Foreign Participation in U.S. Research and Development Asset or Liability? (1996) / Chapter Skim
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Findings and Recommendations
Findings and Recommendations
Pages 140-158
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From page 140... ...
The American public generally viewed the predominately one-way transfer of technology and know-how out of the United States as a way to increase both short- and long-term economic, political, and national security returns on these investments. Recent decades have brought increasing convergence in the technological capabilities of industrialized nations as well as growing cross-penetration of national innovation systems through foreign direct investment and transnational industrial alliances.
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From page 141... ...
Technology transfer—even in an era of global telecommunications—remains a "contact sport" that demands the ongoing, intensive, face-to-face interaction of individual scientists and engineers. Therefore, R&D activity continues to cluster geographically, and much of the economically valuable outputs of publicly and privately funded R&D tend to be highly localized; · In order for a company to draw effectively on advanced technological capabilities and R&D outputs beyond its own walls, that firm generally needs to be performing R&D at a level commensurate with that of the organizations whose R&D activities it hopes to exploit; and · Neither R&D capabilities nor ownership of technology alone are reliable indicators of the economic or competitive strength of a company or a nation.
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From page 142... ...
FOREIGN PARTICIPATION IN PRIVATELY FUNDED U.S. R&D: FINDINGS The past decade has brought a significant increase in foreign participation in privately funded R&D in the United States.
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Case studies show that foreign-owned companies, especially Japanese firms, have in several industries imported significant amounts of advanced production technology and methodologies into the United States. Thus, while in some cases foreign involvement in U.S.-based industrial R&D has resulted in lost opportunities for U.S.-owned firms and foregone wealth for their U.S.-based stakeholders, in many others foreign firms have created opportunities and wealth for Americans and American firms by transferring technology, know-how, capital, and other assets to the United States.
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Threats to National Security Concerns over the risk to national security posed by foreign involvement in the U.S. research enterprise have focused on growing foreign participation in particular it&D-intensive industries, whether through investment or industrial alliances.
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government with respect to foreign participation in privately funded U.S. R&D are inseparable from the nation's broader foreign economic policy agenda, particularly as it relates to foreign direct investment and international trade.
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trade and investment through negotiation in bilateral and multilateral forums. The United States should hold itself and its trading partners accountable to existing international agreements and should redouble its efforts to negotiate more comprehensive, internationally enforceable rules on monopoly formation, foreign direct investment, technical standards, environmental regulation, and intellectual property rights.
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publicly supported R&D may do so in any number of ways, including via sponsored research, patent licensing, university industrial liaison programs, or by employing university faculty and recent graduates from science and engineering doctoral programs. A paucity of data makes it difficult to say much about the aggregate magnitude, disciplinary focus, and national shares of foreign corporate involvement.
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At the same time, the committee firmly believes that knowledge and technology flows between foreign firms and U.S. universities and federal laboratories are far from unidirectional and that foreign firms through their R&D participation also return economic value to U.S.
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The sharply critical public response to the few highly controversial cases of foreign participation in U.S. R&D has, in the committee's opinion, had a distinct chilling effect on the willingness of some foreign firms to enter into closer working relationships with publicly funded U.S.
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Indeed, even more than economic performance rules, reciprocity requirements present liabilities and hazards for the United States. First, by requiring that foreign firms' home governments comply with U.S.
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research universities and federal laboratories generally have made good-faith efforts to comply with federally mandated economic performance and reciprocity requirements. Nevertheless, the committee believes that at the very least these requirements risk impeding the ability of agencies to perform their primary missions as well as diminishing the contribution of federal R&D programs to U.S.
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In addition to more flexible implementation, there needs to be strong interagency policy guidance that explicitly reconciles economic performance requirements with the demands of agency core missions, the nature of multinational R&D and technology practice, and the long-standing U.S. commitment to national treatment of all companies operating in the United States.i Federal policy guidance in this area should make it clear that there will be circumstances in which agency missions and the more immediate economic objectives of these requirements will not overlap and may even diverge.
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Ultimately, strong federal policy guidance is a prerequisite to more flexible and discretionary implementation of statutory economic performance requirements. Such guidance would provide federal agencies and front-line R&D-performing institutions with the authority and legitimacy they need to implement the requirement.
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access to publicly and privately funded R&D in other nations. These include greater insistence on mutual accountability in existing or renegotiated bilateral science and technology agreements, negotiation of new rules at the multilateral level (such as within the OECD, GATT, APEC, and the North American Free Trade Agreement)
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access to privately funded basic research in Japan would be improved if the United States could negotiate a reduction in barriers to U.S. foreign direct investment in Japan.
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and other appropriate organizations to develop and disseminate to the nation's academic research enterprise good practices and general guidelines related to the management of intellectual property. While most of the major research universities appear to have established adequate capabilities for insuring compliance with the requirements of the 1980 Bayh-Dole Act, universities with more modest research activities may not be devoting sufficient resources to this task.
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industrial R&D, the contraction of industry-based basic and long-term applied research, and the implications of defense conversion for the nation's R&D system. However, the committee believes that these concerns, unlike the recent preoccupation with the nation's weaknesses in technology commercialization and use, are likely to have a more balanced and constructive influence on the way the American public looks upon foreign participation in publicly and privately funded U.S.
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is currently reviewing the institute's policies concerning relationships with private industry, including implementation of mandated economic performance requirements. (Phone conversation between Bruce Mattson, NIST, and Proctor Reid, NAE, March 31, 1995)
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