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Areas of Growing Consensus With the completion of these reports, have we made significant progress toward a national policy for strengthening technology development and use as a source of U . S . advantage in global competition ? A review of the reports reveals that consensus is growing around some key ideas. Admittedly, consensus does not mean that an approach is right. Nonetheless, in our political system the broader the consensus that can be achieved, the more likely that significant changes will take place. One of the most visible changes in the policy discussion in recent years has been the increase in the number and variety of players. Preparation of the reports has involved representatives of government (both the executive and legislative branches), industry, academe, and labor-often working together. Broader participation reflects a widespread concern about U . S . problems in commercial technology and international competitiveness, as well as critical needs and dependencies in military technologies . The in volvement of more of the major political players, which represents a distinct change from earlier phases of the technology policy debate, 1 2 increases the chances of technology policy issues being addressed in a more comprehen sive, systematic, and farsighted manner than in the past. IMPORTANCE OF TECHNOLOGY TO COMPETITIVENESS The importance of technology to competitiveness is not at issue among the reports reviewed here. The issues addressed concern the public and private roles and policies necessary to manage technology in the global competitive struggle . The groups producing the reports, however, were often established to serve as advocates for technology. There are other groups, for instance macroeconomists and economic policy officials, for whom the importance of technology is very much at issue. DECLINING U.S. TECHNOLOGY LEA DERSIDP Declining U . S . leadership in technological capability is an underlying theme running across the reports . In many, if not most, of the technologies the reports find a trend toward declining relative U . S . capability compared to the Japanese and Europeans. The Department of Commerce, for example, 24
predicts that, if current trends continue, by the year 2000 the United States will lag behind Japan in most of the emerging technologies and will trail the European Community in several of them. The Council on Competitiveness report Gaining New Ground goes further and concludes that the United States has already lost several technologies that are critical to industrial performance and is weak or losing badly in others . Moreover, it states that in most of the critical technologies the U . S . position continues to erode. The CSPP report and the Council on Competitiveness report Gaining New Ground attempt to identify the characteristics of technologies in which the United States appears to be maintaining a lead. The reports reach simi lar conclusions: the United States tends to maintain a lead in technologies that stress creativity, that are closer to basic research, and that are less capital-intensive . The United States tends to lag in technologies that are capital-intensive, that have a significant manufacturing focus, or that have been targeted by foreign governments and industry. NEED FOR A BROA D-BA SED RESPONSE There is increasing agreement on the need for a broad-based, coordinat ed response to the challenges of technological innovation and international competitiveness. There is virtual consensus among the reports that private industry bears the primary responsibility for commercial technology devel opment and application. However, industry, government, labor, and aca demia are all acknowledged to have important roles to play. These groups are looking for new ways to work together. As Picking Up the Pace says, success ultimately depends on a team effort. Progress along these lines is illustrated by the Bush technology policy statement which explicitly accepts a federal responsibility to work with industry in the development of generic, precompetitive technologies . Also, compared to previous cycles of the technology policy debate, the industry reports give less sense that industry is asking government for special favors and more sense that industry is accepting shared responsibility. A much lower level of agreement, however, exists on the specifics of the respective roles and responsibilities of the various parties, as will be discussed in the next section on unresolved issues. Also, as mentioned above, important policy groups remain outside the consensus on the importance of technology to competitiveness . CRITICAL TECHNOLOGIES Another highly visible new dimension of the technology policy debate is the identification of critical technologies . The lists of critical technolo gies can be used in the allocation of public and private investments to new technologies and to show the country where new priorities should be estab lished. They have the potential to provide a focal point for national tech- 25
nology plans that can guide government, industry, and academic actions to renew technological leadership and competitiveness. As can be seen from Table 3, there is considerable overlap among the various lists of critical technologies. High-performance computing, ad vanced semiconductor devices/microelectronics, high-density data storage, and optoelectronics are listed as critical in five reports. Advanced materials, artificial intelligence, digital-imaging technology, manufacturing technology, sensor technology, and superconductors are listed as critical in four reports. Biotechnology, medical devices, and air-breathing propulsion appear on three lists. These presumably are critical technologies where public and private investments might have payoffs in multiple sectors of the economy. There is considerable overlap between critical defense technologies and critical commercial technologies . Only five of the defense IDOD) critical technologies are not included in the DOC list or one of the other lists . This tends to support the view that commercial technologies are critical to the U . S . national defense and vice versa. The overlap also underscores the importance of DOD R&D funding for commercial technologies. Of the 1 0 technologies o n the AlA list, 9 also appear among the 2 2 DOD 1 1 98 9 ) criti cal technologies. Thirteen of the 16 technologies critical to the computer systems industry also appear on the DOD list . The similarity between lists of critical technologies has been widely noted. The report of the National Critical Technologies Panel, for example, reviews earlier critical technologies reports and notes the extensive overlap among the lists . Lists of critical technologies, which include many of the same technologies, have also been published by groups in Japan and Europe . 13 There are limits to the significance that should be attached to the lists-the definitions of the technologies are often quite broad and are not consistent across the reports; the lists are based on different criteria, meth odologies, and time horizons . Nonetheless, the overlap among critical technologies lists indicates a strong consensus that these are the broad technologies that will underlie global competition in the next decade or so and that countries and industries will have to possess well-developed capa bilities in these technologies to compete successfully. This consensus sets the stage for the next steps. There is now a strong feeling, expressed by the National Critical Technologies Panel, that " . . .identification of critical technologies is not the problem . The chal lenge is to develop and deploy them, swiftly and strategically. " GENERIC AND DUAL-USE TECHNOLOGIES Related to the idea of critical technologies is the idea that certain tech nologies are "precompetitive/' "generic/' or " dual-use. " As mentioned earlier, " precompetitive " refers to a stage of the technology development process that occurs before commercial potential can be assessed. " Generic" 26
technology refers to technology that has potential for applications in a broad range of products and processes. " Dual-use" technologies are those technol ogies with applications in both the military and commercial spheres. The currency of these ideas reflects an increasing focus on potential applications of R&D and emerging technologies-that is, on the potential payoff to investment in technology development. This is a response to criticisms that the United States has excelled at technology development but has fallen down at getting the new technology to the market. The use of these terms reflects an attempt to inject more precise dis tinctions into the traditional classification of R&D used for federal funding purposes-basic research, applied research, and development-and thus to provide a more discerning basis for determining the relative roles of the federal government and the private sector. The concepts of generic, precom petitive, and dual-use technology include a recognition that at early stages of development of a technology it is impossible to tell what types of applica tions, if any, the technology may have and what the value of those applica tions might be. The high uncertainty and risk at these stages, and the probabil ity that the originator of the technology will not be able to appropriate an adequate return on investment, raise the possibility of market failure-that is, underinvestment in technology development by the private sector (from a societal point of view)-implying a need for government action. This argument provides an economic rationale for government involve ment in the early stages of a broader range of technologies than has been traditional. However, if a technology has been identified as critical to com petitiveness in the next 10 to 1 5 years, private firms should also have a strong incentive to invest in its development and application. Hence, criti cal technologies identified as generic, precompetitive, or dual-use would appear to make good candidates for cooperation between the public and private sectors. PROMINENCE OF DEFENSE-RELATED ISSUES Defense-related issues have assumed increasing prominence in the U .S . technology policy debate. It is increasingly recognized that industrial com petitiveness is a prerequisite for national defense, as well as for a growing standard of living. The new defense interest in the competitiveness of U . S . civilian indus try has largely been spurred by the growing dependence of U . S . military security on many areas of commercial technology. As noted in the Carnegie Commission reports, in many fields technological leadership has shifted from the military to the commercial sector. This has raised concern, re flected in the DOD critical technology plans, that the declining competi tiveness of U . S . manufacturers can weaken defense production. A related concern is that procurement and other regulations make it increasingly difficult for DOD to gain access to commercial technology. 27
Some proponents support extension of current defense-related activities as an evolutionary approach to a broader national technology policy. Tech nology and Economic Perform ance and other reports have proposed trans forming DARPA into a National Advanced Research Projects Agency to help in creating a national, rather than solely military, technology base. The DOD's Critical Technologies Plan is viewed by some as the first step toward a broader national technology policy-one perhaps not limited to defense technology. 14 The Critical Technologies Institute, which would be funded by the DOD, is also viewed by some as offering the possibility of analytical support for technology policy more broadly. DOD currently provides the federal funding for the first industry-led, industry-government civilian tech nology development consortium-SEMATECH. Proposals made elsewhere support this view. Some observers, noting the absence of an effective institutional structure for technology policy on the civilian side of the federal government, have called for the DOD to play a role similar to that played by the Ministry of International Trade and Industry (MITI) in Japan. Such a role for DOD might be acceptable if the definition of national security is widened to include economic health. Other observers, however, object to such a role for DOD on a variety of grounds . 15 NEW UNDERSTANDING OF THE INNOVATION PROCESS Another new aspect of the policy discussion as reflected in these reports has been the emphasis on the need for a new understanding of the process of technology development and deployment. The new understanding, which may be characterized as a " systems " perspective, recognizes the need for closer integration among the activities in the innovation process-e.g., research, development, manufacturing, and marketing. It also recognizes the need for better integration between the innovation process and the broader politico-economic system. This leads to calls for a supportive financial environment; for a healthy technology base of human resources, facilities, and research support; as well as for supportive govern ment policies in many areas. Finally, a more systematic and integrated view of the innovation process leads to increased recognition of the importance of technology diffusion to economic productivity and competitiveness . . This results in a new emphasis on broader diffusion of existing technology to modernize manufacturing. POLICY RECOMMENDATIONS Recent technology policy reports agree that changes in a b�oad range of government policies are desirable to promote technology development and use and, thereby, to contribute to the achievement of national economic and defense objectives. As noted earlier, some of the reports, such as the Coun- 28
cil on Competitiveness' report Gaining New Ground, include recommenda tions for changes in industry and academia. However, the main thrust of the technology policy recommendations is for government action. A categorization of recommendations is shown in Table 2. The reports call for actions aimed not only at technology development and use directly, but also at the conditions that promote or impede technology, including the financial environment, harmonizing U . S . policies ( such as antitrust and regulation) with competitiveness objectives, human resources, international trade, governmental S& T policy, leadership and consensus, and the knowl edge base. Table 4 indicates the types of recommendations made in each report . A check does not necessarily indicate agreement among the reports on desirable actions, but merely that the reports make recommendations in that area. Areas where convergence seems to be occurring are summarized below. Critical Generic Technologies Strengthening government support of critical generic technologies is recommended by several of the reports . The reports Gaining New Ground and Technology and Economic Performance make increased federal support of critical generic tech.n ologies a centerpiece of their recommendations. The OSTP technology policy statement acknowledges a federal responsibility to support precompetitive research on generic, enabling technologies . The Council on Competitiveness report Picking Up the Pace and the NAM report support these initiatives and call for further action along these lines. Picking Up the Pace, Technology and Economic Performance, and the NACS first annual report encourage Department of Defense efforts to strengthen the U . S . industrial technology base. The OTA report suggests the establishment of a Civilian Technology Agency, which would build on NIST's Advanced Technology Program, to cooperate with industry in select ing and supporting R&D on civilian technologies. Federal Laboratories Another series of recommendations focuses on the federal laboratories. The Carnegie Commission and the Council on Competitiveness recommend a review of the federal laboratories for the purpose of recommending wheth er to close, consolidate, or expand individual labs . The NAM report recommends more industry involvement in setting the research agenda of the federal labs and focusing selected labs on technolo gies relevant to industry, such as manufacturing processes. The OSTP technology policy statement makes several recommendations to improve transfer of federal laboratories' R&D results to the private sector and to increase collaboration among the federal laboratories, industry, and universities . Further strengthening technology transfer funding, charters, 29
(1.) 0 TABLE 4 Types of Public Policy Recommendations Made by Technology Policy Reports TYPES OF OSTP OTA CAR l CAR II coc coc EPI NACS NACS NAM RECOMMENDATIONS (M) (P I ( G) (CIS) TECHNOL OGY ./ ./ ./ ./ ./ ./ ./ ./ ./ GOVT. R&D ./ ./ ./ ./ ./ GOVT. TECH. ACQUISITION ./ ./ GOVT. TECH. DEPLOYMENT ./ ./ GOVT. SUPPORT OF GENERIC TECH. ./ ./ ./ ./ ./ ./ ./ FED. LABS & COMMERCIALIZATION ./ ./ ./ ./ ./ ./ TECHNOLOGY INFRASTRUCTURE ./ INDUSTRIAL EXTENSION ./ ./ STANDARDS ./ ./ COOPERATION ./ ./ ./ USING FOREIGN TECHNOLOGY ./ FINANCIAL ENVIR ONMENT ./ ./ ./ ./ ./ ./ ./ FISCAL POLICY ./ ./ ./ ./ CAPITAL COST ./ ./ TAX POLICY ./ ./ ./ ./ ./ ./ SAVINGS ./ ./ LEVERAGED BUY-OUTS ./ ./ HARMONIZING U. S. POLICIES ./ ./ ./ ./ ./ ANTITRUST ./ ./ ./ INTELLECTUAL PROP. REG 'N. ./ ./ ./ REGULATION ./ ./ PRODUCT LIABILITY ./ VOICE FOR COMPETITIVENESS ./ HUMAN RES O UR CES ./ ./ ./ WORKER TRAINING ./ ./ ./ PRESCHOOL ./ PRIMARY/SECONDARY ./ ./ HIGHER EDUCATION ./ FOREIGN STUDENTS ./ USING ENGINEERS BETTER ./ MULTI-LEVEL ./ INTERNA TIONAL TRADE ./ ./ ./ ./ UNFAIR TRADE ./ ./ EXPORT CONTROLS ./ TRADE-RELATED INTELL. PROP. ./ ./ ./ So)T POLICY MACHINER Y ./ ./ ./ ./ ./ ./ ./ WHITE HOUSE ./ ./ ./ ./ CONGRESS ./ COORDINATION W/ STATES ./ ./ ./ COMMERCE ./ DEFENSE ./ LEADER SHIP ./ ./ ./ KNOWLEDGE BASE ./ ./ ./ ./ ./
and associated policies (i.e., licensing and intellectual property) of govern ment agencies is recommended by the Carnegie Commission and the OT A. Personnel exchanges between industry and government laboratories are recommended by both NAM and COC. More cooperative research between industry and government labs is recommended by NAM. Industrial Extension and Regional Economic Development Two reports specifically support the Manufacturing Technology Centers program at the National Institute for Standards and Technology. The OTA and the Economic Policy Institute both suggest more funding for the Manu facturing Technology Centers and for state industrial extension services. Fiscal Policy In the area of fiscal policy, the reports by OTA, the Council on Compet itiveness, and NAM, as well as the NACS first annual report, call for reduc tion of the federal budget deficit to promote a sound environment for strengthening U . S . competitiveness. Tax Policy There is broad support for making the Research and Experimentation tax credit permanent. Six reports support this measure. Those six are the NACS first annual report, the NACS capital investment report, both reports by the Council on Competitiveness, and the reports by OTA and OSTP. Support for reinstating the investment tax credit or other form of rapid depreciation is found in the two NACS reports and the OTA report. Support for reduction in the capital gains tax is found in the reports by OTA and OSTP, and the NACS report on capital investment. A ntitrust In the area of antitrust, the OTA and NACS reports support extending provisions of the National Cooperative Research Act to cover joint produc tion to reduce the legal uncertainties of such cooperative activities. The OSTP statement supports eliminating punitive treble-damage awards under certain circumstances. Human Resources Environment Human resources issues are receiving considerably more attention today in relation to technology policy than they have in the past. The recent technology policy reports show support for federal action at several levels of education and training. The OSTP statement recommends the revitalization 31
of education at all levels, " not only the training of scientists, engineers, and the technical workforce, but also educating our population to be sufficiently literate in science and technology to deal with the social issues arising from rapid scientific and technical change. " Individual reports recommend pro grams aimed at worker training ( OTA and NACS annual report), preschool ( NACS), primary and secondary education ( OTA and NAC S ), and higher education I NAC S ) . Trade-Related Intellectual Property Three reports-OTA, the NACS annual report, and OSTP-support international efforts to harmonize patent laws and application procedures. The OTA suggests that serious consideration should be given to such har monization even if it requires substantial changes in the U.S. patent system, as it might. Government S& T Organization and Policymaking Machinery Government organization and policymaking machinery for science and technology I S &T) are receiving more attention than in previous years, re flecting the development of a new understanding of the importance of the federal role in providing an environment conducive to innovation and com petitiveness. The Council on Competitiveness report Picking Up the Pace and the Carnegie Commission reports make recommendations aimed at improving White House S& T policymaking. The Council on Competitiveness recom mends appointment of an Assistant to the President for Science and Tech nology with specified responsibilities. (This was implemented in 1 989 with the appointment of Dr. Bromley. ) The Carnegie Commission report, New Thinking and American Defense Technology, recommends establishment of a combined advisory panel on S& T and national security issues to advise the President . (This was done in 1 9 9 1 via the establishment of a national secu rity committee of the President's Council of Advisers on Science and Tech nology IPCAST] . ) Technology and Economic Performance recommends that the OSTP . exercise lead responsibility in the Executive Office for identifying, formulat ing, and evaluating policy issues related to the national technology base for consideration by other appropriate Executive Office councils and offices. It also recommends that the National Security Council should include in its purview broad issues of science and technology policy related to strengthen ing the national technology base. Three reports address coordination of federal and state technology pro grams. The Council on Competitiveness in Picking Up the Pace and the Economic Policy Institute in Modernizing Manufacturing recommend that federal coordination with state technology programs be strengthened. The 32
OSTP recommends that federal programs in such areas as education, train ing, the national infrastructure, and generic technology centers should build upon state initiatives. Presidential Leadership Some reports argue that the President of the United States is uniquely situated to exert the leadership necessary to enact and implement a national technology policy. The Council on Competitiveness in Gaining New Ground calls for the President to act immediately to make technological leadership a national priority. The Carnegie Commission suggests that a presidential directive be issued to implement the recommendations in its report Technology and Economic Performance. The NAM recommends that the President should lead a public information campaign aimed at elucidat ing the relationship of manufacturing and technology to competitiveness and well-being. Knowledge Base The NAM, the Economic Policy Institute, and the Carnegie Commis sion all address inadequacies in the knowledge base and analytical support for technology policy. The NAM report calls for restoring and strengthening the Commerce Department's data collection and analytical capabilities to improve understanding of international competitiveness. The EPI report recommends federal programs of research and evaluation of industrial exten sion and manufacturing modernization programs. The Carnegie Commis sion report Technology and Economic Performance recommends increasing the technology policy analysis capability of OSTP through a dedicated in house staff and through the recently mandated Critical Technologies Insti tute. Opposing Views on Specific Recommendations In a few cases reports address the same policy areas but disagree on what action to take. For example, the OTA suggests an excise tax on gains from stock turnovers if the stock was held for 1 80 days or fewer, aimed at discouraging rapid, speculative turnovers of stock. The NACS, on the other hand, opposes a " speculation tax" on the grounds that it would depress stock prices and raise the cost of capital generally, and that the effects of such a tax on speculative turnover are unproven. Similarly, the OTA sug gests a variety of measures to limit hostile takeovers, while the NACS opposes such limitations. 33
