, however broadly statedâe.g., space flight, cure of cancer, weather pre- dictionâobjectives that can be readily associated with the sponsoring mission-oriented government agency. The typical free-standing, not-for-profit institute, by contrast, contributes to innovation and to the economy by marketing its research or development competence in specified fields rather than by designating an over-all laboratory mission. Such laboratories as the Batelle Memorial Institute and the Stanford Research Institute operate as job shops for a very wide variety of sponsors; they work with clients from all sectors of the economy, from all parts of the country and many foreign nations. It is interesting to note that, although a number of such not-for-profit laboratories were established with a special view to the economic development of their local regions, the dynamics of their supportâi.e., the marketing of R&D competence in a more or less open economyâhas in almost all cases broadened into a functional relationship with sponsors on a national basis. In broad analogy to the Mayo Clinic or other well-known medical centers, the free-standing, not-for-profit research institute draws its clients not only or even largely from the local neighborhood, but from the nation at large. It specializes in those fields in which the institu- tion has greatest professional talent, motivation, and research interests.
45 Although operated in the public service, these R&D institutions have made significant contributions to the profit-oriented economy through develop- ment of new technologies or products, particularly in areas in which risks were higher and payoffs longer-range than typically carried out within indus- trial development institutions. Universities have also played a role in technological innovation and transfer. The classic demonstration is that of the colleges of agriculture and the agricul- tural experiment stations. In recent years, other professional schools, particu- larly colleges of engineering and of business administration, have played important roles. Important contributions have also been made by physics and chemistry departments, both in research on the forefront of applied sci- ence and technology and in their educational function. In addition, there have been important instances of invention and industrial spin-off, though these may well be more the exception than the rule. Advice by academic staff acting as consultants in an individual capacity to both industry and govern- ment has also resulted in significant contributions to the nation's economy. The Development of Human Capabilities and Skills If the development of new products and techniques is largely carried out by profit-oriented corporations, the development of human resources is largely associated with educational institutions. In no small measure, the regional problems of rural America and of the city centers are associated with the failure of local and regional educational policies and institutions to keep pace with national economic and technological development. A key indicator of the educational potential in a given community or re- gion is the fraction of the population that goes on beyond high school to in- stitutions of higher education. While in some communities this fraction is very large and the national average is approaching 50 percent, it is quite small in economically disadvantaged regions or cities. The inhabitants of such regions are, in effect, unable to participate fully and to compete in the modern economy. If the people who have been denied such opportunities are to receive them, there must be a national commitment to provide educational opportunities at all levels to all citizens, no matter what region they live in. There is need, first of all, for massive improvement in the earlier primary and secondary grades in providing adequate preparation for the poor and disadvantaged. Second, there is a need for providing quality institutions of higher education that are acces- sible to a larger fraction of the population. In addition, there is a challenge to provide continuing education, especially for those already displaced by tech- nological innovation, and more generally for all elements of the professional
46 as well as the labor population in order to keep pace with the accelerating rate of change that characterizes our society. A technologically based econo- my can remain socially responsive only if it adopts measures to continue and maintain a progression beyond earlier training and ways of doing things. It may be a good thing to replace some obsolete school buildings with new ones, but it is much more important to recognize the need for fundamental changes to meet the needs outlined in the paragraph above. It should be recognized, of course, that significant advances in the develop- ment of the human capabilities in a given region increase the mobility of these resources. In many regions or communities that are economically depressed, the provision of educational opportunities to develop new skills is often rec- ommended as a stimulus to the economy. However, if this process is not to result in siphoning the most effective young individuals to more favored areas, the region must concern itself with the total environment for retaining them and attracting others. National policies regarding R&D affect the above issues in two ways. First, the provision of adequate institutions and personnel for higher education is critically dependent on the availability of support for graduate education, which is increasingly bound to graduate research. Secondly, research and development are needed to bring innovation and change into the educational process at all levels. In view of their role in the training of teachers at all levels, changes and improvements in methods are uniquely dependent on the programs of the nation's universities. In recent years, this country's universities have assumed leading positions in research in many fields of science and engineering; they have done cor- respondingly well in the selection and advanced training of scientists and engineers. However, the educational establishment as a whole and the univer- sities in particular are faced with tremendous new challenges in developing the broad range of human talent and educational methods necessary to support and manage a modern technological economy. In addition, the needs for more individualized education for a larger frac- tion of our population over a greater portion of the human life-span call for major innovation and amplification to cope with unprecedented needs. Where- as many service functions such as banking, insurance, communication, and travel have been radically affected by the incorporation of modern technology, educational institutions have, for the most part, been slow to incorporate change, in the form of either technological, administrative, or instructional modifications. Our institutions of higher education are at the forefront of both research and development in such fields as agriculture and computer tech- nology. They have contributed less in their own field of education to the encouragement of innovation or the incorporation of modern technology.
47 A similar situation characterizes the provision and delivery of health ser- vices. Although advances in health science have increased life expectancy, existing methods for the provision of care to the poor, the aged, and the in- stitutionalized remain inadequate. The Committee is well aware, of course, that programs of R&D in both education and public health are presently under way. In view of the burgeon- ing needs of a growing population in a rapidly changing environment, however, we must recognize both needs and demands, not only in areas of urban and rural poverty, but in all parts of the country. They call for major increases in graduate education and research, not only to train badly needed additional professional manpower in these fields, but also to bring innovation and new technology into the delivery of the necessary services. The Committee is also aware of the fact that whatever advances are made in education and public health will redound to the benefit of advanced as well as backward regions. Indeed, it is likely that despite any efforts that may be made to orient such programs toward the backward regions, more ad- vanced regions will be alert to the potential in any new developments and may be even more responsive to them. Attempting, therefore, to improve the backward areas by such new techniques is likely to require concentrated at- tention and special effort, directed at assisting them in reaping the benefits they so desperately need. The needs in the areas of education and public health constitute urgent reasons and significant opportunities for the development of distributed national programs of research and development in these fields. The Improved Utilization of Natural ResourcesâEnhancement of the Quality of the Physical Environment Research and development have been among the principal forces in developing new approaches to the exploitation, replenishment, and utilization of natural resources. In these developments, institutions in all performing sectors have had a significant role. Industrial research and development have been respon- sible for new methods in oil exploration, modern coal mining, and the devel- opment of techniques for the exploitation of the huge taconite deposits in Minnesota. The Departments of the Interior and Agriculture sponsor such laboratories as those of the U. S. Bureau of Mines, regional agricultural cen- ters, state geological surveys, and water-resource centers. Many of these are operated by or in cooperation with universities, and for many years have been engaged in R&D on the regional problems associated with agriculture, forestry, mining, etc. It is characteristic of the older areas of research that cooperative
48 and mutually supportive relationships have been built up over the years between the private profit-oriented laboratories and those in government and in universitites. Increasingly, the scale and character of man-made technological resources have made major changes in the economies of regions formerly dominated by the location of natural resources. As an example, the development of econom- ically competitive nuclear-power plants will have major consequences for the future development of regions that formerly were dominated by considera- tions of proximity to coal, water, or mineral resources. This man-made resource has both promise and threat for the economies of various regions. Whichever it is, the consequences must be assessed and dealt with on a regional basis. In a similar way, modern man-made developments have had a major effect on the physical environment of regions; many problems thus created, such as air or water pollution and traffic congestion, have assumed national propor- tions; it is unlikely that they can be solved without federal R&D programs, perhaps similar to those set up over the past century to deal with natural- resource problems. That all performing sectors in the economy should contribute to the analysis and solution of such problems seems clearly indicated. Furthermore, virtually every major region of the country has problems of similar broad character, though with unique local dimensions. The Delineation of Regional Problems and the Development of Plans for Their Solution Among the significant technological innovations since World War II has been the development of systems analysis and systems approaches to complex problems. They were accompanied and stimulated by the establishment of institutions typified by the RAND Corporation and the Institute for Defense Analyses. While not restricted to this type of institution, there is a great need for expanding such activities in the solution of regional or "distributed" national problems. Examples of the types of problems that might be addressed are: a. design of new urban centers b. specific environmental problems c. social problems endemic to a local area d. design of specific new transportation systems e. development of under-utilized resources It would be desirable to broaden the application of existing techniques to
49 forecast the impact on various regions of new technological developments and thus to provide alternatives for economically injured regions. Such studies have been made, for example, on the impact of the mechanization of the coal mines and the changes from steam to diesel in the railroads. The broad imple- mentation of such studies would help to anticipate the effects of other national decisions or developments of regional consequence; for instance, decisions to lower import duties on goods where the domestic production is concentrated in a relatively few areas. A critical limitation on the utilization of systems analyses in the solution of regional problems often is the absence of a specified client. As contrasted with the situation typified by the Department of Defense sponsoring a systems analysis of weapons cost-effectiveness, the usual regional problem does not have a specified agency charged with the task of delineating or solving the problem. Indeed, in most cases, the region is not identified with a specified political unit or governmental body. Hence, in the course of the application of new technological approaches, it is essential to elicit a client-sponsor. The nature of an able client-sponsor may vary, depending on the problem. The client-sponsor to solve a transportation problem may be quite different from that required to solve the problems of water resources. As discussed in detail in Chapter VI, the elicitation of a knowledgeable and able client-sponsor is at least as important as the availability of technological resources for the applica- tion of R&D. In the hands of a viable client-sponsor, a systems analysis may be a powerful beginning to the solution of a problem; in the absence of such a client, it may be a futile intellectual exercise.