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Understanding Trends in Science and Technology Critical to US Prosperity

SUMMARY

Sound policies rest on a solid foundation of information and analysis. The collection and analysis of data have become key components of the innovation system.

During the late 1980s and early 1990s, policy-makers expressed a growing interest in assessments and international comparisons of critical technologies. This interest was prompted by the rapid (and unexpected) emergence during the 1980s of Japanese companies in high-technology fields, such as microelectronics, robotics, and advanced materials. Policy-makers proposed that regular efforts to identify the technologies likely to underlie future economic growth and to assess the relative international standing of the United States in those technologies would yield information useful for making investment decisions.

Today, a number of government and private groups undertake a variety of technology assessments that enhance our understanding of America’s relative standing in specific science and engineering fields. More detailed and innovative measures could provide important additional information on the status and effects of scientific and technological research.

Recommendations for federal actions in these areas include the following:

This paper summarizes findings and recommendations from a variety of recently published reports and papers as input to the deliberations of the Committee on Prospering in the Global Economy of the 21st Century. Statements in this paper should not be seen as the conclusions of the National Academies or the committee.



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Understanding Trends in Science and Technology Critical to US Prosperity SUMMARY Sound policies rest on a solid foundation of information and analysis. The collection and analysis of data have become key components of the innovation system. During the late 1980s and early 1990s, policy-makers expressed a grow- ing interest in assessments and international comparisons of critical tech- nologies. This interest was prompted by the rapid (and unexpected) emer- gence during the 1980s of Japanese companies in high-technology fields, such as microelectronics, robotics, and advanced materials. Policy-makers proposed that regular efforts to identify the technologies likely to underlie future economic growth and to assess the relative international standing of the United States in those technologies would yield information useful for making investment decisions. Today, a number of government and private groups undertake a vari- ety of technology assessments that enhance our understanding of America’s relative standing in specific science and engineering fields. More detailed and innovative measures could provide important additional information on the status and effects of scientific and technological research. Recommendations for federal actions in these areas include the following: This paper summarizes findings and recommendations from a variety of recently published reports and papers as input to the deliberations of the Committee on Prospering in the Global Economy of the 21st Century. Statements in this paper should not be seen as the conclusions of the National Academies or the committee. 444

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445 APPENDIX D International Benchmarking of US Research Fields • Establish a system to conduct regular international benchmarking assessments of US research to provide information on the world leadership status of key fields and subfields of scientific and technologic research. Critical Technologies • Establish a federal office that would coordinate ongoing private and public assessments of critical technologies and initiate additional assess- ments where needed. Data Collection and Dissemination • Mandate that the White House Office of Science and Technology Policy prepare a regular report on innovation that would be linked to the federal budget cycle. • Provide the National Science Foundation (NSF) Division of Science Resources Statistics (SRS) with resources to launch a program of innova- tion surveys. • Ensure that research and innovation survey programs, such as the NSF R&D survey, incorporate emerging, high-growth, technology-intensive in- dustries, such as telecommunications and biotechnology, and industries across the service sector—financial services, transportation, and retailing, among others. SCIENCE AND TECHNOLOGY BENCHMARKING As part of the technology and international-competitiveness debates of the 1980s and 1990s, several initiatives were launched to assess national capabilities in specific fields of science and engineering. Many of the early assessments looked at Japanese capabilities and were performed by US or international panels.1 In the late 1980s, the Japan Technology Evaluation Center started as an interagency federal initiative managed by SAIC; it evolved into an NSF-contracted center at Loyola College of Maryland and is now an independent nonprofit known as WTEC, Inc.2 WTEC assess- ments cover a variety of countries and fields and are undertaken on an ad hoc basis. They are funded by the federal agencies most interested in the specific field being assessed. 1National Research Council, National Materials Advisory Board. High-Technology Ceram- ics in Japan. Washington, DC: National Academy Press, 1984. 2See the WTEC, Inc., Web site. Available at: http://www.wtec.org/welcome.htm.

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446 RISING ABOVE THE GATHERING STORM A 1993 National Academies report recommended that the world lead- ership status of research fields be evaluated through international bench- marking.3 A followup report that reviewed three benchmarking experiments (mathematics, immunology, and materials science and engineering) con- cluded that the approach of using expert panels could yield timely, accurate “snapshots” of specific fields.4 The report also suggested that benchmarking assessments be conducted every 3-5 years to capture changes in the subject fields. Figure UT-1 illustrates one such assessment. The factors considered most important in determining US leadership status, on the basis of all the international benchmarking experiments, were human resources and graduate education, funding, innovation process and industry, and infrastructure. In addition, the Bureau of Industry and Security of the US Department of Commerce undertakes assessments of the US industrial and technology base in areas considered important for national defense.5 These assessments often take into account international competitiveness. Possible federal action includes the following: • Establish a system to conduct regular international benchmarking assessments of US research to provide information on the world leadership status of key fields and subfields of scientific and technological research. An example of the potential utility of this information is shown in Fig- ures UT-2 to UT-5 which show funding and innovation process metrics for nanotechnology. CRITICAL TECHNOLOGIES In 1990, Congress mandated that a biennial review be conducted of America’s commitment to critical technologies deemed essential for “main- taining economic prosperity and enhancing the competitiveness of the US research enterprise.” The legislation required that the number of technolo- gies identified in the report not exceed 30 and include the most economi- cally important civilian technologies expected after the decade following the report’s release with the estimated current and future size of the domes- 3NAS/NAE/IOM. Science, Technology, and the Federal Government. Washington, DC: Na- tional Academy Press, 1993. 4NAS/NAE/IOM. Experiments in International Benchmarking of U.S. Research Fields. Washington, DC: National Academy Press, 2000. 5See http://www.bis.doc.gov/defenseindustrialbaseprograms/osies/DefMarketResearchRpts/ Default.htm.

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447 APPENDIX D Current Position Likely Future Position 1 2 3 4 5 1 2 3 4 5 Fore- Among Behind Gaining/ Main- Losing Sub-Subfield Comments front world world Extending taining leaders leaders • • Tissue Clear US leadership; engineering tremendous worldwide interest. • • Molecular Strong US competition architecture from Germany and Japan. • • Protein analogs US dominates, driven by a basic-science approach. • • Biomimetics Strong players in North America, UK, Japan. • • Contemporary Large European diagnostic Community systems investments in biosensors research could lower US ranking. • • Advanced US leads; extremely controlled- high worldwide interest release systems could change this. • • Bone Important biomaterials developments in Europe and Japan. FIGURE UT-1 Example of international benchmarking for several materials science and engineering subfields. SOURCE: NAS/NAE/IOM. Experiments in International Benchmarking of US Research Fields. Washington, DC: National Academy Press, 2000. tic and international markets for products derived from the identified tech- nologies. However, the exact definition of critical technologies was not in- cluded in the legislation. The Office of Science and Technology Policy (OSTP) prepared National Critical Technologies Reports (NCTR) to Congress in 1991,6 1993,7 1995,8 and 1998.9 The content of and methods used to prepare the NCTRs varied 6National Critical Technologies Panel. Report of the National Critical Technologies Panel. Washington, DC: US Government Printing Office, 1991. 7National Critical Technologies Panel. The Second Biennial Report of the National Critical Technologies Panel. Washington, DC: US Government Printing Office, 1993. 8National Critical Technologies Panel. The National Critical Technologies Report. Wash- ington, DC: US Government Printing Office, 1995. 9S. W. Popper, C. S. Wagner, and E. V. Larson. New Forces at Work: Industry Views Critical Technologies. Santa Monica, CA: RAND, 1998.

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448 RISING ABOVE THE GATHERING STORM FIGURE UT-2 Share of total government investment for nanotechnology, in billions of dollars. SOURCE: S. Murdock. Testimony before the Research Subcommittee of the Committee on Science of the United States House of Representatives. Hearing on “Nanotechnology: Where Does the US Stand?” June 29, 2005. FIGURE UT-3 Venture capital, global corporate, and global government nanotech- nology funding, in billions of dollars. SOURCE: S. Murdock. Testimony before the Research Subcommittee of the Committee on Science of the United States House of Representatives. Hearing on “Nanotechnology: Where Does the US Stand?” June 29, 2005.

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449 APPENDIX D Number of US Nanotechnology Startups FIGURE UT-4 Number of US nanotechnology startups, 2000-2003. SOURCE: S. Murdock. Testimony before the Research Subcommittee of the Committee on Science of the United States House of Representatives. Hearing on “Nanotechnology: Where Does the US Stand?” June 29, 2005. FIGURE UT-5 US patents awarded to US institutions, 2003. SOURCE: S. Murdock. Testimony before the Research Subcommittee of the Committee on Science of the United States House of Representatives. Hearing on “Nanotechnology: Where Does the US Stand?” June 29, 2005. This figure was based on an analysis done by Jim Murday and Mike Roco of the Nano Business Alliance.

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450 RISING ABOVE THE GATHERING STORM throughout the decade.10 The 1995 report, for example, identified seven “technology categories” (energy, environmental quality, information and communication, living systems, manufacturing, materials, and transporta- tion), which were divided into 27 “technology areas.” Figure UT-6 illus- trates the NCTR analyses for materials research. Each of the 27 areas was identified on a competitive scale ranging from lagging to leading, and each area was then compared with Europe and Japan.11 Over the 1990s, the RAND Corporation played an increasingly impor- tant role in the preparation of the NCTRs. RAND assisted with the back- ground research for the 1993 report and was a co-author of the 1995 report with OSTP.12 The 1998 critical-technologies report was prepared by RAND with little involvement of OSTP.13 This report, which refocused the study specifically on input from the private sector, identified five critical sectors of technology: software, microelectronics and telecommunications technolo- gies, advanced manufacturing, materials, and sensor and imaging technolo- gies.14 After the release of the 1998 report, the legal requirement for OSTP to prepare the NCTR was removed. Those involved in the NCTR process point out that federal agencies and state and local governments used the reports as a basis for policy-making. However, the NCTRs do not appear to have had a formal effect on US fed- eral policy toward technology development.15 For example, the NCTRs did not lead to the creation of any large cross-agency technology initiative. Nanotechnology was not a focus of the final 1998 NCTR, but OSTP started work around that time on discussions that would culminate in the creation of the National Nanotechnology Initiative several years later.16 In addition to the NCTRs, several other public and private efforts to identify critical technologies in both the defense and civilian arenas were undertaken during the 1990s by such groups as the US Department of De- fense17 and the Council on Competitiveness.18 More recently, several govern- ment agencies have expressed interest in assessing international capabilities in 10C. S. Wagner and S. W. Popper. “Identifying Critical Technologies in the USA.” Journal of Forecasting 22(2003):113-128. 11National Critical Technologies Panel, 1995. 12Wagner and Popper, 2003, p. 120. 13Ibid. 14Popper, Wagner, and Larson, 1998. 15Wagner and Popper, 2003, p. 123. 16N. Lane and T. Kalil. “The National Nanotechnology Initiative: Present at the Creation.” Issues in Science and Technology 21(Summer 2005):49-54. 17See the Militarily Critical Technologies Web site. Available at: http://www.dtic.mil/mctl. 18Council on Competitiveness. Gaining New Ground: Technology Priorities for America’s Future. Washington, DC: Council on Competitiveness, 1991.

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FIGURE UT-6 Example of critical technologies list for materials. NOTE: EP = Economic Prosperity, NS = National Security. SOURCE: Office of Science and Technology Policy. “National Critical Technologies List, March 1995.” Available at: http:// clinton1.nara.gov/White_House/EOP/OSTP/CTIformatted/AppA/appa.html. 451

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452 RISING ABOVE THE GATHERING STORM militarily critical technologies.19 Also, a number of countries are engaged in periodic assessments of critical technologies and international capabilities. Possible federal actions include the following: • Establish a federal office that would coordinate ongoing private and public assessments of critical technologies and initiate additional assess- ments where needed. • Analyze the technology forecasting and foresight activities of other countries to identify where such activities can provide useful input to policy processes. DATA ON RESEARCH AND INNOVATION The adequacy of measures and statistical data to inform policy-making remains a concern of the science and technology policy community. For example, during the 1990s, information technologies were widely deployed throughout the US economy and played a major role in a surge of US inno- vation, yet this process was captured poorly, if at all, by traditional indica- tors of research and innovation. Except for statistics on formal R&D spend- ing, patents, and some aspects of science and engineering education, innovation-related data are extremely limited.20 Among the steps the federal government could take to improve data collection and analysis are the following: • Mandate that OSTP prepare a regular report on innovation that would be linked to the federal budget cycle.21 The goal of the report would be to give the government and the public a clear sense of how federal sup- port for R&D fits into the larger national economic system and how both are linked to an increasingly international process of innovation. • Provide the NSF SRS with resources to launch a program of innova- tion surveys.22 SRS should work with experts in universities and public institutions that have expertise in a broad spectrum of related issues. In some cases, it may be judicious to commission case studies. NSF also should 19National Research Council, Division on Engineering and Physical Sciences. Avoiding Sur- prise in an Era of Global Technology Advances. Washington, DC: The National Academies Press, 2005. 20National Research Council, Committee on National Statistics. Measuring Research and Development Expenditures in the U.S. Economy. Washington, DC: The National Academies Press, 2004. 21K. Hughes. “Facing the Global Competitiveness Challenge.” Issues in Science and Tech- nology 21(Summer 2005):72-78. 22National Research Council, 2004.

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453 APPENDIX D build an internal capacity to resolve the methodologic issues related to col- lecting innovation-related data. • Ensure the collection of information needed to construct data series of federal science and technology (FS&T).23 NSF needs to continue to col- lect the additional data items that are readily available in the defense agen- cies and expand collection of civilian data that would permit users to con- struct data series on FS&T expenditures in the same manner as the FS&T presentation in the president’s budget documentation. • Overhaul the field-of-science classification system to take account of changes in academic research, including interdisciplinary and multidis- ciplinary research.24 It has been some three decades since the field-of-science classification system has been updated, and the current classification struc- ture no longer adequately reflects the state of science and engineering fields. The Office of Management and Budget needs to initiate a review of the Classification of Fields of Science and Engineering, last published as Directive 16 in 1978. The SRS could serve as the lead agency for an effort that must be conducted on a governmentwide basis. NSF should engage in a program of outreach to the disciplines to begin to develop a standard concept of interdis- ciplinary and multidisciplinary research, and on an experimental basis it should initiate a program to collect information from a subset of academic and research institutions. • Redesign NSF’s industrial R&D survey.25 The redesign should begin by assessing the US survey against the international “standard”—the defini- tions promulgated through the Frascati Manual from the Organisation for Economic Co-operation and Development. The redesign also should up- date the industry questionnaire to facilitate an understanding of new and emerging R&D issues, enhance the program of data analysis and publica- tion, revise the sample to enhance coverage of growing sectors, and improve the collection procedures to better involve and educate the respondents. • Ensure that research and innovation survey programs, such as NSF’s R&D survey, incorporate emerging, high-growth, technology-intensive industries, such as telecommunications and biotechnology, and industries across the service sector—financial services, transportation, and retailing, and others.26 Also, survey programs should collect information at the business-unit level of corporate activity rather than on a firm as a whole, and geographic location detail should be collected. 23Ibid. 24Ibid. 25Ibid. 26National Research Council, Board on Science, Technology, and Economic Policy. Indus- trial Research and Innovation Indicators. Washington, DC: National Academy Press, 1997.

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454 RISING ABOVE THE GATHERING STORM • NSF should increase the analytic value of its data by improving com- parability and linkages among its data sets and between its data and data from other sources, such as the US census.27 • SRS should develop a long-term plan for its Science and Engineering Indicators publication so that it is smaller, more policy-focused, and less duplicative of other SRS publications.28 SRS also should substantially re- duce the time between the reference date and data release of each of its surveys to improve the relevance and usefulness of its data. 27Committee on National Statistics, 2004. 28Ibid.