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Copyright © 1997 by the National Academy of Sciences. All rights reserved.
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NATIONAL RESEARCH COUNCIL
BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY
A. MICHAEL SPENCE, Chairman Dean,
Graduate School of Business Stanford University
M. KATHY BEHRENS Managing Partner
Robertson, Stephens & Company
JAMES F. GIBBONS Professor of Electrical Engineering
Stanford University
GEORGE N. HATSOPOULOS President and CEO
Thermo Electron Corporation
DALE JORGENSON Frederic Eaton Abbe Professor of Economics
Harvard University
RALPH LANDAU Consulting Professor Economics
Stanford University
JAMES T. LYNN Adviser
Lazard Freres
BURTON J. McMURTRY General Partner
Technology Venture Investors
MARK B. MYERS Senior Vice President
Xerox Corporation
JAMES M. POTERBA Professor of Economics
Massachusetts Institute of Technology
PAUL ROMER Professor of Economics
Graduate School of Business Stanford University
RUBEN METTLER, Vice Chairman Chairman and CEO (retired)
TRW, Inc.
WILLIAM J. SPENCER Chairman
SEMATECH
JOSEPH E. STIGLITZ Senior Vice President and Chief Economist
The World Bank
ALAN WM. WOLFF Managing Partner
Dewey Ballantine
Ex-Officio Members
BRUCE M. ALBERTS President
National Academy of Sciences
WILLIAM A. WULF President
National Academy of Engineering
KENNETH I. SHINE President
Institute of Medicine
Staff
STEPHEN A. MERRILL Executive Director
CHARLES W. WESSNER Program Director
LENA J. LAWRENCE Administrative Assistant
STEERING GROUP ON INDUSTRIAL RESEARCH AND INNOVATION INDICATORS
DALE JORGENSON, Chair Frederic Eaton Abbe Professor of Economics
Harvard University
MARK B. MYERS Senior Vice President
Corporate Research and Technology Xerox Corporation
GEORGE N. HATSOPOULOS President and CEO
Thermo Electron Corporation
BRONWYN HALL Associate Professor of Economics
University of California, Berkeley
ADAM JAFFE Professor of Economics
Brandeis University
CHARLES LARSON Executive Director
Industrial Research Institute
ROBERT M. WHITE Head,
Department of Electrical and Computer Engineering Carnegie Mellon University
JOHN BALDWIN Director,
Micro Economic Studies and Analysis Statistics Canada
Staff
STEPHEN A. MERRILL Project Director
RONALD S. COOPER Consultant
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by Congress in 1863, the Academy has a working mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The council is administered jointly by both academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council.
Preface
In 1991 the National Academies of Sciences and Engineering established the Board on Science, Technology, and Economic Policy (STEP) as a forum in which economists, technologists, scientists, financial and management experts, and policy makers could broaden and deepen understanding of the relationships between science and technology and economic performance. In its first three years, the Board's activities focused on the adequacy and efficiency of public and private domestic investment in physical and human capital. The Board's first report, Investing for Productivity and Prosperity, underscored the need for higher rates of national saving and investment. Its principal recommendation was to shift the base for taxation from income to consumption.
In the past two years, the Board has turned its attention to more microeconomic concerns—technology policies, broadly defined, and their relationship to international trade relations, determinants of competitive performance in a wide range of manufacturing and service industries, and changes in patterns of research and development and innovation investments. A series of conferences, workshops, and reports, of which this volume is the first, comprises the latter body of STEP work, entitled U.S. Industry: Restructuring and Renewal, because it represents a broad assessment of U.S. industrial performance in an international context at a time of domestic economic confidence and optimism but uncertainty about the consequences of fundamental changes in the composition of the economy and processes of innovation. Future publications under this title will include the proceedings of a conference on international tax rules and research and development tax policy, commissioned papers on a dozen industries, a review of trends in financing new technology-based enterprises, and the conclusions and recommendations of the Board. This series of projects would not have
been possible without the financial support of the National Aeronautics and Space Administration (NASA) and the National Science Foundation and the personal encouragement of Daniel Goldin, NASA Administrator.
This first publication in the series is the report of a workshop, Industrial Research and Innovation Indicators, held at the National Academy of Sciences in Washington, D.C., on February 28, 1997, in response to a specific request initiated by John E. Jankowski, Jr., director of the research and development statistics program of the Science Resources Studies Division of the National Science Foundation. The conference was organized with the assistance of a committee chaired by STEP Board members Dale Jorgenson, Frederic Eaton Abbe Professor of Economics, Harvard University, and Mark Myers, Senior Vice President for Corporate Research and Technology, Xerox Corporation. The workshop brought together statisticians and economists concerned with industrial organization and innovation practices, industrial managers, association representatives, government officials representing diverse policy arenas and statistical agencies, and analysts from other industrialized countries and international organizations.
The report does not present conclusions and recommendations of the STEP Board and the Academies but does represent a faithful summary of the suggestions of workshop participants for improving measurement of private-sector innovative activity and output, expanding the collection of data within the constraints of available resources, and enhancing the utility of information available to policy makers and corporate decision makers. Above all, it underscores the need to periodically reassess the selection of science and technology indicators in light of changes in the international economy and domestic industrial activity and advances in understanding of innovation processes, and to do so in close consultation with the interested policy community and the private-sector.
A. MICHAEL SPENCE
CHAIRMAN
STEPHEN A. MERRILL
EXECUTIVE DIRECTOR