Enduring Dilemmas in U.S. Technology Policy

Clinton W.J. Gore A. Jr. , Technology for America's Economic Growth, A New Direction to Build Economic Strength (Washington, D.C.: U.S. Government Printing Office, 1993), p. 1.

During 1960–1986, real defense spending on R&D and procurement increased 2–4% on an annual basis. According to the Economist [“Downdraft: A Survey of Military Aerospace,” September 3, 1994], this trend will likely be replaced by 4% annual reductions in these expenditures through the end of this century. Defense Department spending on research, development, and procurement has already fallen by nearly 50% in real terms since 1986.

U.S. trade with other nations (imports plus exports) has grown from 9% of GDP in 1960 to nearly 23% in 1994. President's Council of Economic Advisers, Economic Report of the President, 1995 (Washington, D.C.: U.S. Government Printing Office, 1994).

Much of this foreign challenge to U.S. economic and technological hegemony reflects a remarkable policy success, the reconstruction of foreign economies that was a central goal of postwar U.S. foreign policy.

National Science Board, Science and Engineering Indicators, 1993 (Washington, D.C.: U.S. Government Printing Office, 1993).

Mowery D.C. , ed., International Collaborative Ventures in U.S. Manufacturing (Cambridge, MA: Ballinger Publishers, 1988); Mowery D.C. , “Collaborative Ventures Between U.S. and Foreign Manufacturing Firms,” Research Policy, 18 (1989): 19–32.

National Science Board, op. cit.

According to Katz and Ordover, at least 14 Congressional bills passed during the 1980s focused on strengthening domestic and international protection for intellectual property rights, and the Court of Appeals for the Federal Circuit created in 1982 has upheld patent rights in roughly 80% of the cases argued before it, a considerable increase from the pre-1982 rate of 30% for the Katz Federal bench. M.L. Ordover J.A. , “R&D Competition and Cooperation,” Brookings Papers on Economic Activity: Microeconomics 1990, pp. 137–192.

Under the terms of a CRADA, federal laboratories may assign private firms the rights to any intellectual property resulting from the joint work (the federal government retains a nonexclusive license to the intellectual property). The Acts further stipulate that federal agencies can allocate funds for collaborative projects only to the federal entities engaged in the project; transfers of funds to private firms are not allowed.

Despite its high profile within Clinton Administration goals, support for the National Information Infrastructure thus far has had little visible impact on reallocations of agency R&D budgets. The $1.3 billion requested for this program in fiscal 1995 is spread among a large number of programs within NIST, NSF, and the National Telecommunications and Information Administration (also a part of the Commerce Department), and represents less than 0.5% of the total federal R&D budget of $73 billion. American Association for the Advancement of Science, Intersociety Working Group, AAAS Report XIX: Research and Development, FY 1995 (Washington, D.C.: American Association for the Advancement of Science, 1994).

Growth in the Commerce Department's R&D budget occurred largely at the expense of the Department of Energy, which lost considerable funding with the termination of the superconducting supercollider.

U.S. Office of Management and Budget, Executive Office of the President, The Budget of the United States Government for Fiscal 1995 (Washington, D.C.: U.S. Government Printing Office, 1994); U.S. Office of Management and Budget, Executive Office of the President, The Budget of the United States Government for Fiscal 1996 (Washington, D.C.: U.S. Government Printing Office, 1995).

Federal and state governments traditionally have invested little in programs designed to assist firms in adopting technology, which may have contributed to the relatively slow adoption by U.S. manufacturing firms of advanced manufacturing technologies. Mowery D.C. Rosenberg N. , Technology and the Pursuit of Economic Growth (New York, NY: Cambridge University Press, 1989); Edquist C. Jacobsson S. , Flexible Automation (Oxford: Blackwell, 1988). U.S. agriculture, of course, is a prominent exception to this characterization, with its elaborate network of federal and state-funded extension agents. Evenson R.E. , “Agriculture,” in Nelson R.R. , ed., Government and Technical Progress: A Cross-Industry Analysis (New York, NY: Pergamon, 1982).

The fiscal 1995 Presidential budget requested $61 million, more than twice the Congressional fiscal 1994 appropriation for this program. Congress further increased the fiscal 1995 appropriation to $91 million. For fiscal 1996, the Clinton Administration requested $147 million for this program, an increase of more than 60%.

Illustrating the elastic character of current definitions of “dual-use” R&D spending, the February 1995 estimate omitted “dual-use S&T investments” in the Defense Nuclear Agency, the Ballistic Missile Defense Organization, and the three uniformed services that had been included in earlier tabulations, presumably by redefining them as “military-only” R&D programs. U.S. Department of Defense, Dual Use Technology: A Defense Strategy for Affordable, Leading-Edge Technology (Washington, D.C.: Defense Department, 1995), p. 10.

New York Times, November 14, 1994, p. F13.

Davis B. Zachary G.P. , “Electronics Firms Get Push from Clinton to Join Industrial Policy Initiative in Flat-Panel Displays,” Wall Street Journal, April 28, 1994, p. A16.

Indeed, on March 8, 1995, the Senate adopted a “sense of the Senate” resolution as an amendment to the Defense Department supplemental appropriations bill “affirming the importance of, and the need for, cost-shared partnerships between the Department of Defense and the private sector to develop dual-use technologies,' and arguing that “…such partnerships, including SEMATECH and the Technology Reinvestment Project, need to become the norm for conducting such applied research by the Department of Defense.” U.S. Congress, Congressional Record, March 9, 1995 (Washington, D.C.: U.S. Government Printing Office, 1995), p. S3584.

Nelson R.R. , High-Technology Policies: A Five-Nation Comparison (Washington, D.C.: American Enterprise Institute, 1984).

Langlois R. Mowery D.C. , “The Federal Role in the Development of the American Computer Software Industry: An Assessment,” forthcoming in Mowery D.C. , ed., The International Computer Software Industry (New York, NY: Oxford University Press, 1995); Institute for Defense Analyses, DARPA Technical Accomplishments , vol. II, An Historical Review of Selected DARPA Projects (Alexandria, VA: Institute for Defense Analyses, 1991).

U.S. General Accounting Office, Technology Transfer: Implementation of CRADAs at NIST, Army, and DOE (Washington, D.C.: U.S. Government Printing Office, 1993).

According to the Defense Department report on its flat-panel display initiative, this domestic production facility is scheduled to “expand its capabilities to manufacture advanced AMLCDs [Active Matrix Liquid Crystal Displays], with the plant sized to start 36,000 substrate pairs per year.” U.S. Department of Defense, Flat Panel Display Task Force, Building U.S. Capabilities in Flat Panel Displays (Washington, D.C.: U.S. Department of Defense, 1994), p. iv–6. At a yield of 50%, which is relatively low for a mature production process, this level of “wafer starts” would produce 18,000 units annually.

Ibid., p. vi–17.

For comments from former Deputy U.S. Trade Representative Smith Michael B. on this point, see Barfield C. , “Flat Panel Displays: A Second Look,” Issues in Science and Technology (Winter 1994–95), pp. 21–25.

See Singer P. , “Flat Panel Displays: An Interesting Test Case for the U.S.,” Semiconductor International (July 1994), pp. 78–88.

The structure of the process is similar to that of a defense procurement competition, in which winners of a development competition compete for production contracts

Kelley Watkins note that a large number of U.S. firms in the “machining-intensive durable goods” sector currently produce military and civilian products in such “dual-use” production facilities. Kelley M.R. Watkins T.A. , “In from the Cold: Prospects for Conversion of the Defense Industrial Base,” Science, 268, April 28, 1995, pp. 525–532. Their analysis does not reveal the share of defense contractors' manufacturing capacity devoted to such joint production, however, since they report only the proportion of establishments that sell to both defense and civilian markets. The authors also report nothing about the competitive performance of these firms, located in a sector that has includes many industries that have lost market share to import competition. For both of these reasons, their conclusions must be treated with care. More specifically, these findings do not provide a sufficient basis for insisting that such dual production be pursued in a very different industry. Policies that discourage cost-effective dual production clearly should be discarded; but assuming that such dual production can be undertaken from the outset in a very complex and novel manufacturing process seems risky.

Describing the shift in the U.S. position in the subsidy negotiations in the final stages of the Uruguay Round trade negotiation, Lepkowski noted that “The entire episode essentially exposed one of the weaker aspects of the Clinton Administration—too little coordination between technology policy and international economic policy.” Lepkowski W. , “Last Minute Maneuvering Rescues U.S. Technology Policy,” Chemical and Engineering News, January 3, 1994, p. 13. These problems of coordination and consistency appear to have been just as severe in the Bush and Reagan Administrations.

The “U.S. discovery” of high-temperature superconductivity that led to the White House symposium was in fact accomplished by two German scientists working in a Swiss industrial R&D laboratory owned by a large U.S. multinational firm, IBM. Establishing the “national ownership” of this scientific accomplishment is as futile as it is counterproductive.

Many of the current restrictions on foreign participation, which differ among U.S. technology programs, determine foreign firms' eligibility for these programs based on assessments of home-country government policies, on the assumption that denial of access to foreign firms will increase pressure for change in the policies of their governments. The basis for such assessments of home-government policies are relatively subjective, and are surprisingly “non-transparent” (i.e., they are not based on any single or comprehensive published assessment, and there is no well-developed process for review of these determinations). These statutory requirements for the fulfillment of a lengthy, inconsistent, and complex set of conditions across programs also mean that foreign-firm participation that is deemed by policymakers to be economically beneficial for U.S. firms and taxpayers may be prohibited for one or another reason that has little to do with the specific merits of an individual proposal. U.S. Office of Technology Assessment, U.S. Congress, Multinationals and the U.S. Technology Base (Washington, D.C.: U.S. Government Printing Office, 1994).

“The government-funded technology transfer/industrial competitiveness activities of the national laboratories should be focused on industries and areas of technology that contribute directly to the DoE's primary missions in national security, energy, and environment.” U.S. Department of Energy, Task Force on Alternative Futures for the Department of Energy National Laboratories, Alternative Futures for the Department of Energy National Laboratories (Washington, D.C.: U.S. Department of Energy, 1995), p. 80.

Indeed, an important component of “adoption-oriented” U.S. technology policy has been the industrial extension and modernization programs of the Defense Department, the annual budgets of which during the 1980s exceeded spending by all state-level programs on technical assistance programs. Kelley Watkins , op. cit.