Foreign Participation in U.S. Research and Development Asset or Liability? (1996) / Chapter Skim
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Foreign Participation in Publicly Funded U.S. R&D
Foreign Participation in Publicly Funded U.S. R&D
Pages 90-139
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From page 90... ...
This trend is less well documented than is the growth of foreign participation in privately funded U.S. R&D, and it has stimulated intense controversy.
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This chapter examines the scope and nature of foreign participation in three areas of publicly funded R&D activity: research universities, federal laboratories, and federally funded industrial R&D programs and industry-led consortia. It concludes with an assessment of the costs and benefits of this participation.
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The extent of foreign participation at the graduate level varies among engineering fields, with significantly more participation in petroleum, mining, and agricultural engineering, and significantly less in aerospace and biomedical engineering, and in engineering science (Figure 4.3~.
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a) 50 40 30 20 10 _ — ~ O— 1980 1 982 Postdocs Doctorate recipients — Graduate students ,~_ _ 1 1 1 1 1 1 1 1 1 1 1 1984 1986 1988 1990 93 FIGURE 4.1 Foreign postdocs, doctorate recipients, and graduate students in science and engineering fields, 1980 through 1991.
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Petroleum ~ a Mining Agricultural Chemical Industrial Metallurgical/Material Electrical Mechanical Nuclear Civil Engineering Science Aerospace Biomedical Engineering (NEC*
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universities or university-based research centers and their counterparts overseas, anecdotal evidence suggests an increase in such linkages (Godfrey, 1991~. For example, in testimony at a December 1993 National Academy of Engineering workshop on the flat panel display industry, Jay William Doane, director of the Liquid Crystal Institute at Kent State University, underlined the importance of his institution's research collaboration with the University of Stuttgart, Tokyo University of Agriculture and Technology, and the Slovenian J
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Within the context of these shifts, foreign governments, nonprofit institutions, and companies have begun to play a small role in underwriting U.S. academic R&D.
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Six years later, in fiscal 1994, the foreign share of total sponsored research at most of the nation's top research universities had not changed significantly.9 In fiscal year 1986, Japanese entities sponsored more university-based R&D in the United States ($9.5 million) than did those of any other foreign country, although the United Kingdom and Germany were also major contributors to U.S.
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98 ; C~ A en U)
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subsidiaries. This is because foreign firms unlike foreign governments, nonprofit institutions, and academic researchers are well equipped to acquire and apply commercially valuable outputs of publicly funded U.S.
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. Research Contracts and Grants As noted, foreign-owned companies accounted for approximately one-third of all foreign-sponsored research at U.S.
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However, in fiscal 1986, nearly 50 percent of foreign support of university research, including funding by foreign governments, companies, and nonprofit organizations, was concentrated in geology, agriculture, and medicine (see Table 4.3~. Stalson's (1989)
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All foreign corporate support of the university's Engineering Systems Research Center and department of optometry came from Japanese companies, as did a majority of foreign research support for the department of mechanical engineering and mechanical design.~3 For the most part, foreign firms appear to be sensitive to the charge that they are taking more from U.S. research institutions than they are contributing.
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. In the opinion of the committee, it is in the best interests of the United States for publicly supported research universities and other publicly funded institutions to offer to private-sector investors the right of first refusal for intellectual property resulting from specific research supported by these investors.
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research universities found that roughly 15 percent (29 of 197) of all exclusive licenses issued by universities for technologies developed with NSF or NIH funds were sold to foreign companies (18)
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Of the 30 universities with ILPs, 24 had a total of 499 foreign companies enrolled in at least 1 industrial liaison program.23 Nine of the 24 host institutions reported holding more than $10,000 in stock through endowments in at least one of the participating foreign companies. Eighteen of the universities surveyed provide liaison program members, whether domestic or foreign, with access to the results of federally funded research before those results are made generally available, while the other 12 institutions do not.
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university campuses indicate that on average, foreign firms accounted for roughly 12 percent of all companies involved in nearly 470 centers reporting at least some foreign participation (Table 4.6~. Among the 17 technology areas identified, the level of foreign involvement exceeded 12 percent in five areas: biotechnology, pharmaceuticals, biomedicine, chemicals, and agriculture and food.
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Dalton and Serapio (1995) have documented how foreign corporate R&D facilities are clustered around major U.S.
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Other Forms of Foreign Corporate Participation in U.S. Academic R&D Beyond the more institutionalized interaction of foreign companies and university-based researchers, a variety of relationships has developed in which university faculty act as independent professionals—often consultants, advisors, or board members.
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WAS. 80 60.= I an a, 40— o Q an lo: o 20 Collaborative research Obtaining innovative ideas Determining technology trends Training company personnel Ol North American firms European firms Japanese firms FIGURE 4.5 Use of university resources by North American, European, and Japanese companies, by type of activity, 1992.
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and foreign researchers from industry and academe. Since 1980, growing concern about the nation's international competitiveness has led the federal government to take a number of steps designed to increase the extent to which federal laboratories support the activities of U.S.
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industry. By the mid 1980s, visiting researchers accounted for a significant share of the work conducted at federal laboratories.
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. Foreign Corporate Participation in Federal Laboratories In recent years, several federal laboratories have also entered into formal relationships with foreign-owned companies as part of broader efforts to collaborate more with U.S.-based industry in areas of precompetitive, commercially relevant R&D.
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If a laboratory director considers a CRADA proposal to be particularly sensitive, he or she can request direction from the NIST Director.37 In contrast, DOE, whose 10 multiprogram laboratories had entered into over 1,200 CRADAs as of early 1995, allows less discretion to its contractor-operated labs in the negotiation of CRADAs in general and in the implementation of performance requirements in particular. Exercising a higher degree of centralized control, the DOE initially developed strict guidelines for compliance with the "substantial U.S.
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Department of Energy, 1993~. In short, this requirement continues to impose significant delays on the CRADA negotiation process for firms that will not accept the "sample language." Subsequent to the introduction of performance and reciprocity requirements for foreign-controlled firms into CRADA regulations, the federal government has extended similar requirements to cover a range of financial-assistance agreements, such as contract research, joint ventures, and research grants, between federal laboratories and private companies.40 Most noteworthy in this regard is the Energy Policy Act of 1992, which includes more detailed economic performance requirements for participating firms as well as more extensive reciprocity requirements for foreign-controlled firms.4i With regard to the latter, DOE is obligated to determine whether the prospective foreign participant's home government: allows U.S.-owned companies opportunities, comparable to those afforded to any other company, to participate in any government-sponsored joint ventures similar to those authorized under the act; affords U.S.-owned companies local investment opportunities comparable to those afforded foreign firms in the United States; and affords adequate and effective protection for the intellectual property of the U.S.-owned companies.
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and Kvaerner Masa Marine (Canada) , are involved in the TRP project designed to help Bath Iron Works Corporation of Maine diversify and modernize its shipbuilding operations to compete more effectively in the global commercial shipbuilding market.47 Foreign firms seeking to participate in a TRP consortium must meet eligibility requirements that are basically the same as those for the ATP.48 However, regardless of the nationalities of the countries participating, only U.S.-owned firms may submit proposals.
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Such an analysis suggests that some forms of foreign participation yield a more adequate quid pro quo than others. Foreign Graduate Students, Postdoctoral Researchers, and Long-Term Visiting Researchers Clearly, foreign students, postdoctoral researchers, and other long-term visiting researchers derive many benefits from their involvement in publicly funded
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These research programs, in turn, induce high-quality faculty to stay. Numbers alone confirm the important role of foreign postdoctoral researchers and long-term visiting researchers in the work of federal laboratories.
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Congress, House, 1993~; and the critical role of Japanese scientists and engineers in the research program of the Kent State University's Liquid Crystal Institute.55 Furthermore, laboratory administrators attest to the significant intellectual contributions made by many of their foreign visiting researchers. In response to a 1988 GAO survey, a majority of the federal laboratory directors contacted concluded that overall "the federal laboratories and the United States benefitted more than foreign researchers and their countries through the collaboration on research and development" (U.S.
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In conclusion, the committee is convinced that the participation of foreign graduate students, postdoctoral researchers, and other long-term visiting researchers in U.S. academic and federal laboratory research has yielded significant net benefits to the U.S.
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To a certain extent, involvement in publicly funded research has also provided those companies another window on the R&D activities of U.S.-owned firms engaged in collaborative research at university research centers or federal laboratories. Although it is impossible to place an economic value on these benefits, the committee believes they are greater than the current scope of foreign corporate participation measured in terms of research sponsored, research personnel exchanged, and technology licenses acquired suggests.
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research universities and federal laboratories, in the committee's judgment, have generally made good-faith efforts to comply with federally mandated economic performance requirements. There have been several well-publicized instances in which publicly supported U.S.
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Moreover, these publicly funded institutions and their foreign corporate customers or patrons appear equally aware of the public-relations hazards associated with involving foreign firms in publicly supported research. As a result, they exercise considerable care to avoid even the appearance of impropriety.62 Indeed, the negative fall-out from the few high-visibility cases has, in the committee's opinion, discouraged foreign corporate involvement in U.S.
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. A 1988 GAO survey found that research managers and administrators at eight federal laboratories did not have "difficulty getting access to foreign laboratories and that, except for some isolated instances, foreign researchers have readily exchanged information with federal laboratory researchers" (U.S.
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These policies require that corporate participants be established in the sponsoring country and exploit resulting intellectual property in a manner consistent with the sponsoring nation's interests.68 In Japan, access by foreign firms to publicly funded industrial R&D programs appears more tightly regulated than it is in the United States or in the European Community. Much more than its American or European counterparts, the Japanese government uses privately owned industrial consortia to plan, execute, and supervise most of the nation's investment in industrially relevant R&D.
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companies do on the research output of publicly funded research abroad. Nonetheless, international comparisons of R&D expenditures confirm that most of America's important trading partners invest as much if not more of their gross national product in basic research than does the United States (Table 4.8~.
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128 FOREIGN PARTICIPATION IN U.S. RESEARCH AND DEVELOPMENT TABLE 4.8 Govemment Expenditures on Academic and Academically Related Research as a Percentage of GDP and Per Capita' 1987 Expenditure as a percentage of GDP (1987)
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The committee believes that the extensive presence of foreign graduate students, postdoctoral researchers, and other long-term foreign visiting researchers at U.S. universities and federal laboratories has, on balance, yielded significant benefits to the U.S.
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publicly funded R&D activities and institutions has brought extensive benefits to foreign-owned firms and their stakeholders abroad, in some cases at the expense of American firms and their American stakeholders. Nevertheless, there is also considerable evidence to confirm that foreign firms have contributed significant material support, technology, and intellectual resources to research universities and federal laboratories.
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International comparisons of R&D expenditures confirm that most of America's advanced industrialized trading partners invest as much if not more of their gross national product in basic research than does the United States. Japan, despite recent efforts to expand its basic research capabilities, spends a smaller share of its gross domestic product and only about half as much per capita in this area compared with the United States.
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William Doane at the National Academy of Engineering workshop on the flat panel display industry, Committee on Technological Innovation in Small Business, December 7, 1993; correspondence from Doane to Proctor Reid, NAE, March 31, 1995.
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20. The 18 foreign companies granted exclusive licenses included 4 French firms, 3 British companies, 2 Swiss companies, and 1 Canadian, 1 Israeli, 1 Finnish, and 1 Japanese company.
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found that foreign participation in ERCs and other university-industry research centers at the eight universities she surveyed was relatively modest with only limited participation from European firms in basic chemical and power engineering research. Moreover, it appeared that a number of European industrial commitments to these centers were "inherited" when European firms acquired participating U.S.
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37. Proctor Reid, NAE, phone discussions, March 8, 9, and 31, 1995, with David Edgerly and Bruce Mattson, NIST, Office of Technology Services.
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45. Telephone discussion between Connie Chang, Advanced Technology Program, NIST, and Proctor Reid, NAE, February 24, 1995.
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58. Of the 17 foreign-owned firms involved in industrial affiliate programs at the Georgia Institute of Technology, 16 are known to have U.S.-based manufacturing and R&D operations (Correspondence from Robert Nerem, Georgia Institute of Technology, to Proctor Reid, NAE, January 1995)
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Proctor Reid, NAE, discussions with Anthony Rock and Gary Couey, U.S. Department of State, March 14, 1995.
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The U.S. commitment to the principle of national treatment is manifested in bilateral and multilateral investment treaties it has negotiated with other countries, and the federal government's official negotiating position within the Organization for Economic Cooperation and Development (OECD)
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