A New S&T Policy for a New Global Reality

Globalized science and engineering capability has changed how innovation happens and who it benefits. US policies need to be reconfigured to respond.

Science and technology policy in the United States has a hubris problem. For several generations, the United States stood alone as the world’s leader in research and development (R&D), without peer in scientific and technological achievement. But the quality and amount of research and technological innovation outside the United States has grown rapidly in recent decades. The United States is now one nation among many R&D-intensive nations. Complicating this picture, other nations have not simply cloned the US approach but have built their national scientific, engineering, and innovation capability on different models of relationships among government, university, and industry.

As the breadth and depth of global research have grown, academic scientists and engineers around the world have become linked in a dense global network, collaborating and sharing results in real time. This is a fundamental shift in the way humankind advances, records, and shares new knowledge.

The global networks of open, academic research overlap substantially and intermingle with equally robust cross-border networks of inter- and intracompany research, development, and commercial applications of new knowledge. This crossflow is another fundamental shift, one that has occurred in the way companies innovate and in the ways that nations capture societal and economic value from advances in science and engineering.

This new reality is neither well understood nor fully appreciated by the US policy establishment, which is overconfident that the country can regain its position as the dominant force in global science, engineering, and innovation. This belief, like the traditional argument that “more domestic R&D is always better,” is outdated. Instead, policymakers must focus on capturing economic value from new scientific and engineering knowledge, whether or not it originates in the United States. 

Policymakers must focus on capturing economic value from new scientific and engineering knowledge, whether or not it originates in the United States.

Economic value can be captured from global sources and integrated locally—but it requires deliberate actions, appropriate for the new situation. Just as national security depends on allies and alliances, so too must science and technology policy. US economic security and prosperity requires creating strategic international collaborations that take advantage of the strengths of other nations, and being a leader in negotiating international agreements on topics such as telecommunications technology, supply chain security, and antitrust law and enforcement. 

One among many, tightly networked to all 

In the past, countries depended on the low mobility of researchers, inventors, and entrepreneurs to link R&D to innovation and innovation to wealth creation. When researchers were less mobile and less engaged in close collaboration with peers in other nations, new knowledge tended to be retained by institutions and the countries that housed them. From a national perspective, this arrangement had the benefit of aligning intellectual property ownership, early applications, and company growth with the location of the R&D activity. 

The advent of the telegram, telephone, and a global mail system reduced the time it took for ideas to spread, shrinking the required time from years to months, then from weeks to days. But instantaneous, global collaboration was not possible until the rise of the internet in the 1990s, which enabled people to communicate in real time, collaborating as never before. The lowering of global barriers—including to international travel and cross-border personnel exchanges—came about as the result of several significant geopolitical changes, including the end of the Cold War, the rise of the European Union and relaxation of border controls across Europe, and the increasing wealth of China and other countries in Asia. These changes, taken together, globalized scientific, engineering, and innovation enterprises.

At the same time that global collaboration has become ubiquitous, the rest of the world has begun doing more research. During the 1960s, US public and private R&D investment accounted for almost 70% of the global total. Today, even though US spending has increased, US R&D is less than 30% of the world’s total. Twenty nations now match or exceed US R&D intensity, with public and private R&D spending in these countries near or in excess of 2% of gross domestic product per year. In absolute dollars, China spends approximately the same amount on R&D as the United States. Furthermore, according to figures from the Organisation for Economic Co-operation and Development, China has nearly 2 million full-time equivalent researchers now, compared with the United States’ 1.5 million.

Twenty nations now match or exceed US R&D intensity, with public and private R&D spending in these countries near or in excess of 2% of gross domestic product per year.

Japan, Finland, South Korea, Israel, and Singapore were among the first to systematically increase their national R&D capability by sending scientists and engineers abroad, particularly to the Unites States, for training. These countries then brought researchers back to build domestic capacity that sought, in a focused way, to benefit their country’s economic and military security. China has followed in their footsteps, at a quicker pace and at a larger scale, becoming a science and engineering powerhouse.

Simultaneously, US multinational corporations have established global networks of research laboratories, research university relationships, and talent recruitment efforts that partially decouple them from the science and engineering enterprise in the United States. Virtually every technologically advanced manufactured good is created by a production process (supply chain) that crosses national borders several if not dozens of times and draws on innovations from many countries.

Changes in the global distribution of advanced scientific and engineering capability have made it possible for small firms to have a handful of employees developing software in, for example, a half dozen different countries—a type of company whose existence was impossible a generation ago. These shifts in corporate R&D and innovation activities were triggered by the same technological and geopolitical shifts that drove the globalization of open science since the early 1990s. Stronger global intellectual property protections such as the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights have further supported these changes.

These converging historic trends mean that assertion of national leadership in quantum computing, genetic editing, artificial intelligence, or nanoscale manufacturing has little real meaning. Being first with new scientific knowledge or having a pioneering innovative company based in the United States does not guarantee success in domestic industry. Nor does it guarantee that the nation will capture substantial economic value from the new knowledge. In a globalized knowledge network, knowledge spreads so quickly and widely that being in “first place” is a notional distinction at best.

Being first with new scientific knowledge or having a pioneering innovative company based in the United States does not guarantee success in domestic industry.

New scientific and engineering knowledge and innovation cross US borders in both directions—as part of commercial exchanges and collaborations—every day. Economic value cannot be captured by erecting barriers to the flow of knowledge or trade as the United States needs new knowledge and innovation from outside its borders as much as it needs robust US-based scientific and engineering capability. 

Therefore the goals and approaches of US policy regarding science and technology need to be reconfigured to promote economic prosperity and the national defense within the context of the irrevocable globalization of science and engineering. In simplest terms, policy needs to shift focus to capture economic and national security value from all innovation, whether or not it originates in the United States.

Reconfiguring goals and mechanisms

For decades after World War II, the goals of national defense, economic growth, and competitiveness fueled considerable domestic public investments in developing and applying new scientific and engineering knowledge. These investments included increased public R&D spending, R&D tax credits, public-private partnerships, support for higher education, and policies to stimulate technology-based private sector innovation.

During the 2020 presidential campaign candidates, legislators, and think tanks generated a raft of proposals for new R&D spending, some of which are now being pursued by the Biden administration. Many of these proposals rest heavily on increased investments in domestic R&D to address perceived threats to US economic and national security from the technological and geopolitical rise of China. In the rush to address real geopolitical and international economic challenges, many of the current plans to increase domestic R&D engage in magical thinking, vaguely promising that investment in broad areas of science and engineering will somehow yield improvements in US prosperity and economic security.

US government investment in domestic R&D should not be abandoned or diminished; indeed, there are solid arguments that public investments in R&D need to increase to secure or improve the US national position in global knowledge networks. Merely spending more, though, is not enough to secure the economic future of the United States or to respond effectively to the growth and integration of scientific and engineering capability around the world.

Merely spending more, though, is not enough to secure the economic future of the United States or to respond effectively to the growth and integration of scientific and engineering capability around the world.

To contend with this global reality, the United States needs a meaningful reconfiguration of policy goals and approaches. High-tech economic competition with countries that were “behind” the United States only a few years ago cannot be addressed with domestic R&D investments alone. Nor will more domestic R&D investment do much to counter vulnerabilities derived from supply chains based in other countries. Domestic R&D investments will also—absent reforms to US immigration policy—do little to keep capable and ambitious people from leaving the US to pursue careers elsewhere.

What this new reality means is that US policy regarding science and technology must become more like US national security policy, which depends on allies and alliances. Capturing the economic value from new knowledge and global innovation depends on creating strategic and mundane international agreements that help the US economy, both producers and consumers, to lawfully take advantage of the science, engineering, and innovation capabilities of other nations. In some cases, the US government will need to step up and play a leading role in negotiating bilateral and multilateral agreements, as well as setting norms for a wide range of activities that can include next-generation wireless R&D, privacy-by-design approaches to public health or social network data, antitrust laws affecting technology platform companies, and cross-border supply chain resilience.

The reconfiguration we are calling for includes:

  1. Setting aside the notion that the goal of US R&D investment is to make the United States “win” every technological race and focus instead on capturing the economic and social value of new scientific and engineering knowledge, wherever it originates.
  2. Expanding the US government support for tracking and monitoring research activity and output, regardless of where it occurs, and support for dissemination of that information to US-based companies and centers of research.
  3. Implementing economic and regulatory policies including international tax, antitrust, trade, and investment polices with an eye toward increasing the nation’s ability to capture economic and national security value from new knowledge, wherever
    it originates.
  4. Addressing national security vulnerabilities and risks in diverse areas (e.g., food, energy, and health, as well as traditional national defense) that arise from the new and broad dependence on global scientific and engineering networks.
  5. Pursuing education and immigration policies that continue to attract R&D talent and skilled workers from other countries to the United States and to enable these individuals to stay here, while also increasing the number and improving the capacity of US-born scientists and engineers.
  6. Establishing new types of strategic scientific and technological alliances with other countries around the globe, focusing first on natural allies among the liberal democracies.

These changes, along with other shifts in US science and technology goals and approaches, flow directly from acknowledging that our nation’s economic security and prosperity in 2021 depends on S&T collaboration and exchange with other nations. This approach to innovation-based economic security is analogous to the manner in which US national security has long depended on alliances as well as the activities and capabilities of allies.

Recommended Reading

Caroline Wagner, Kenneth B. Poland, and Xiaoran Yan, “Flows and Networks in Global Innovation Systems Among Top R&D Nations,” Working Paper 7, Global Innovation and National Interests Project, BRG Institute (March 8, 2021).

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Cite this Article

Guile, Bruce R., and Caroline S. Wagner. “A New S&T Policy for a New Global Reality.” Issues in Science and Technology 37, no. 4 (Summer 2021).

Vol. XXXVII, No. 4, Summer 2021