FIGURES: 2-1 2-2 2-3 2-4 2-5 The 20th century saw dramatic reductions in disease incidence in the US, 2-3 Examples of critical technologies patented by US researchers, 2-12 Moore's law, 2-13 Many US children have access to and use computers and the Internet, 2-14 US life expectancy, particularly in the last century, 2-16 Relative cancer survival rates, 2-17 Heart disease mortality, 2-17 Ground transportation, 2-25 Telephones, 2-26 Energy Efficiency, 2-27 R&D expenditures as a percentage of GDP, 3-6 2-6 2-7a 2-7b 2-8a 2-8b 2-9a Infant mortality, 2-18 2-12a 2-12b Air travel, 2-25 2-13 2-14 3-1 3-2 3-3 3-4 3-5 3-6 3-7 3-8 3-9a 3-9b 3-10 3-11 3-12 3-13 3-14 3-15 3-16a 3-16b 3-17 5-1a 5-lb 5-2 5-3 US patent applications, 3-7 Total science and engineering articles with international coauthors, 3-7 Doctorates awarded by US institutions, by field and citizenship status, 3-12 R&D shares of US gross domestic product, 3-16 Venture capital funding, 3-17 Offshored services market size, 3-21 Expenditures in the 6.1 portion of the DOD budget for basic research, 3-22 Percentage of 24-year-olds with first university degrees in the natural sciences Science and engineering bachelor's degrees, by field, 3-30 Students recommended for secondary teaching certification in mathematics and science at UT Austin, 5-6 UTeach minority enrollment, quality of undergraduate students in the program, Professional development of teachers increases student achievement in The number of AP examinations in mathematics, science, and English taken in 6-1 6-2 9-1 9-2 TABLES: 2-1 2-2 2-3 3-1 3-2 3-3 3-4 5-1 5-2 5-3 6-1 6-2 8-1 Research and development shares of US gross domestic product, 6-4 Trends in federal research funding, 6-5 Growth of emerging markets, 9-3 International production of science and engineering doctorates compared with Annual Rate of Return on Public R&D Investment, 2-9 Annual Rate of Return on Private R&D Investment, 2-10 Publications and Citations Weighted by Total Population and Number of Change in Applications, Admissions, and Enrollment of International Graduate R&E Tax Claims and US Corporate Tax Returns, 3-19 Early-Stage Venture Capital, Including SBIR, ATP, and Private Sources, 3-20 Six-Year Graduation Rate of Students Who Passed AP Examinations and Achievement of US AP Calculus and Physics Students Who Participated in the Specific Recommendations for Federal Research Funding, 6-7 Overview of R&D Tax Incentives in Other Countries, 8-11 EXECUTIVE SUMMARY The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and our hope that our children and grandchildren will inherit evergreater opportunities. That vitality is derived in large part from the productivity of well-trained people and the steady stream of scientific and technical innovations they produce. Without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living. Economic studies conducted even before the information-technology revolution have shown that as much as 85% of measured growth in US income per capita was due to technological change.' Today, Americans are feeling the gradual and subtle effects of globalization that challenge the economic and strategic leadership that the United States has enjoyed since World War II. A substantial portion of our workforce finds itself in direct competition for jobs with lower-wage workers around the globe, and leading-edge scientific and engineering work is being accomplished in many parts of the world. Thanks to globalization, driven by modern communications and other advances, workers in virtually every sector must now face competitors who live just a mouse-click away in Ireland, Finland, China, India, or dozens of other nations whose economies are growing. This has been aptly referred to as "the Death of Distance." CHARGE TO THE COMMITTEE The National Academies was asked by Senator Lamar Alexander and Senator Jeff Bingaman of the Committee on Energy and Natural Resources, with endorsement by Representative Sherwood Boehlert and Representative Bart Gordon of the House Committee on Science, to respond to the following questions: What are the top 10 actions, in priority order, that federal policymakers could take to enhance the science and technology enterprise so that the United States can successfully compete, prosper, and be secure in the global community of the 21st century? What strategy, with several concrete steps, could be used to implement each of those actions? The National Academies created the Committee on Prospering in the Global Economy of the 21st Century to respond to this request. The charge constitutes a challenge both daunting and exhilarating: to recommend to the nation specific steps that can best strengthen the quality of life in America our prosperity, our health, and our security. The committee has been cautious in its analysis of information. The available information is only partly adequate for the committee's needs. In addition, the time allotted to develop the report (10 weeks from the time of the committee's first gathering to report release) limited the ability of the committee to conduct an exhaustive analysis. Even if unlimited time were available, definitive analyses on many issues are not possible given the uncertainties involved.2 This report reflects the consensus views and judgment of the committee members. Although the committee consists of leaders in academe, industry, and government-including several current and former industry chief executive officers, university presidents, researchers (including three Nobel prize winners), and former presidential appointees the array of topics and policies covered is so broad that it was not possible to assemble a committee of 20 members with direct expertise in each relevant area. Because of those limitations, the committee has relied heavily on the judgment of many experts in the study's focus groups, additional consultations via e-mail and telephone with other experts, and an unusually large panel of reviewers. Although other solutions are undoubtedly possible, the committee believes that its recommendations, if implemented, will help the United States achieve prosperity in the 21st century. 'For example, work by Robert Solow and Moses Abramovitz published in the middle 1950s demonstrated that as much as 85% of measured growth in US income per capita during the 1890-1950 period could not be explained by increases in the capital stock or other measurable inputs. The unexplained portion, referred to alternatively as the "residual" or "the measure of ignorance", has been widely attributed to the effects of technological change. Since the prepublication version of the report was released in October, certain changes have been made to correct editorial and factual errors, add relevant examples and indicators, and ensure consistency among sections of the report. Although modifications have been made to the text, the recommendations remain unchanged, except for a few corrections, which have been footnoted. FINDINGS Having reviewed trends in the United States and abroad, the committee is deeply concerned that the scientific and technological building blocks critical to our economic leadership are eroding at a time when many other nations are gathering strength. We strongly believe that a worldwide strengthening will benefit the world's economy-particularly in the creation of jobs in countries that are far less well-off than the United States. But we are worried about the future prosperity of the United States. Although many people assume that the United States will always be a world leader in science and technology, this may not continue to be the case inasmuch as great minds and ideas exist throughout the world. We fear the abruptness with which a lead in science and technology can be lost-and the difficulty of recovering a lead once lost, if indeed it can be regained at all. The committee found that multinational companies use such criteria' as the following in determining where to locate their facilities and the jobs that result: · Indirect costs (litigation, employee benefits such as healthcare, pensions, vacations). Convenience of transportation and communication (including language). Fraction of national research and development supported by government. Legal-judicial system (business integrity, property rights, contract sanctity, patent protection). Attractiveness as place to live for employees. · Effectiveness of national economic system. Although the US economy is doing well today, current trends in each of those criteria indicate that the United States may not fare as well in the future without government intervention. This nation must prepare with great urgency to preserve its strategic and economic security. Because other nations have, and probably will continue to have, the competitive advantage of a low wage structure, the United States must compete by optimizing its knowledge-based resources, particularly in science and technology, and by sustaining the most fertile environment for new and revitalized industries and the well-paying jobs they bring. We have already seen that capital, factories, and laboratories readily move wherever they are thought to have the greatest promise of return to investors. RECOMMENDATIONS The committee reviewed hundreds of detailed suggestions including various calls for novel and untested mechanisms-from other committees, from its focus groups, and from its own members. The challenge is immense, and the actions needed to respond are immense as well. The committee identified two key challenges that are tightly coupled to scientific and engineering prowess: creating high-quality jobs for Americans, and responding to the nation's need for clean, affordable, and reliable energy. To address those challenges, the committee structured its ideas according to four basic recommendations that focus on the human, financial, and knowledge capital necessary for US prosperity. 3 D.H. Dalton, M.G. Serapio, Jr., P.G. Yoshida. 1999. Globalizing Industrial Research and Development. US Department of Commerce, Technology Administration, Office of Technology Policy. Grant Gross. 2003, October 9. “CEOs defend moving jobs offshore at tech summit." InfoWorld Mehlman, Bruce. 2003. Offshore Outsourcing and the Future of American Competitiveness. “High tech in China: is it a threat to Silicon Valley?" 2002, October 28 Business Week online. B. Callan, S. Costigan, K. Keller. 1997. Exporting U.S. High Tech: Facts and Fiction about the Globalization of Industrial R&D, Council on Foreign Relations, New York, NY. |