Future National Research Policies Within the Industrialized Nations: Report of a Symposium (1992)

Assistant to the President for Science and Technology; Director of the Office of Science and Technology Policy

As part of this symposium, we have been asked to look at the future of the research policies within each of our countries. In taking on this assignment, I am ever mindful of the Chinese proverb "prediction is a difficult art—particularly when applied to the future." I am also sure that the only absolutely valid prediction I can make is that I will miss many important developments entirely. Who would have predicted a year ago, for example, that the Gramm-Rudman budget law would be a thing of the past, that the international scene would have changed as dramatically as it has, and that the United States would be at war?

But the long-term future is an important consideration of the Office of Science and Technology Policy (OSTP). In my confirmation hearings I stated that a major strength of many of our friendly competitors lies in their ability to maintain a longer-range perspective in business, in academic institutions, and in government than we do. We in the United States need to develop a longer-range strategic vision of science and technology and of their present and potential contributions to economic growth, the quality of our lives, and national security.

I have been very fortunate in that regard, because the Bush administration is committed to making the investments necessary to ensure the vitality of the United States through the 1990s and into the twenty-first century. In particular, the administration is strongly committed to increasing support of R&D, because we believe that investments in R&D can be expected to pay themselves back many times over. This is why the Bush administration proposed to increase federal funding for R&D by 13 percent— to over $75 billion—in the budget submitted to Congress three weeks ago.

As you well know, divining the long-term future of federal science and technology policy from a single year's budget document is something like trying to figure out the plot of a movie from a single still photograph. Nevertheless, if the still has all of the movie's characters in it, perhaps the plot can be explained. So let me start by talking about the budget and about some of the thinking that went into it. Then I shall discuss some of the long-term planning that is entering into the formulation of the administration's science and technology policy.

One of the most important areas of emphasis in the Fiscal Year 1992 budget is basic research. Basic research accounts for less than 10 percent of all the R&D done in the United States. But basic research, and particularly the large fraction of basic research done by individual investigators in universities and colleges, is the wellspring from which new knowledge and technical advances flow, not only in the United States but around the world.

Recognizing the many essential contributions of basic research to our national future, the Fiscal Year 1992 budget proposes actions in several federal agencies designed to strengthen the individual and small group investigator component of the scientific enterprise. At the National Science Foundation (NSF) the budget proposes an 18 percent increase, which would get the NSF back on the doubling track established by President Reagan and supported by President Bush.

At the National Institutes of Health (NIH), the budget proposes an increase of 6 percent—to almost $9 billion. Because of the way this increase is structured, it would allow for an increase of 9 percent in NIH's funding for research project grants awarded to individual investigators.

Together, NSF and NIH support over half of the federally funded basic research done in the United States and over 75 percent of the federally funded basic research done in universities. By focusing special attention on these agencies, the administration plans to strengthen the individual investigator and small group research that remains the heart and backbone of American science and technology.

Yet it should be remembered that we will never fully satisfy the needs of university researchers for funds; nor should we. Competition remains an indispensable part of a system based on excellence. The challenge is to balance competition with the needs of the nation and with the many opportunities that now exist within science.

I have been focusing on basic research thus far, but, clearly, basic research cannot be the only component of a nation's R&D enterprise. Many nations have R&D enterprises of great value that include very little basic research. Indeed, in the United States the challenge increasingly is to find ways to exploit more effectively and efficiently the results of basic research, whether it is done here or elsewhere.

Our international trading partners have forged very strong links between government and industry. They have put public and private funds into targeted programs that reduce the risk of technology development. These funds lower the cost to each participant and make it easier to compete. If the United States is to compete in such a marketplace, we cannot force each individual company to reinvent the technological wheel. Rather, the government must act as a catalyst, with federal funding if appropriate, to combine the very real strengths apparent in each component of our R&D enterprise.

In this country, in addition to our university researchers and those researchers in industry, we have an enormous national resource in the professional talent, know-how, and science and technology resident in the 726 federal laboratories. Most of these laboratories were established in the immediate post-World War H period, with very specific missions and objectives, many of which were satisfied years ago. Many of these federal laboratories now lack clearly defined objectives, although some have been able to keep their programs in close touch with national needs. Our challenge is to involve these [federal] laboratories in a much-discussed but all-too-in-frequently realized partnership with universities and industry so that the laboratories can play a more effective role in supporting U.S. economic competitiveness in the international marketplace.

Competitiveness and the power of partnerships are leading considerations in one of the presidential initiatives in the FY 1992 budget: high-performance computing and communications. The President has proposed a 30 percent increase—to a total of $638 million—for an interagency effort designed to extend U.S. leadership in all advanced areas of high-performance computing and networking. The program underlying this initiative has been put together by the Committee on Physical, Mathematical and Engineering Sciences under the Federal Coordinating Council for Science, Engineering and Technology (FCCSET), which is the Cabinet-level group in the federal government responsible for coordinating and implementing federal science and technology policy.

Part of this program consists of basic research at the nation's universities designed to develop the hardware, software, networks, and human resources needed to ensure American leadership in all advanced areas of high-performance computing and networking. An additional and very important component of the program consists of applied research and the development of generic, precompetitive technologies that will form the basis for tomorrow's computer and communications industries. This work involves both the national laboratories and the computer and communications industries, and it promises to provide an excellent example of what can be accomplished in the kind of partnerships I have just mentioned.

The budget includes increased funding for a number of other areas of technology development, including energy technologies, biotechnology, advanced manufacturing and materials, and aeronautics. In fact, the budget itself goes so far as to state that it is providing increased funding "for all major civilian applied research and development areas." This is a very important indication of future directions in federal R&D. In addition to supporting a strong program of basic research, the federal government intends to support the technologies that will be crucial to meet national needs.

However, an important factor in that support is the way in which the federal government structures its support. The technology initiatives cited

above tend to be most effective when pursued through collaborative, cost-shared efforts among government, industry, and universities. In the past, as I have just noted, there has been much discussion of partnerships but not much action. More recently, however, all sectors of the R&D enterprise have become aware of the problem and have demonstrated their willingness to take action.

This is a process frequently defined as "technology transfer." I have become convinced, however, that the only effective transfer occurs when the technologies are carried in the minds of trained individuals moving from one organization to another. As a result, I believe that substantially increased mobility among our research personnel—both basic and applied and both short and long term—is essential.

Equally important, I believe that potential users must be more involved in the launching of laboratory programs than is now the case. I am convinced that groups of knowledgeable industrial and university scientists, meeting with laboratory management and senior scientists and engineers, can add a very important new dimension to the selection of program emphases and priorities—at the outset—with the laboratories. In so doing, this process will lead to significantly improved coupling throughout the research programs and in the use of their outputs.

Another good example of a partnership among government, industry, and universities is SEMATECH. Increases in productivity brought about through SEMATECH's R&D directly benefit the computer industry and will lead the way to new generations of technology. These increases in productivity also have important indirect benefits to other companies through the provision of more powerful, cheaper, and more reliable computing power. This is the kind of external return that offers a powerful argument for partnerships involving more than just industrial researchers.

Another partnership example is a new venture involving the Department of Energy, Ford, General Motors, Chrysler, and the Electric Power Research Institute (EPRI) on R&D on batteries for electric vehicles. We are within a factor of two of having batteries with the lifetime, energy density, and charging characteristics required for truly viable electric vehicles. By leveraging the knowledge and expertise of the private sector with governmental and university inputs, great progress can be made.

In parallel with the efforts to find more effective ways of organizing technology development, the administration is acting to improve coordination among the federal agencies that support this work. Part of this coordination work is being done through FCCSET. Following its reorganization and revitalization last year, FCCSET has initiated and extended a number of activities in high-priority, crosscutting areas of science and technology. Over the last year, FCCSET has conducted such analyses in the areas of education and human resources, global change, and high-performance computing and communications, and it plans to call for new areas to be added to this list over the next year.

In addition, the National Critical Technologies Panel, formed under the auspices of OSTP, has been examining technologies important to the future economic health and national security of the United States. The Critical Technologies Institute, which OSTP is in the process of establishing as directed by Congress, will assist in the development of strategies that will follow up on the panel's work in these critical areas.

Finally, the President's Council of Advisors on Science and Technology (PCAST) has been meeting monthly with the President and with senior members of the White House staff for much of the last year. PCAST has helped to bring the private sector's perspective to the federal science and technology policy process at the highest level, and the deliberations of this group are having an important influence on federal science and technology policy.

These, then, are some of the institutions that will be shaping federal science and technology policy over the next few years. But, of course, the policy itself is in a state of constant flux, for the world is changing with unprecedented speed, and an unchanging policy will quickly become obsolete.

Of course, any policy will have to be reevaluated and changed in the light of changing external conditions. It is vitally important for us to recognize at all times that the federal government is only one of the players in the research enterprise. It does have a powerful influence on that enterprise, but it is limited in many of the things that it can do. It is important that those limitations, just as much as the opportunities be recognized.

In the long run, however, I believe that we have established a mechanism, in this administration, that has the potential of working with many organizations to coordinate and integrate the activities of the federal government in a way that has not been possible previously. Rather than taking forward the programs of a whole series of heterogeneous agencies, which after all is one of the great strengths of our enterprise, in this coordinating activity, we put together federal programs instead. By doing so, and by being able to take forward to the rest of the administration and to the President such items as the federal program on global change, the federal program on high-performance computing, the federal program on education in science and mathematics, we have been able to convince all of those involved that these are indeed very important areas—areas deserving of special support.

At a time when we, probably unique among the developed nations, are very certainly playing a zero-sum game in constant dollars, I think all of us here should take real encouragement from the fact that the budget reflects the increases I have mentioned, for that means that other programs with strong constituencies have necessarily been cut back to provide the funds that have been moved into the support of science and technology.

I have every confidence that this will continue in the years ahead. The real problem we now face is that, although the President requests and pro-

poses, it is Congress that disposes and appropriates. I must say with all candor that the scientific and engineering communities do not constitute a singularly effective constituency. This is a challenge that all of us must face in the years ahead.

President, National Academy of Sciences

In my remarks today I would like to single out several issues that I think will be important in the years ahead. Let me start with current trends. By that, I mean things that are already in place and trends that might take us to the end of the decade. I would like to tell you about a few factors that influence my own thoughts on these matters.

If one uses the index of citations to each nation's literature in the world's scientific literature—new data from the Institute for Science Information— normalized for the size of the country, this is what one concludes: the United States leads by a large amount according to this indicator of scientific productivity, and it is the only country in recent years with a positive slope. We are getting better.

In the second ranking are the United Kingdom and Germany. Japan and Italy are in the bottom of the group. I would like to ask David Phillips and Michael Atiyah how Great Britain does so well in the light of tight science budgets. You are well up there in the world scientific literature. You are producing; you are very creative. Maybe Prime Minister Thatcher was correct in her statement that there is enough money to go around, as long as we give it to the best people. That question actually is one that we are facing in this country.

Another factor that impresses me is that the Bush administration proposal for science funding is really the best in as long as anybody can remember. And it comes at a time of record deficits. One might argue with the way the administration is allocating the budget, but one cannot argue with its commitment to science and its recognition that science is one of the best investments in the nation's future. Allan Bromley is to be congratulated in shepherding that budget through the administration. He is also lucky that he has an Office of Management and Budget (OMB) filled with science buffs. They like science, and they believe it is one of the best investments we can make. That is a very powerful team, OMB and OSTP working together.

Despite the skepticism of a senator or a congressman or congresswoman, I believe that in Congress there is general support for investments in science. Every congressperson wants an R&D establishment in his or her district. They recognize the connection between economic development and a strong research university R&D center in their community. So there is support across our government, I believe, in science budgets and in investments in science.

If the United States is supported so well in absolute terms—by international comparisons of science funding or by the output measurement I have suggested—if we occupy that position, why is there such a great deal of stress in the American scientific community? The growth in science budgets, as magnificent as they have been, have not kept up with the growth in the number of scientists at work in our research laboratories and, mostly, in our university research laboratories. We cannot say in this country what Professor Markl said about Germany this morning: it is very difficult to be a good German scientist and not be supported. There are some very good American scientists who have lost a great deal of their support.

This raises key questions in our country that I think will be debated in the years ahead. Are we training too many scientists who want to do academic research? Is it realistic to think of continually increasing scientific budgets? How much is enough in the support of science? The issue has polarized the scientific community into two groups. One group I call the plateau school. This group, in the present climate of deficits and despite the great Bush budget for science, believes that it is unrealistic to expect to have significant growth in the years ahead at the same rate and that we should be concentrating on setting priorities and on better allocation of science funds.

The second group supports growth. I call it the doubling school. They believe that growth can be persuasively argued in terms that the public and politicians can understand, that increased funding of science is not that expensive compared to other national priorities, and that science will founder unless it continues to grow.

My own view is that the outcome will be somewhere in the middle. We will see continuing budgets, good budgets, for science. But there will be a great deal of thought given to allocation, to setting priorities, and to seeing that the funds are well spent.

Let me talk about some trends in the infrastructure of science, starting with the research universities. I believe that the research universities will remain the primary vehicle for fundamental research in the United States. They have delivered on the investment made in them in the years since 1950. There are no alternatives in our country; the research universities have been good, and they have the potential for continuing to be highly productive in scientific research.

Wrongly or rightly, our research universities are under a siege of criticism from many quarters: Congress, governors, faculty criticizing their own administrations, parents of students criticizing the escalating costs of education, and so on. There is a perception that their rising costs are out of control and that they need tough management. Then there will be demographic changes as a wave of retirements takes place in the next few years, necessitating that new faculty be found.

Thus, because of these pressures, there will be many changes in the management of science in the research universities and in the way they allocate their own internal resources. There will be pressures to cap the esca-

lation in their costs, their tuition, the growth in their overhead, and so on. But these pressures can have some positive effects. I think we may see a redefinition of departments and disciplines as new faculty and newly trained scientists come in and as the administrators wrestle with the pressures that I have described. We may see some reduced scope; universities cannot do everything for everybody. Perhaps they will cut back fields that have been bypassed by the progress of science and reallocate those resources to the more lively fields. As a matter of fact, I visit a lot of universities each year, and these kinds of trends are already happening. They are not advertised—they are happening without fanfare—but these kinds of internal soul searching and changes are gradually taking place.

Here are some words about the industrial laboratories and what is ahead for them. We have some great and effective industrial laboratories in the United States, especially in the pharmaceutical, chemical, electronic, and biotechnology fields. By great and effective, I mean they do good research and their management knows how to use the products of that research. We also have some great laboratories that are ineffective. Some of our companies with the highest R&D budgets in the country have very good laboratories, but you would not know it from the products they turn out. This is because their management is not trained properly; they do not know how to use their very able scientists and engineers and their research centers to develop new ways of doing things and new products.

I believe that this may change in time. I think that those companies that do it well will be role models for the others, and I believe as well that the effective use of R&D by Japanese companies may be a role model for American companies.

As for our national laboratories, the personnel there and the political supporters of these laboratories are in search of new missions as the sponsoring agencies change their priorities. The Defense Department is reducing its budget in the years ahead, and the same is in store for the other national laboratories. Many of them are looking for new work in the areas of the environment, energy resources, and precommercial R&D.

Can they bring this off? Can the culture of these national laboratories, accustomed to single customers, change so that they are competitive in these areas that I have mentioned? I believe these laboratories will survive because no regional congressional group will permit them to be disbanded. We do not know how to do that in this country. But can we make them effective in addressing the new national problems? That will be the issue we will have to face.

Let me talk about the national response to trends in the research enterprise. Explosive developments in almost every field of science will keep science and technology very high in the public interest. It will keep its priority high. Every week one can read of a major new discovery in the newspapers, and the public follows this with great interest. All of the leading newspapers now have science sections. This past week Amgen released a

remarkable new product, maybe the most important biotech product yet on an agent that enhances the white cells' effectiveness. During the previous week, I was traveling during the meeting of the American Association for the Advancement of Science (AAAS), and in every city I visited I found on the front page of the newspaper what was happening that day at the AAAS meeting. I think the public knows a lot, that science has a high priority, and that science and technology will be in the limelight.

But that limelight also presents us with problems. The large science budgets that we are enjoying makes science very, very visible. Increasingly, we will be asked as a community, with so much invested in science and with our world leadership role, why is our record of commercial exploitation so disappointing? Anybody who has testified before Congress must have been asked that question many times.

I recently heard a new slant from a Japanese friend, who very frankly said that we Americans may be putting too many resources into basic science, with the mistaken notion that technological innovation follows a linear model: research to development to prototype to product.

Well, I do not know anybody in this country who believes that innovation exclusively follows that linear model. On the other hand, let us not forget that the transistor came out of solid state physics and spawned the computer information revolution, that biotechnology came out of molecular biology, and that all of the emerging technologies that Dr. Kikuchi mentioned in his paper require some scientific breakthroughs before they reach fruition. So when it comes to the innovation process, especially in the years ahead with the new technologies, we can make a good case for the support of science.

But why have we not done so well in economic exploitation? There are so many important factors that go into innovation: management skills, the investment policies of management, such tax policies as the capital gains tax or the lack thereof, the macroenvironment, and regulatory policies of government. If this nation has failed to exploit its own scientific successes fully, it is not because it has not been successful in science; it has not done well in these other factors that influence our ability to reap commercial success from scientific success.

Looking ahead, I make a prediction that some of you may argue with, but at least it will make a good discussion. I think American industry will shift a major fraction of its fundamental research to research universities and will reserve targeted research more related to products for their own industrial laboratories.

Why do I say this? A growing number of American companies have formed new kinds of relationships with university departments that go beyond simply sending money. These new relationships respect the open nature of the university; their only restriction is exclusive licensing if something useful develops. This is very important. There is a two-way intellec-

tual flow of people and ideas, with the industry contacts being the intellectual peers of their university scientist counterparts.

There is a lot of feedback from technology to science that results from this kind of relationship. The industrial scientists who maintain this relationship know on a timely basis about the research in the universities where they serve as patrons. They know the graduate students, and they know the thesis topics. These industrial scientists go and spend time, months at a time, at the universities, and the university people sometimes spend an equal amount of time in the industrial laboratories. This is a new concept that seems to be very successful. I think that the more that American industries not doing it learn about it, the more they will swing in this direction.

Also, university research is cheap, and that is because a great fraction of it is done by low-cost labor: the postdoctorate and graduate students. This is a very efficient means of technology transfer, because it is not simply money being sent down but it is people working together, going back and forth. It leverages a much larger government investment in the research university.

Despite these future trends, no matter what happens, the industrial contribution to universities will always be a small fraction of the federal contribution. On the other hand, that small contribution, as I said, leverages a great federal investment. Some members of Congress are worried about this. On the other hand, this is as it should be, because the government return on their investment is in the form of industrial growth, growth in the tax base, and growth in jobs.

I believe there will be more spin-offs from American universities—not only in biotechnology but in materials, software, and many additional areas. Can the national laboratories participate in these trends? This requires the cultural change that I alluded to before, which has occurred already in the American universities. Today, the relationship is a good one, whereas 20 years ago industrial representatives were not very popular on American campuses.

Finally, some concerns about the future. If the relationship between science and technology activity and economic success is as close as we all think in this room, there may be some pressures and some unfortunate directions taken. There may be a new kind of protectionism, replacing the military security sort with economic protectionism, that could lead, in one way or another, to closing off scientific communication. We must guard against that.

As I said before, big money attracts political attention. So we have to be concerned about pressure to allocate resources on political grounds rather than on the basis of quality of work. There may be oversight initiatives, close monitoring of universities because of the big money spent there, and issues of fraud and conflict of interest leading to inspectors running all over the place. We have to guard against that. There may be a tendency to allocate resources not to the best places but to the lower bidders; we see some signs of that happening already.

I think these are problems we can handle in the years ahead. If we are not sensitive to them, we might be disappointed—we might be surprised and shocked. But, on the whole, I am rather optimistic about the way things are going in our country. We have a lot of problems, which I have described, but the connection between the welfare of our people and the economic success of our country generally is recognized, and I think we will do well in the years ahead.

Professor Roger Geiger: I think I agree very much with the view that Frank Press just gave of the American research universities. That is the part of the research system I am prepared to talk about.

I think a major trend of the past decade is the decrease in the percentage of federal funding of university research. The federal government paid for about 70 percent of university research in 1970, and 67 percent in 1980; at the end of the decade of the 1980s, that percentage fell below 60 percent. Thus, it is now approximately where it was in 1960.

This low percentage is not because federal investment decreased; it actually increased by about 50 percent in real terms during the 1980s. Rather, other sources increased at a more rapid rate. One of the most important of these has been the increase in industrial funding. I found your comments very interesting, because the industrial contribution to university research has approximately doubled in the last 15 years. It has reached a level of perhaps 10 percent, counting direct and indirect contributions. Many people doubt that it can go beyond that.

Your faith that it will, I think, is a daring position to take in some ways. But it may be a very reasonable one as well, because the limits of this are not yet apparent, and the interactions that have occurred to date seem to be breeding more interreactions rather than reaching any particular limits. So, I think the reasons you give for why this partnership may be extended further are quite convincing, and I believe the point you made that the culture of universities has changed dramatically over the last decade is certainly a particularly significant reason.

Question: I agree with the comments, just made by Frank Press, that if you look at the growth rates of supportive academic R&D in the 1980s, the federal government rate has been only at about 9 percent per year, and industry has been about 17 percent per year, so those ratios have gotten to where the federal government supports about 60 percent. But as for total support for academic research, that grew at about 10.5 percent per year during the 1980s, during a time when inflation was only 5 to 5.5 percent. As a matter of fact, per capita expenditures on academic doctorals grew during the 1980s very significantly.

Thus, there is the curious phenomenon that in the very year when per capita support of people in the physical sciences in academia was at a minimum, the survey showed there was greatest satisfaction with support. Today, where that support is 64 percent higher in constant dollars, the satisfaction has dropped. I think that, as scientists and engineers, that is a phenomenon that deserves examination and explanation. I do not know what the explanation is, but it is curious.

Dr. Frank Press: I think those figures have to be disaggregated to see where the money is coming from. Is there defense money in there; is that counted? Is there NASA money in there? Are the big accelerators included? Because when using the NSF's own data in scientific indicators, you will see that the average grant size does not seem to follow the trend you have mentioned. So one has to understand this information in a better way to see what is really happening.

Sir Michael Atiyah: Could I just try to respond to the question that Frank asked about the health of British science? First, I would like to say how very pleased I was to learn that he thought British science was still in a very healthy state.

Not everybody puts full faith in citation indices, but even if one takes these at face value, I think one might make the following point. The health of science in a country at a given time depends not only on the funding of institutions at the moment, but it depends on its past. It takes a long time to build up a scientific tradition, to train scientists and so on.

So the point may be that you may look very healthy at a particular moment, but 10 years later your situation might be quite different. I think there is a long time lag in building up science and scientists, and one has to bear that in mind in trying to assess where the future is going to lie. I think it is dangerous to be complacent, because by the time you discover that things are bad, it is too late to change.

Question: I attended a recent meeting sponsored by the National Academy of Engineering on industry-university interactions. One of the things that struck me during the course of the day was that several of the academic presenters and a couple of the people in the audience were very much interested in developing models for and expanding services of universities that would be of value to companies.

The corporate speakers seemed to be presenting the view that they do not look to universities as their primary source for new technologies—not necessarily basic research, but new technologies. It seems to me in my observations that corporate support for university research usually is in areas where there is some perception that something useful is going to come out of it. So I would guess that a lot of the support is not uniform across fields in science and engineering but that it is very heavy in biologically oriented areas, particularly in microbiology and where there is a medical application that is available; that it is very heavy in the computer and computer soft-

ware area; and that it is not as heavy in some other areas—certainly not as heavy in basic engineering research.

To look to industry to drastically increase its support of universities seems to me to be saying in a sense that, over a period of time, university research is going to change—it is going to change in response to the sources of funds that come in, which is always what happens when sources of funds change, and it will become more directed into areas that are of interest for industrial application. Now, there is nothing wrong with that, except that we then have to question what happens to the basic research capability of the university. Are we developing then within the universities the same kind of shorter-term perspective that we are saying our industries have suffered from?

The universities in this country have been the long-term research generator—the place where somebody could follow a research idea for 20 years, and where some of these major breakthroughs that you mentioned before came about.

Is not the discussion deriving from the fact that federal support for basic academic research has not been keeping up with need? So we are looking around for another source of funds, other than the first principles, and we are saying that the other source would, in fact, be a good thing.

Dr. Frank Press: I said it was a tentative prediction of how things might go. I have in mind about a dozen American companies that have relationships with universities of the kind that I described. The fields are absolutely forefront. The university people would love to work in these fields, no matter who supported them.

A model that immediately comes to mind is the relationship between MIT and AT&T, IBM, and ITC. It is a great model. MIT is mostly supported by the federal government. The industries put up their own money for this joint project, and people from the industrial laboratories spend months at MIT and the other way around, with graduate students going to the industrial laboratories and so on. It is a terrific model.

There are some others that I might speak of—Monsanto and Washington University, for example. It is a unique model; if I had time I would describe it to you. There are only about a dozen of these models, but they are so good I think other companies might learn about them and try to replicate them.

Mr. Erich Block: Let me just remind you that over the last decade, roughly speaking, the percentage of funding from industry to universities has doubled. You can say that is from a small percentage, which is true also, but it has doubled nevertheless. That is one kind of indicator.

Second, there are some universities where the funding from industry is a very high percentage of their total research funding—much higher than the average. The third point I wanted to make is highly field dependent. There are certain industry sectors where greater university funding is more prevalent; and there are other industry sectors where it is not so. A lot of it has to do with tradition and also with the fact that some of these industry

sectors have not yet realized that basic research is a very important ingredient to their competitiveness.

I think we will see a trend in that direction. It will never be 90 percent of the total research funding of a university; that comes from industry. But you should not underestimate what has happened and what the trend is.

Professor Alan Beyerchen: A major transition that has occurred, naturally, is the unification of Germany: something that was not foreseen by anyone—German, American, or otherwise—that I know of in 1989.

I am very concerned at this point about the manner of the West German restructuring of East German scientific institutions, and I am concerned as well about the reports coming out of East Germany that indicate that certainly people in the eastern provinces of Germany realize that there was a great deal of overstaffing and so on. But there was a lot of partisan activity going on. Professor Markl indicated that the nature of the environment for science policy has become very politicized in the past 15 years or so. The fact that there is a CDU government in charge of Germany sets the tones of everything being done in eastern Germany. If there were an SPD government, perhaps the tone would be different.

I wonder if perhaps this is not an historical opportunity for scientists in the federal republic to step in and work for a more nonpartisan way of setting policy for the eastern provinces—more nonpartisan than what is happening in general in those provinces.

I have a second general comment on the talks, those of this morning in particular, but also the ones this afternoon. This morning we heard a fair amount of talk about the human capital involved and the mobility of human capital, from the various members representing the European Community in particular, but also from people who were talking about training the young in the universities and preparing the next generation.

One word that seemed to be left out of this entire discussion was ''women.'' In this country we have a number of major initiatives from the National Science Foundation, the AAAS, and all sorts of other organizations to encourage the flow of women into the mainstream of science. What we see is literally a human energy shortfall. I wonder if the other speakers this morning might want to address that particular question—Professor Markl, in particular, who said there is no real shortage in Germany. Does this mean that women are not being recruited as actively as they are in the United States? If they are, in what ways?

Professor Hubert Markl: I want to combine my answer to your comments and questions with a comment I wanted to make on Academician Osipyan's presentation.

This change of the East German scientific system comes as a great hardship to the people who are involved there, and we realize that. If it is the perception from the outside that the hardship comes from a kind of partisan treatment of the situation, I think that perception is wrong.

The major agent, presently, in this process is the Wissenschaftsrat, the science council, which is really very nonpartisan as to the people involved. There was from the very beginning a conviction, which has even strengthened, of all parties and even between politics and the scientists that the faster the restructuring goes and the more it goes in the direction of building up the research base of the universities again, the better it will actually be for the people involved.

This is not easy for those who are now the objects of this handling to accept, because they were, in fact, rather comfortable and well financed, without any job insecurity, and with very little pressure to show in productivity what they did in the academic system. The East German Academy was a rather sheltered, prestigious body that did not have to worry too much about where the funds came from for its work. Once you were in, you could be pretty sure you were in for life, unless you aged with the political system. That, of course, could give you trouble.

Now, the situation cannot continue like this, and it will not. What actually is happening is that we have tried to help all the different groups assembled there to get as fast as possible into the closest productive contact with the system that makes the money available for them now. So, many of the groups will end up in Max Planck groups, in Hanover institutes, or in some of our national laboratories. But most of them really will come into closer contact with the universities, an idea they do not like, for they will have to teach—to face the red in the eye of the student every day. I have heard a number of comments to this effect. Of course this is not true for everyone; I know that Academician Osipyan is continuously in contact with his students. But there are many people who are not, so this is the basic thing.

The problem that I see with the situation as you described it, regarding the connection between science and the economy, is as follows. In East Germany, since unification, we have clearly seen the following process. West German investors immediately went into the services and commercial sectors, and established everything from very small to very big supermarkets— everything very fast. This provided a number of jobs. Repair shops then blossomed everywhere, as did investment in those industries that have to be very close to the market to be served, say, for instance, furniture.

But all of these investors and industries do not employ researchers. Where you do find employment for researchers—in the big chemical industry, or the big engineering sector, the investment is very slow and very difficult to arrange. What really happens is that the average person hitting a big company—say one of our company industries—has to justify in front of his stockholders whether he or she invests wherever the value added to the product is best. If that is judged to be Australia, the investors will put

the next department of research of Hoechst in Australia or Spain rather than in Leipzig, even though it is German.

Not disregarding that, labor is much cheaper in East Germany, and real estate is very, very cheap. The eternal factors seems to be very simple and easy. But this is not how it is decided where to invest in research. I can tell you where the West German industrialists invest in new research activities. They invest in Munich, where the rents are staggering and where it is very difficult to find a square meter in town that is less than most Tokyo values. But that is where they put their money. They do not go where it is cheap to set up a new building and where there are cheap but qualified scientists.

We live in an open world. It is clear that talented scientists move much more quickly and freely than does money. So what we all have to face is that there is no strategy to keep talent where it is. Thus, when you say, "Please come set up a research department in Moscow and work with these people because they are cheap; for this will hold them back in Russia." I believe it just will not work.

The only way which we have discovered to retain talent is to have the government invest and then to attract more money from outside in very qualified research universities. Research universities provide something that keeps people in their home communities and gives them support, because it is the young people from the region who are educated there, and education provides chances for the future for them.

So what we are going to do—and that is why we are trying to move these people out of the Academy and into the universities—to build up the R&D and science and technology structure of East Germany to make it productive, first by putting a lot of money into the universities and then by letting conglomerate around active research universities small and large business, making it attractive for other investment as well.

This is the only way it has worked in our country, and I see it in other countries as well. That is why I am so much in agreement. If you talk about industrial policy and regional policy, the only way we could affect the system of investment in Germany, at least, was by providing this type of attractiveness and not tax benefits.

In Berlin you can see it very clearly. Investors will undertake any type of research, as long as the government pays for it. But when the subsidies are cut, they suddenly take off. They do not worry about whether that research is productive or not. If you want to make productive investment, you have to leave it to the industrialists to decide where they want to go, and you have to attract them by the boundary conditions, so to speak. And research universities are an exceedingly important condition for development.

The former East Bloc countries, such as Poland and. Hungary are having similar problems and unless they somehow try to tie in with this experience of western Europe, they will not have the development they want. I think they will try to do so.

In the long run, for the Japanese, the Taiwanese, the Singaporese, the South Korean, or for any of these examples, there is no way to build up their country from attracting venture capital from outside. You have to earn your money in your own country in a free world market with products that are competitive, and from that you can build up your society. There is no other way.

As for women researchers, women have much better chances now in Germany to get funds and to get jobs. But it will take some time before these policies, which have really only evolved over the last five years or so, really show in the numbers.

Academician Yuriy Osipyan: In general, I agree with what Hubert Markl said. But we [Russians] have to take into account the two ways possible: (1) western European or British, American, German, and French based on individual activity and individual responsibility, and (2) let's say, Asian, Japanese, Taiwanese, South Korean.

I do not know what the Russian way will be, but this is the very time to decide. Perhaps we will combine the two. I have only to say that for us, personally—for the Russians—it would not be best to move this unsuccessful research group to the university. Maybe there will be a new research group—there will be a little shift with the good people based on individual responsibility.