Scenario 1: Baseline America's Narrowing Lead What is likely to happen if we do not change our current approach to science and technology? The US lead is so large that it is unlikely that any other nation would broadly overtake us in the next decade or so. The National Intelligence Council argues that the United States will remain the world's most powerful actor economically, technologically, and militarily at least through 2020.40 But that does not mean the United States will not be challenged. Center for Strategic and International Studies concludes, “although US economic and technology leadership is reasonably assured out to 2020, disturbing trends now evident threaten the foundation of US technological strength." 42 ,,41 Over the last year or so, a virtual flood of books and articles has appeared expressing concern about the future of US competitiveness. They identify trends and provide data to show that the relative position of the United States is declining in science and technology, in education, and in high-technology industry." All of this leads to a few simple extrapolations for our global role over the next 30 years, assuming that we change nothing in our approach to science and education. The US share of global R&D spending will continue to decline. US R&D spending will continue to lead the world in gross terms, but R&D intensity (spending as a percentage of GDP) will continue to fall behind that of other nations. US R&D will rely increasingly on corporate R&D spending. Industry spending now accounts for two-thirds of all US R&D. Total government spending on all physical science research is less than the $5 billion that a single company-IBM-spends annually on R&D, although an increasing amount of IBM's research, like that of most large corporations, is now performed abroad. • Most corporate R&D is focused on short-term product development rather than on long-term fundamental research. US multinational corporations will conduct an increasing amount of their R&D overseas, potentially reducing their R&D spending in the United States, because other nations offer 40 National Intelligence Council. Mapping the Global Future: Report of the National Intelligence Council's 2020 Project. Pittsburgh: Government Printing Office, Dec. 2004. 41 Center for Strategic and International Studies. Technology Futures and Global Power, Wealth and Conflict: Washington, DC: Center for Strategic and International Studies, May 2005, p. viii. 42 Some of the most prominent publications include A. Segal. Is America losing its edge? Innovation in a globalized world. Foreign Affairs (Nov./Dec. 2004):2-8; Geoffrey Colvin. America isn't ready. Fortune. July 25, 2005; K. H. Hughes. Building the Next US Century: The Past and Future of US Economic Competitiveness. Washington, DC: Woodrow Wilson Center Press, 2005; R. D. Atkinson. The Past and Future of America's Economy: Long Waves of Innovation That Power Cycles of Growth. Northampton, MA: E. Elgar, 2004; and R. Florida. The Flight of the Creative Class: The New Global Competition for Talent. New York: Harper Business, 2005. 43 The Task Force on the Future of US Innovation. The Knowledge Economy: Is the United States Losing Its Competitive Edge, Benchmarks for Our Innovation Future. Washington, DC: The Task Force on the Future of US Innovation. February. 2005. lower costs, more government incentives, less bureaucracy, high-quality educational systems, and in some cases superior infrastructure. The US share of world scientific output will continue to decline. The share of US patents granted to US inventors is already declining, although the US researchers' scientific publishing will decline as authors from other nations increase · The number of scientific papers published by US researchers reached a plateau in 1992.44 Europe surpassed the United States in the mid-1990s as the world's largest producer of scientific literature. If current trends continue, publications from the Asia Pacific region could outstrip those from the United States within the next 6 or 7 years." The US share of scientists and engineers will continue to decline. 45 Other nations will have larger numbers of students receiving undergraduate degrees in science and engineering. In 2000, more than 25 countries had a higher percentage of 24year-olds with degrees in science and engineering than did the United States." 46 The number of graduate degrees awarded in science and engineering will decline. • The number of new doctorates in science and engineering peaked in the United States in 1998. By 2010, China will produce more science and engineering doctorates than the 47 The US share of world science and engineering doctorates granted will fall to about 15% by 2010, down from more than 50% in 197048 (Figure 9-2). International students and workers will make up an increasing share of those holding US science and engineering degrees and will fill more of our workforce. • In 2003, foreign students earned 38% of all US doctorates in science and engineering, and they earned 59% of US engineering doctorates. 49 In 2000, foreign-born workers occupied 38% of all US doctoral-level science and engineering jobs, up from 24% just 10 years earlier.50 44 'National Science Board. 2004. Science and Engineering Indicators 2004 (NSB 04-01). Arlington, Virginia. National Science Foundation. Table 5-30. 45 A. von Bubnoff. Asia squeezes Europe's lead in science. Nature 436(7049)(Jul. 21, 2005):314-314. 46 National Science Foundation. Science and Engineering Indicators 2004. NSB 04-1.Arlington, VA: NSF, 2004, Appendix Table 2-33. R. B. Freeman. Does Globalization of the Scientific/ Engineering Workforce Threaten US Economic Leadership? Working Paper 11457. Cambridge, MA: National Bureau of Economic Research, Jun. 2005, p.4 48 Ibid., p. 5. 49 National Science Foundation, Survey of Earned Doctorates, 2003. Arlington, VA: NSF, 2005. 50 R. B. Freeman. Does Globalization of the Scientific/ Engineering Workforce Threaten US Economic Leadership? Working Paper 11457.Cambridge, MA: National Bureau of Economic Research, Jun. 2005, p. 36. FIGURE 9-2 International production of science and engineering doctorates compared with US production. SOURCE: R. B. Freeman. Does Globalization of the Scientific/ Engineering Workforce Threaten US Economic Leadership? Working Paper 11457.Cambridge, MA: National Bureau of Economic Research, Jun. 2005. Our ability to attract the best international researchers will continue to decline. • From 2002 to 2003, 1,300 international students enrolled in US science and engineering graduate programs. In each of the 3 years before that, the number had risen by more than 10,000. 51 After a decline of 6% from 2001 to 2002, first-time, full-time enrollment of students with temporary visas fell 8% in 2003.52 Snapshot surveys indicate international graduate student enrollments decreased again in 2004 by 6%53 but increased by 1% in 2005. In the early 1990s, there were more science and engineering students from China, South Korea, and Taiwan studying at US universities than there were graduates in those disciplines at home. By the mid-1990s, the number attending US universities began to decline and the number studying in Asia increased significantly." 54 PCAST observes that, "while not in imminent jeopardy, a continuation of current trends could result in a breakdown in the web of 'innovation ecosystems' that drive the successful US innovation system. Economist Richard Freeman says those trends foreshadow a US transition "from being a superpower in science and engineering to being one of many centers of 3,55 51 National Science Foundation. Graduate Enrollment in Science and Engineering Programs Up in 2003, but Declines for First-Time Foreign Students. NSF-05-317. Arlington, VA: NSF, 2005. 52 Ibid. 53 H. Brown. Council of Graduate Schools Finds Declines in New International Graduate Student Enrollment for Third Consecutive Year. Washington, DC: Council of Graduate Schools, Nov. 4, 2004; Heath Brown. 2005. Findings from 2005 CGS International Graduate Admissions Survey III: Admissions and Enrollment. Washington DC: Council of Graduate Schools. Available at http://www.cgsnet.org/pdf/CGS2005Intl AdmitIII_Rep.pdf. 54 The Task Force on the Future of US Innovation. The Knowledge Economy: Is the United States Losing Its Competitive Edge, Benchmarks for Our Innovation Future. Washington, DC: The Task Force on the Future of US Innovation, Feb, 2005. "PCAST. Sustaining the Nation's Innovation Ecosystems, Information Technology Manufacturing and Competitiveness, Washington, DC: White House Office of Science and Technology Policy, Dec. 2004, p. 13. excellence."56 The United States still leads the world in many areas of science and technology, and it continues to increase spending and output. But our share of world output is declining, largely because other nations are increasing production faster than we are, although they are starting from a much lower base. Moreover, the United States will continue to lead the world in other areas critical to innovation-capital markets, entrepreneurship, and workforce flexibilityalthough here as well our relative lead will shrink as other nations improve their own systems. The biggest concern is that our competitive advantage, our success in global markets, our economic growth, and our standard of living all depend on maintaining a leading position in science, technology, and innovation. As that lead shrinks, we risk losing the advantages on which our economy depends. If these trends continue, there are several likely consequences: • The United States will cease to be the largest market for many high-technology goods, and the US share of high-technology exports will continue to decline. Foreign direct investment will decrease. Multinational corporations (US-based and foreign) will increase their investment and The industries and jobs that depend on high-technology exports and foreign investment The trade deficit will continue to increase, adding to the possibility of inflation and Salaries for scientists, engineers, and technical workers will fall because of competition Job creation will slow. GDP growth will slow. Growth in per capita income will slow despite our relatively high standard of living. Today's leadership position is built on decisions that led to investments made over the past 50 years. The slow erosion of those investments might not have immediate consequences for economic growth and job creation, but the long-term effect is predictable and would be severe. Once lost, the lead could take years to recover, if indeed it could be recovered. Like a supertanker, the US economy does not turn on a dime, and if it goes off course it could be very difficult to head back in the right direction. Given that they already have a commanding lead in many key sectors, it is likely that US multinational corporations will continue to succeed in the global marketplace. To do so, they will shift jobs, R&D funds, and resources to other places. Increasingly, it is no longer true that what is good for GM (or GE or IBM or Microsoft) is good for the United States. What it means to be a US company is likely to change as all multinationals continue to globalize their operations and ownership. As China and other developing nations become larger markets for many products and 56 R. B. Freeman. Does Globalization of the Scientific/ Engineering Workforce Threaten US Economic Leadership? Working Paper 11457. Cambridge, MA: National Bureau of Economic Research, Jun. 2005, p. 2. services, and as they maintain their cost advantages, US companies will increasingly invest there, hire there, design there, and produce there. This nation's science and technology policy must account for the new reality and embrace strategies for success in a world where talent and capital can easily choose to go elsewhere. Scenario 1 is the most likely case if current trends in government policies continue both here and in other nations and if corporate strategies remain as they are today. Two other scenarios represent departures from recent history. As such, they are more speculative and less detailed. Scenario 2: Pessimistic Case In Scenario 1, the United States continues to invest enough to maintain current trends in science and technology education and performance, leading to a slow decline in competitiveness. Scenario 2 considers what might happen if the commitment to science and technology were to lessen. Although that would run counter to our national history, several factors might lead to such an outcome: 58 Rising spending on social security, Medicare, and Medicaid (now 42% of federal outlays compared with 25% in 1975) limit federal and state resources available for science and technology. In 2005, Social Security, Medicare, and Medicaid accounted for 8.4% of GDP. If growth continues at the current rate, the federal government's total spending for Medicare and Medicaid alone would reach 22% of GDP by 2050. The war on terrorism refocuses government resources on short-term survival rather than long-term R&D. • Increasingly attractive opportunities overseas draw industrial R&D funding and talented US scientists and engineers away from the United States. • Higher US effective corporate tax rates discourage companies from investing in new facilities and research in the United States. Excessive regulation of research institutions reduces the amount of money available for actual research. Those possibilities would exacerbate and accelerate the trends noted in Scenario 1: · The availability of scientists and engineers could drop precipitously if foreign students and workers stop coming in large numbers, either because immigration restrictions make it more difficult or because better opportunities elsewhere reduce the incentives to work in the United States. US venture capitalists begin to place their funds abroad, searching for higher returns. Short-term cuts in funding for specific fields could lead to a rapid decline in the number of students in those disciplines, which could take decades to reverse. 58 W. B. Bonvillian. Meeting the new challenge to US economic competitiveness. Issues in Science and Technology 21(1)(Fall 2004): 75-82. |