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Chapter VI Mechanisms for the Implementation of Regional or Distributed National Goals in R&D The Nature and Support of Distributed Goals in R&D The distributed national goals for R&D envisaged in this .report are in large measure oriented toward the correction of major social and economic prob- lems that have arisen or become intensified because of uneven progress toward economic affluence. Programs to attain these goals can not be established without a national consensus and commitment. For example, the recent establishment of new agencies of cabinet rank, in particular the Departments of Transportation and of Housing and Urban Development, reflects the na- tional recognition of the need for broad government programs in these areas. In a number of areas, programs are already being supported by the national government, though many are restricted by limited funding. In addressing such distributed or regional problems as transportation, air pollution, waste disposal, control and prevention of crime, what is typically needed is a combination of centrally directed research broadly oriented to the problems, and locally directed R&D that views the problems in terms of specific local constraints. This is a pattern adopted by the U.S. Department of Agriculture, in the form of the regional laboratories of the Department, and the many university and industrial laboratories in this field. A similar dual approach characterizes the industrial scene in which research in major corpo- rations is carried out both in the central research laboratory and at the product divisions. If the research is all done locally, it tends to be limited in viewpoint or to lead to wasteful duplication; on the other hand, if it is all done centrally, 59
60 it tends to become unresponsive to local and special needs. In the context of regional problems, the solution seems to lie in a set of institutions oriented toward problems common to many regions, in cooperation with a network of institutions that address themselves to the problems of a given region, utilizing the more generalized results and adapting them to specific and local require- ments. Even in the case of distributed national problems such as transportation or agriculture or education, there are both central national goals and distributed national goals in R&D. For example, one might list the following R&D objec- tives as common or central national goals in transportation: Design or study of supersonic jet aircraft Design of a system of air-traffic control R&D on new methods for land-based high-speed transportation At the same time, there are needs for R&D aimed at distributed national goals of the following variety: Design of a high-speed land-based transportation system for the Northeast Corridor Design of a mass-transit system for the San Francisco Bay metropolitan area Research on the extension of the shipping season on the Great Lakes Systems analyses of the effects of highway location on urban development in the Midwest Similarly, in centrally oriented national R&D missions, such as the space program, which is largely oriented to the national goal of pre-eminence in space science and technology, there have emerged some programs that are addressed to distributed or regional goals. Thus, the use of satellites for com- munication or for weather prediction may provide solutions to regional prob- lems in different parts of the country. The Committee believes that there is a growing recognition of the need for R&D in problem areas of a broadly distributed national character; it seems evident that federal funds will of necessity be an important factor in the sup- port of such programs. How much federal funding should be committed to distributed as compared with central national goals in R&D? This is clearly one of the most interesting
61 questions that emerges from this report. This Committee has not had the time or the staff to make an analysis of the present expenditure picture in these terms or to project quantitative recommendations for the future. We believe, however, that further studies based on this approach may provide a sounder rationale for federally sponsored R&D aimed at broad national objectives. Since most major programs may have both central and distributed goals, such an analysis would also provide a better basis for considering the geographic allocation or origin of financial support. Although a substantial portion of the funds to support programs aimed at distributed goals should be provided by the federal government, we believe that funds should also be provided on some reasonable and equitable basis from local and state taxes. Whether a program calls for better schools, more adequate transportation to recreational areas, or the removal of pollution from lakes and streams, the constraints imposed by the local geographic and political environment should be taken into account. This can be done if local and state governments contribute funds and take part in the decision-making process. It is important, however, that the financial matching requirements not be so onerous as to reduce or eliminate the participation of the lower- income areas with smaller tax bases. This consideration can be taken into account through the inclusion of measures of tax effort and/or an equalization feature in the fomulas for distributing such federal grants-in-aid. In addition to specific R&D programs aimed directly or indirectly at given problems, federal policies for investment in R&D should promote the general objectives of such national distributed goals as regional economic development, technology transfer, and innovation. The Role of Government Policies in Encouraging Innovation and Technology Diffusion Over the years, the federal government has taken measures to foster the de- velopment of regions and facilitate the transfer of technology in a variety of ways. Early in its history, Congress undertook a number of responsibilities for "internal improvements" designed to encourage the development of the na- tion's interior. Later, land grants to the railroads, the Homestead Act, the Timber and Stone Act, and a wide variety of other such legislation was aimed at placing as many resources as possible in the hands of as many settlers as possible in order to encourage immigration into areas that Congress deemed to be in need of development. The Morrill Act of 1862, establishing the land-grant colleges, and the Hatch Act of 1887, establishing the support of agricultural experiment stations, combined the twin goals of education and practical support of agriculture
62 through research. In recognition of the necessity for active agents for trans- ferring the new knowledge and new technologies to the farmer, the Agricul- tural Extension Service was organized in 1914. Numerous other federal science programs were born in the decades follow- ing the Morrill Act. The U.S. Geological Survey represented an attempt by the national government "to explore, define, and describe" the geological re- sources of the nation in the hope that the consequent knowledge would lead to more effective economic exploitation of those resources. In addition, such institutions as the National Institutes of Health, the Bureau of Commercial Fisheries, the U.S. Bureau of Mines, and the U.S. Forest Service operate other research programs of value to various regions of the nation. Despite this long history, the scope of federal R&D support and interest in national science policy was relatively small until the advent of World War II. At that time, the national defense required an effort of such dimensions and of such technological sophistication that the federal government was called upon to set up a new management structure, largely made up of scientists, not only to staff the weapons laboratories but also to direct the national pro- gram in weapons development. Since World War II, the continued growth in the federal support of R&D has profoundly affected the national posture in science and technology, and, in turn, the national economy as a whole. As the technologies associated with the defense (and later the space) effort increased in complexity and sophistication, new techniques of management, including the so-called systems approach, have evolved; these agencies of the national government have assumed the responsibility not only to provide the funding of R&D but also to establish the objectives and, in many cases, to assume responsibility for over-all management of important programs. This kind of applied program, largely aimed at development of systems for mission-oriented agencies, makes up the major share of national expenditures for research and development today. Along with the buildup in military-space and other applied R&D activities, there has been very rapid growth in the support of basic research, particularly in the physical and life sciences, by agencies such as the National Science Foundation and the National Institutes of Health, as well as the Atomic Energy Commission and the Department of Agriculture. Like the development programs aimed at specific national objectives in technological hardware or software, the programs of basic research in science have represented central national objectives to which the nation as a whole has been committed. In recent years, there has been a growing recognition that there are other national objectives that can not be reached through the support of basic research alone or through contract research tailored solely to agency missions. As a result, the nation has assumed additional objectives, for example, institu- tional development and technology transfer. Thus, the National Science
63 Foundation and the National Institutes of Health have set up programs of institutional or block grants awarded on the basis of promise and potential to universities and medical schools, as well as programs to encourage the develop- ment of new centers of research competence. These have been accompanied by similar programs supported by the Department of Defense and the National Aeronautics and Space Administration. A family of programs designed to facilitate the transfer of new technologies has been set up. One of these is the Technological Utilization Program of the National Aeronautics and Space Administration. Fee-paying, private firms may be provided technical information services based on their "interest pro- files" from several regional centers established at universities in various regions of the country. The Atomic Energy Commission has initiated similar efforts. In addition to the above efforts, Congress has broadened the original responsi- bilities of the Department of Commerce for disseminating technical informa- tion to private business in several new programs designed to facilitate the transfer of technological and scientific information. The State Technical Services Act of 1965 makes grants to the states "to provide technical services so that industry can benefit from technology to the fullest extent." In some respects, it is modeled on the Agricultural Extension Service, since the pro- gram is intended to encourage interactions among qualified universities, in- dustry, and state governments. Under this program, in which local leadership and resources are emphasized, the states have been required to establish five- year plans for developing technical service programs. Then, through a variety of mechanisms involving person-to-person contact, information services, and conferences, attempts are made to improve the flow of technological informa- tion to enterprises that can make use of it. For the most part, this was in- tended to help industrial concerns that were somewhat behind the forefront of modern technological advance. The analogy to the Agricultural Extension Service has not, in practice, been particularly meaningful. In the first place, industry is relatively mobile and is often not uniquely tied to the economy of a given state; a corporation may locate or relocate plants in other states or regions. Second, the State Technical Services Act is not accompanied by a series of acts such as those in agriculture that have supported major research programs aimed at local agricultural prob- lems. Often the university participants are engaged in basic science or in sophisticated technological research wholly unrelated to the problems of their potential clients, who by contrast are in industries that lag behind modern technological developments. To overcome this cultural and professional mis- match, universities engaged in the programs of the State Technical Services Act have had to contribute substantially from their own resources in order to be as successful as they have been. At their best, university projects in this program have combined the public service role with their research and
64 educational efforts. New programs of research aimed at distributed national goals would contribute significantly to the strengthening of relevant research activities and in so doing would greatly enhance the quality of the public service. While elements of all recent programs at the federal level and a number of programs at the state level have significant relevance to the effective diffusion of technology, many of them appear to be based on rather limited views of the nature of technological transfer. In particular, it is important to realize that most technological innovation and transfer involves individuals with an innovative and entrepreneurial spirit. In order to train or to encourage others in the development of such qualities, contact with individuals imbued with this spirit is a key factor. In this connection, there should be national recognition of a need in higher graduate education to support technical activities that involve the processes of invention and innovation. The universities should be concerned with how science is put to use, and support both science and the art of using science. In engineering and in the social sciences, as in medicine, some of the best practitioners should devote themselves to applied problems rather than basic research. Programs in support of distributed goals in R&D should provide for this type of activity in our university system. One of the important conclusions of this Committee is that the professional colleges of our universities have a continuing responsibility for carrying out research programs aimed at understanding and contributing to the solution of real problems posed by society. In recent years there has been a decided ten- dency in some professional schools to shift emphasis in the direction of more basic science or methodology; in some universities and disciplines the issue of faculty involvement in addressing the problems of society has developed strongly conflicting pressures. It must be recognized that universities have not been overly successful in inplementing effective interdisciplinary work of a type called for in addressing major social and technological problems. Such efforts must of necessity cut across the traditional university departmental structure; but neither the organizational framework nor the system of rewards and promotion has been conducive to such activities. Nor has the system of research project grants to individual investigators encouraged cooperation between disciplines. While a strong case can be made that it is vitally necessary for the modern university to remedy what may be viewed as a deficiency in its structure or reward system, it should also be recognized that the departmental system has proved to be eminently successful in many fields of academic research, especi- ally those in the basic sciences. It may be necessary to seek additional institu- tional means to cope with R&D needs in the public interest.
65 One approach is to establish cooperative programs.between universities and mission-oriented not-for-profit institutions. Alvin Weinberg,68'69 in a series of significant papers, has made a case for cooperative programs between uni- versities and government-sponsored laboratories, in which the latter would assume responsibilities for programs aimed at the solution of major problems posed by society. Such cooperation is of great potential value to each of the participating institutionsâparticularly in providing mechanisms for the mo- bility of research personnel between basic and applied R&D programs. This exchange of talent is one of the strong arguments for locating such institutions in close proximity to each other. There is a need for cooperation not only between universities and other not-for-profit institutions but also between institutions in the private and the public sector. A limited number of cooperative programs between universities and industrial corporations have recently been sponsored by the Advanced Research Projects Agency of the Department of Defense. Increasingly, the problems of our society call for the participation of private corporations along with public development corporations to serve as agents of innovation in the public sector. The Buildup of Regional Strength in Research and Educational Institutions In the pursuit of distributed goals in R&D, there are important roles for each of the categories of R&D performers: universities, not-for-profit institutions, government and industrial laboratories. A wide variety of R&D efforts is called for in addressing any of the major social and economic functions for which we seek invention and innovation, and competent institutions are needed in all regions of the nation. The land-grant universities have indicated both the feasibility and the long- range value of a major program of distributed national goals in education. An enlarged program based on this model seems strongly indicated in the future; major improvements are needed in virtually every sector of education, from elementary and secondary schools through to higher education and continuing adult education. According to the projections of the U.S. Office of Education,70 the number of graduate students would double by 1975 and triple by 1980 if opportunity were provided. Such a growth in higher education can not be ac- complished merely by expanding the enrollments of the established prestigious universities. Some new universities will have to be formed or those that do not have traditions of research will have to develop them. This will make possible the establishment of centers of scientific and academic excellence in regions now lacking such facilities.
66 As indicated in Chapter III, a great concentration of resources is necessary to build a first-rate graduate program. Under the most optimistic circumstances it will not be possible for the nation to convert every institution of higher education into a major center for graduate research and education, nor is it likely that such a need would arise. Dr. Philip Handler, Chairman of the Na- tional Science Board, advocates that each state or group of states engage in planning activities to determine which of its institutions are to be the impor- tant graduate universities 10 years hence, thus obtaining the requisite quality. In support of higher education, it would be a serious mistake to withdraw the project system of R&D funding, which has brought American science to the forefront of world science. Yet in the face of the urgent need for increased financial support, the current system, devised to purchase results and to sup- port a relatively small group of students through fellowships, is wholly inade- quate. In recent hearings on the "Miller" bill (H.R. 875) to establish a National Institutional Grants Program in support of higher education, virtually all wit- nesses supported the general concept of some type of federal institutional support according to a formula based in part on the number of students. Certain needs, shared by all colleges and universities, might well be sup- ported by a combination of institutional and project support. An example of such a need, shared by the well-established universities as well as the developing institutions, is access to computers for both research and education. Virtually all disciplines call for an introduction to and familiarity with the use and system logic of this new tool, which has the kind of revolutionary impact on every phase of life in this century that the steam engine had during the eighteenth century. A familiarity with this powerful tool may well be a re- quirement for most professions in the years to come. Within the next decade, all colleges or universities in this country should be in a position to provide ready access to a major computer facility for their students and faculties. It seems equally essential that access to major libraries also should be available to all college students. In the foreseeable future these two essential facilities (libraries and computers) may be electronically tied together in a single system like the telephone system or the national electrical power grid. A broad network of computer facilities providing a basic access for students in every part of the country is an example of a national distributed need in education. A continuing central national goal should be the advance of computer science and technology. Thus, the federal contribution to the support of computers in a given university might contain two components, one providing basic educational access to com- puters for all students and a second associated with the support of computer- centered research by the scientific and engineering staff. In addition to support of educational facilities, there is a need for the sup- port of graduate research in the developing institutions. This need might be met in conjunction with the need for research on problems of a regional
67 nature, called for in every part of the nation. A network of newly established educational institutions might therefore be supported in their developing phases by institutional or block grants committed to the study of regional problems. The block grant is uniquely suited to work in the more applied areas, and it is also very well suited to the buildup of new universities. Applied work often calls for the cooperative effort of academic staff from different departments or disciplines as well as competent professional staff. The block grant to a qualified research administration is more likely to build cooperative efforts and to retain continuity of purpose than individual grants to each of the participants. This was demonstrated in the development of the agricul- tural experiment stations and the great state universities during the latter part of the nineteenth and the early twentieth century. Critical, of course, to any such venture is the selection of the educational and research leadership in the newly developing institutions. As indicated previously, there are many R&D programs for which the uni- versity is not especially well suited. We have called attention to the need for other types of public institutions, both not-for-profit research centers and government laboratories, to provide the proper environment for scientific or technological activities committed to the solution of society's problems. Such laboratories have done outstanding work directed toward R&D objectives in both the military and civilian spheres. At the same time, one should not over- look the problems that most not-for-profit or government laboratories have had in retaining enthusiasm and personnel after their initial problems have been solved. Later in this chapter, we discuss some of the problems of as well as the need for R&D institutions committed to the solution of regional problems. A discussion of the buildup of institutions supportive of a regional economy is not complete without reference to the role of industrial corporations and industrial research laboratories. Obviously, however, the location or buildup of such institutions follows a different logic and responds to initiatives differ- ent from those which derive support from government. It is implicit in the free enterprise system that the location of new industrial plants or labora- tories responds to comparative advantages and to local initiative, as evidenced by economic, political, or environmental incentives. In addition, various entrepreneurial or trade associations may be utilized by a given region to attract new industrial or government installations on a case-by-case basis. Programs aimed at distributed national goals may involve federal support of industrial development as well as investment by industry in both research and development on these problems, in which communities or regions as a whole are the ultimate customers. In certain areas, such as air transportation, a combination of federal subsidy, federal R&D investment, and private invest- ment has led to a very powerful national posture. In other areas, such as ground transportation within metropolitan areas, new ventures are needed to solve
68 increasingly difficult problems of traffic congestion, noise, or general incon- venience. To bring a truly sophisticated approach to the joint participation of industry and government at all levels will call for special technological competence in those agencies of the federal government charged with achieving distributed goals; it will also call for new institutions by which local or regional compe- tence is mobilized. Special not-for-profit organizations sponsored by major clients have served this purpose well in the case of some of the federal agen- cies, although industry has at times chafed under this arrangement. Other arrangements for the joint participation of industry and the federal and local governments should be seriously considered. Successful approaches should be expected to vary significantly with the problems concerned; they depend, for example, on whether the objectives are better education, better housing, or the elimination of industrial wastes. Continuing interacting study groups involving technical experts from industry as well as from government and universities may provide a promising mechanism. The Statement of Regional Problems and the Formulation of Regional Plansâ State and Federal Efforts Few major institutions in our nation today function without a broadly con- ceived set of long-range goals and a continually updated set of plans laid out to achieve them. On the other hand, the need for such plans at the state or regional level has been relatively slow in gaining recognition. In recent years, however, a number of states and a few metropolitan areas have attempted to improve their utilization of R&D in the formulation of plans for their economic development and in the solution of the social problems facing their citizens. A recent study by Harvey Sapolsky71 found that in 1967, 22 states and territorial governments and five major municipal governments had either established or were planning to establish science advisory units. New York formed the first such state unit in 1959, but most of the others have been established since 1963. Most of these bodies have been concerned initially with the political question of the distribution of federal R&D expenditures as well as the role of science in regional economic development. A number of states have gone beyond the simple establishment of scien- tific advisory committees. New York, on the advice of its Advisory Council for the Advancement of Industrial Research and Development, established the "New York State Science and Technology Foundation." Pennsylvania has developed a similar "Science and Engineering Foundation," which is now making grants for contract research to institutions of proven expertise in sub- jects of direct relevance to the development of local economies. For example,
69 it has awarded substantial support to the Franklin Institute in Philadelphia for research on estuarine pollution, a problem of substantial concern to industries in the Delaware Valley. Philadelphia, however, is also a major center of bio- logical research and the state hopes over a period of time to enhance that city's pre-eminent position in that field through support of this kind. The Commonwealth of Kentucky established Spindletop Research under a state charter and with substantial financial support. Spindletop carries out a considerable research program for Kentucky but can also provide contract research for other public institutions or private industry. Mississippi, recognizing the difficulties that its governmental salary schedule would pose in recruiting high-caliber expertise, established the Mississippi Research and Development Center to provide much of the back-up planning and advice required by the state government. In general, experience with these state programs has been somewhat dis- appointing; almost half of them have lapsed. In part, this stems from a lack of understanding by local and state political leaders of how to use scientific advice effectively. Part of it stems from the relatively small investment in R&D that individual states have thus far felt justified in committing. The two reasons are not unrelated. In addition, most scientists are reluctant to identify themselves with problems too narrow in scope or too rigidly defined. To circumvent these limitations, it has been suggested that the states could more profitably invest in R&D programs if they acted as regions rather than separately. Sapolsky, for example, observes that with the wider perspective and the larger base of a region, it is possible that local science communities will find more opportunities than they would have had to participate in the social and economic problems.71 The talent and experience called for in delineating regional problems and making plans are very diverse; they include competence in such fields as economics, urban planning, and various aspects of applied science as well as leadership in organizing this competence in effective teams of specialists. Since only a few institutions in the nation have proven capabilities along such lines, there is a need for building up the nation's R&D competence in addressing social and economic problems. The Public Works and Economic Development Act constituted a major effort to provide mechanisms by which the federal government could provide aid to states that had not shared in the general development of the nation's economy. A number of features of the Act led to constructive interaction among states with common problems, and significant progress has been made in numerous areas. In particular, it placed the responsibility for the develop- ment of plans for economic recovery in the hands of federal-state regional commissions, an arrangement that is discussed in the next section.
70 It is fair to say at this time that there is a need for continuing review of mechanisms by which R&D may be brought to bear on the solution of local and regional problems. State governments have lagged far behind the trend in the federal government toward increasing utilization of modern technology and management science. In support of state and regional objectives in these areas, innovation is called for both in institutions and in institutional relationships in order to benefit from modern developments in systems planning and management. On the one hand, we need competent technological institutions committed to solving regional or distributed problems; on the other hand, we need viable mechanisms by which the problems of a region may first be adequately stated and viable approaches to their solution be implemented. Client-Sponsors for the Implementation of Regional Plans-Organization of Regions for the Improved Use of R&D While competent, technologically sophisticated organizations are necessary to provide analyses and designs for the future, it is equally essential to elicit a knowledgeable client capable of implementing such plans. Indeed, in most cases, the client-sponsor must be clearly identified at the planning stage to permit stipulation of the various social, political, and technological conditions within which programs and solutions may plausibly be set forth. Perhaps the most widely recognized and well-established client-sponsors that support R&D relating to regional problems are such federal government agencies as the Departments of Agriculture and the Interior and, more recently, the Departments of Transportation, Housing and Urban Development, and Health, Education, and Welfare. Some client-sponsors have been provided by the combined efforts of groups of self-appointed farsighted private citizens and elected officials of vision and influence. The Allegheny Conference for Community Development, a group of influential community leaders, set forth a plan for enlightened reorientation of an entire metropolitan area. The so-called "Pittsburgh renaissance" was the result. Another example of client-sponsor arrangement, which was developed in the State of California, is the School Construction System Development Project. This project, financed in its early stages by the Educational Facilities Laboratory of the Ford Foundation, made great contributions to the economic design and construction of new school facilities. The client-sponsor in this case was a group of school districts that collaborated in the use of the systems approach for the design and procurement of school buildings; the resulting structures were more attractive from both economic and educational view-
71 points. In the absence of such a collective client-sponsor, it is highly unlikely that the systems analysis could have been effectively carried out or imple- mented. The Port of New York Authority is another example of a client-sponsor, one which has initiated important operations research and analyses of trans- portation problems for the nation's largest metropolitan area. State government agencies may also act in the role of client-sponsor for studies of local or regional problems. The Department of Business and Economic Development of the State of Illinois has sponsored a series of studies aimed at improving the long-range economic posture of the state.72'73 Such studies have been used in many states in efforts to attract new industries or to ad- minister more effectively such complex state systems as those engaged in the provision of health or educational services. In 1965, the State of California provided funds for studies of four major problem areas: information systems, transportation systems, control and prevention of crime, and management of waste disposal.74"77 These systems analyses, carried out by major aerospace firms, were significant pioneering efforts in state funding of exploratory R&D, but not for their substantive results. It remains to be seen whether an adequately funded client-sponsor will emerge that is capable of continuing these studies and implementing the im- portant recommendations. Even as wealthy a state as California is limited in the amount of funds available for certain programs, particularly in broad problem areas shared with other states. In addition to limitations on state resources, there are many situations in which state lines may not be the proper boundaries for a viable approach to regional or local problems. In its report of July 1967, entitled Modernizing State Government, the Committee for Economic Development observed: The boundaries of many states coincide reasonably well with the economic and social interests of the citizens, containing resources and population ade- quate for economies of scale in state services. Even where population is small, geographic isolation may justify separate statehoodâas in Alaska and Hawaii. But some states are severely handicapped in solving their most pressing prob- lems because of awkward boundary locations. Metropolitan areas containing parts of two or more states are illustrative, as are river basin problems wherever major rivers form state boundary lines. Since no state, acting alone, can be expected to solve multi-state problems, there is an obvious need for active interstate cooperation. Occasional and slowly increasing use has been made of interstate compacts, which the United States Constitution has authorized since 1789. Still, the potential utility of this device is largely unrealized. Uniform state laws have been drafted on a number of important subjects, but comparatively few have been widely adopted.78
72 For some time, there has been a growing realization of the major limitations of local government units in dealing with problems that exceed their political or geographic boundaries, and several approaches have been used in attempts to circumvent some of these shortcomings. One approach is the formation of "special districts," in which a number of local units join in order to solve par- ticular problemsâsuch as water resources and transportation. This widely used and often successful approach has the advantage that one type of problem may call for a somewhat different geographic or political grouping from another; the "special district" is tailored to the problem. On the other hand, the pro- liferation of such districts itself causes problems; there are now over 20,000 such special authorities in the United States, each with specialized functions and jurisdictions. In referring to this situation, the Advisory Commission on Intergovernmental Relations observed in 1964, the establishment of special districts creates intergovernmental problems and is frequently an uneconomical means of providing services. Perhaps most important, their use has tended to distort the political processes through which the competing demands for the local revenue dollar are evaluated and balanced.79 Thus, while the special districts have proven to be of considerable utility in carrying out essential public functions, local governments often find such an approach more, rather than less, difficult because of the past proliferation of single-purpose authorities. Furthermore, since problems tend to change with time, "special districts" sometimes find themselves with obsolete man- dates. An alternative approach to the formation of joint government groupings is the "area development district." Such districts, set up under the provisions of the Public Works and Economic Development Act, have been formed in a number of states to aid in planning. The area development district is typically larger than a single county; its area is intended to tie together a "growth center" and the surrounding country it serves, including the rural periphery that is economically linked to the center. The development district is intended to be the area in which most of the residents work, shop, and spend much of their leisure time. This recognition of a need to relate the less-developed, rural districts and nearby metropolitan growth centers into governmental units is critical to the formulation of reasonable plans for economic development. In two broad categories of regional problems, the participation by the federal government seems strongly indicated: (1) regional problems that encompass the territories of a number of contiguous states, and (2) regional problems that a number of states may have in common but for which the resources of a given state are inadequate. In either case, a mechanism is needed
73 to assist the local or state government to formulate the problems in sufficiently broad terms, and to participate in and contribute to the solution of the prob- lems. One approach to providing such a mechanism for interstate and federal cooperation is provided by the Federal-State Regional Commission, which has been implemented under federal auspices, as set forth in the Public Works and Economic Development Act and the Appalachian Regional Development Act. It has federal and state co-chairmen, and is largely, but not completely, financed by federal funds. This approach, which has sought to take advantage of opportunities for joint action by the states, has been utilized in the estab- lishment of six development regions. These have provided a basic framework in underdeveloped regions for establishing programs aimed at the provision of regional analyses and development.* Unfortunately, the existing regional commissions were all too often formed on the basis of criteria related to underdevelopment (unemployment, level of income, availability of health facilities, etc.), so that the delineation of regions is made up much too exclusively of poverty-stricken areas with few prosperous growth centers. With the exception of New England, the interstate regions were not constituted in such a way as to optimize social and economic develop- ment. Thus, from the viewpoint of their geographic boundaries and focus, the present regional commissions also tend to be problem-centeredâwith little flexibility to consider the full range of opportunities for future development. In the shaping of such regions, care should be devoted to combining areas that share something other than economic stagnation. Indeed, it may well be in the national interest that some such mechanisms should be available to all regions, underdeveloped or not. History suggests that many of the underdeveloped regions of today were prosperous regions of yesterday. This Committee has not attempted a detailed analysis of the accomplish- ments and deficiencies of the Federal-State Regional Commissions in Appala- chia or elsewhere. Since such commissions have been in operation only since 1965, it would be premature at this time to make an over-all evaluation in view of insufficient evidence. We have listened to careful presentations of the objectives, and of some of the achievements and problems that have been encountered by the regional commissions. While significant contributions have already been made, we have also been made aware of deficiencies in the utilization of R&D and of problems stemming from inadequate inputs in the planning phase from industry, from not-for-profit institutions, and from *An analogy has been made with the Marshall Plan, in which the European countries developed concerted plans for economic recovery after World War II. This is widely cited as an unusually successful form of aid program since the recipients themselves were responsible for most of the planning.
74 various local and state agencies. We have also been made aware of some of the significant problems and unintended consequences associated with unrelated federal grants-in-aid to local districts when there is no over-all plan. In the absence of a regional client-sponsor capable of relating the efforts of many federal and state agencies in a broad plan of action, isolated efforts may be fruitless or even counter-productive. The Committee is cognizant of the continuing changes in the relationships between special districts or states, and recognizes the dangers of imposing fixed boundaries on changing situations, even at the regional level. For these reasons, and in the absence of a detailed evaluation of existing regions, we have refrained from making specific recommendations as to the organization of new regional commissions or the designation of geographic boundaries for new or modified regions. At the same time, we have an increased awareness of the need for viable mechanisms for fulfilling the role of client-sponsor in ap- proaches to problems that many states face in common. We believe that the Federal-State Regional Commissions constitute a major innovation and should be viewed as a significant experiment, not only to provide a client-sponsor for the solution of regional problems but also in other aspects of federal-state relationships. The commissions have provided a new approach to the utilization of federal funds from numerous agencies in a broadly conceived over-all course of action. This experiment in federal-state cooperation should receive continuing evaluation as a possible pattern for wider application in the future. As a committee, we believe in a pluralistic approach to the creation of new client-sponsors. What is needed is a proper organization of regional interests and commitments, with aid from the federal government, particularly to sponsor long-range planning and the effective use of science and technology in the solution of regional problems. Opportunities should be provided for competent, farsighted R&D institu- tions to anticipate or provide attractive solutions for regions that have not yet crystallized either the leadership or the initiative. A national program of sup- port for R&D activities of this type would enhance the likelihood of finding solutionsâfor example, research and development aimed at industrial applica- tions of a hitherto uneconomic natural resource. Significant advances in the general area of regional development may come from individuals or groups, not by virtue of their formal responsibility, but rather on the basis of their commitments to private interests or to social ad- vance in a region. A variety of approaches in this area will enhance the likeli- hood that the individual entrepreneur and visionary will find an opportunity to contribute to the solution of regional problems.
75 Exploratory Centers for Regional Economic Development In the context of this report, regional economic development may be con- sidered a distributed national objective similar to those in transportation, education, etc. In a corresponding way, R&D programs aimed at this distrib- uted mission may best be carried out in two broad categories of R&D institu- tionsâone oriented toward problems that many regions have in common, the other toward problems of separate regions. In other sections of this report it is indicated that the national economic welfare is benefited by federal programs aimed at such central national R&D goals as eminence in important fields of science and advances in technological areas such as nuclear power, computers, and systems management. Similarly, the economic and social welfare of all regions may be benefited by distributed programs in education, health services, etc. In most cases, such activities may be described along functional lines, each serving the nation's economy. If the above programs serve the economic and social needs that most regions have in common, what is the character of the R&D activities that are oriented to the economic welfare and responsive to the local conditions of a given region? Our Committee has attempted first to delineate three major functions that might be provided to encourage and systematize regional development, and then to consider the types of R&D institutions that might best serve them. The first major locally oriented R&D function is a continuing comprehensive survey and exploration, both of regional problems and opportunities and of available capabilities and resources to meet them. Capabilities that can con- tribute to a region's economy reside in sources of venture and working capital, in human skills and talents, in entrepreneurial and business talent, and in natural resources. An intensive, continuing search for individuals with innova- tive talent and commitment is vital. A second major R&D function involves social and technological invention, an organized effort to match potential solutions to implicitly or explicitly stated problems. The invention phase includes the development of new plans for regional development, the proposal of new ideas for industrial ventures, new uses for natural resources, new associations between existing industries, etc. As in other fields, invention in this context is characterized by consider- able uncertainties and a high ratio of unsuccessful to successful ventures. The invention phase includes "reducing to practice" activities to demonstrate the feasibility or plausibility of a given approach. This might involve a new method for the utilization of oil-shale deposits, new systems for the disposal of mine wastes, or the analysis and evaluation of regional comparative advantages for the location of new industry.
76 The third major function is innovation, the transfer of new products, processes, or ways of doing things into widespread use in the region. This is the role of the technological or social entrepreneur; it involves the identifica- tion or establishment of specific industrial or governmental sponsors either to exploit new inventions or to utilize existing technology and know-how. The Committee has devoted considerable time and discussion to possible means for providing the three regionally oriented functions listed above. It is persuaded that, in the long view, two major types of institutional frameworks are needed: on the one hand, there is a need for a broadly identified client- sponsor, which in effect defines the region to be served and sponsors the R&D activities. On the other hand, there is a need for R&D institutions committed to addressing the economic problems of the sponsoring region. At the present time, there are relatively few organized regions that could aspire to the sponsorship of a regional laboratory for economic development; similarly, there are relatively few R&D centers to serve a given region. Although such not-for-profit centers as the Stanford Research Institute and the Midwest Research Institute were initially created to serve local industry and promote the regional economy, and they have continued to serve the local interests, there has been a strong tendency for such research institutes to "go national" (or international) and to seek clientele from all parts of the country. It is natural for the managements of such organizations to seek out the most inno- vative or responsive corporations as clients, or those able to benefit from R&D activities for which the not-for-profit institution has achieved great internal strength and national recognition. Thus, many of their clients are not found in home territory and, obviously, it is not in the interests of such free-wheeling institutes to restrict their activities to local clienteles. A national market for their product enhances both financial support and the buildup of special areas of competence. How, then, is it possible to develop the necessary dual components of viable and knowledgeable client-sponsors and competent regionally oriented R&D institutions? Historically, there has been a chicken-and-egg aspect to the devel- opment of any such relationship. In many instances, a capable client-sponsoring agency comes first. Many government laboratories and such special.not-for- profit institutes as RAND and IDA followed this pattern. In other cases, the R&D group is the initiator in establishing the client-sponsor. For example, the sponsorship of the Manhattan Project and, later, the National Science Founda- tion grew out of proposals of groups of scientists. This Committee recommends serious consideration of both approaches for the establishment of regionally oriented R&D institutions. The Committee recommends the establishment or identification on a trial basis of a number of "Exploratory Centers for Regional Development." We believe that it is preferable that the initiative for establishing such organizations
77 come from the local regions. This is most likely to occur where a major client- sponsor in the form of a regional commission or compact may already exist. In some regions, in which needs exist but a regional impetus has not yet been generated, one or two such Exploratory Centers might be set up on a pilot basis charged with identifying or encouraging the formation of viable regional client-sponsors. Perhaps such laboratories should be created by redefining the missions of existing laboratories as technology and circumstances change. Such an approach would seem to be particularly appropriate to in-house government laboratories or contract laboratories supported by mission-oriented agencies, which, because of the accomplishment of their original missions, may have lost some of their original impetus. It is not uncommon for such organizations to become pre- occupied with detailed implementation of programs, and for the leadership personnel to drift away, because the laboratory itself is confined to its original mission statement. If the sponsoring-agency mission is sufficiently broad, the more aggressive organizations often seek out new missions, adapting their pre- existing capabilities by adding new capabilities as needed. They use funding from the supporting agency as the vehicle by which the organization is sup- ported during the transition phase. Transitions managed in this way are in the best tradition of the American enterprise system, and merely parallel what is often seen in industry when a private firm finds that its original product line is becoming obsolescent, and makes a transition to new product lines. While there are examples of in-house laboratories and government-contract laboratories that have made transitions to new missions successfully, there is reason to believe that the structure of laws, regulations, and funding arrange- ments are not generally conducive to such readjustments. There would seem to be some advantage in explicitly encouraging laboratories verging on mission- obsolescence to seek new missions, and particularly missions with regional orientations. In some cases there may be a need to obtain funding from other agencies; indeed, a transfer from one sponsoring agency or department to another may be called for. In the transition period, managements need to be given considerable discretion in expenditure of funds; lack of such discretion will seriously inhibit the adoption of a new mission. Of course, the geographic pattern of high-quality laboratories needing mis- sion reorientation does not necessarily coincide with the geographic pattern of need for regional laboratories. In some regions no such laboratories will exist, and R&D capabilities will necessarily have to be obtained by the formation of new institutions. Even in regions that do have such laboratories, the creation of wholly new laboratories may be a more effective approach than attempting to transform pre-existing R&D organizations. The Committee refrains from specific recommendations as to the form and organization of such regional Exploratory Centers. We would recommend that
78 a number of different alternatives be considered for the initial experiments. While one or two might be newly established, the first few Centers might also include (or be attached to) reoriented centers, such as one of the National Laboratories of the AEC, a free-standing not-for-profit institute, or a private corporation engaged in systems analyses and technology transfer. As indicated earlier in this chapter, there would be significant advantages in locating a newly established Center in proximity to a major university. To carry out the functions set forth above, the Exploratory Centers would require a broad range of competence, including applied social and managerial science as well as applied physical and biological science. The Committee recommends that an informed committee of national stature consider the design of organization that would avoid some of the obstacles that stand in the way of development of high-quality regional labora- tories. Some of the necessary conditions and organizational needs that such Exploratory Centers would have to meet are: attraction of a sufficient number of scientists and engineers to problems of less than national scope, provision of stable, long-range support by regional and national sponsors, maintenance of flexibility that allows regrouping within the laboratory and acceptance of new tasks, transfer of both people and technology between the laboratory and the sur- rounding industrial complex, encouragement of universities to involve graduate students in problems of this area, cooperative activities with other R&D facilities in the region, and a viable relationship to regional, state, and local government agencies and private organizations in the region. The initial support for such laboratories would necessarily come from the federal government, particularly for the two functions of exploration and in- vention. However, continued support of such a laboratory after its buildup phase should depend in large measure on its success in contributing to the regional client-sponsors; an increasing share of costs, particularly in the im- plementation phase, would be borne by those in both the public and private sector who would directly benefit from a given innovation.
79 An essential feature of the mission of such an organization would be dedi- cation to the problems of the given region. A key feature of its administration would be the participation of local agencies and individuals in establishing policy and direction. Performance would depend on broad competence, but would be assessed in terms of contributions to local regional development. The assessment of performance would be based on continuous review and evaluation of the various programs initiated by the Center; such evaluation would be made on the basis of reviews carried out by the Center itself as well as by the sponsoring agencies. Since some of the projects initiated by a Center might involve programs requiring several years between initiation and completionâfor example, a major urban experimentâthe function of assessment and evaluation should be viewed as a significant part of the Center's operation. In summary, the Exploratory Centers here envisaged should be viewed as both initiating and being part of a set of major experiments and experimental projects to which the federal government and the individual regions would jointly be committed. Such experiments should be initiated in order to gain new insights and to develop new approaches to the solution of the nation's major economic and social problems.