S&T Policy and Economic Security
The post-World War II period ushered in a rapid increase in and unprecedented level of international scientific cooperation and knowledge flows. The end of the Cold War and the opening and rise of China, economically and scientifically, have further boosted this trend. For three decades, the global enterprise of science benefitted from a strong consensus on the positive value of international collaboration. Throughout most of this period, the United States has been the undisputed leader in terms of knowledge resources, international attractiveness for global talent, and economic prowess.
In more recent times, however, policymakers around the world are reassessing internationalization or globalization of research and development as something unequivocally positive. They are also revising their view of the United States as an undisputed beacon in the global science landscape.
Against this background, the article by Bruce Guile and Caroline S. Wagner, “A New S&T Policy for a New Global Reality,” and the one by Laura D. Tyson and Bruce Guile, “Innovation-Based Economic Security,” both in Issues, Summer 2021, provide an important impulse to the domestic policy discussion.
Guile and Wagner point to the declining US dominance in the global science and technology enterprise and argue for a different approach to international science and technology cooperation. Tyson and Guile see an urgent need for linking science, technology, and innovation more closely to issues of economic security. They warn of rising cross-border supply chain vulnerabilities and the risk of other countries appropriating the gains of new technologies and knowledge-intensive ventures originating in the United States.
Policymakers around the world are reassessing internationalization of research and development as something unequivocally positive.
Both pieces argue that the United States needs to rethink its role in the global knowledge landscape and adopt a more strategic and coordinated approach to science and technology policy and to international cooperation. The United States, the authors write, should focus less on generating all knowledge at home and more on tapping into and benefitting from the knowledge and innovation created outside its borders.
Working in the European scientific and policymaking community, I see a growing concern over the United States wavering in its commitment to the global enterprise of science. Some of its closest traditional allies worry that it is prioritizing its own narrow national interests over the benefits of international cooperation, even pitting the two against each other or instrumentalizing the latter in pursuit of the former in a zero-sum fashion. They also observe US actions that seemingly reflect a lack of awareness of a rapidly changing role and perception of the United States in the rest of the world, not least among its closest friends. Large parts of the world and the global scientific community are looking to the United States to redefine its role and regain its credibility as a pillar of responsible research and innovation in a rapidly changing global context. As someone who is firmly rooted in both Europe and the United States, I echo that hope.
Sylvia Schwaag Serger
Professor of Research Policy
Lund University, Sweden
Bruce Guile, Caroline S. Wagner, and Laura D. Tyson present strong arguments for better research and development policies (Issues, Summer 2021). In “A New S&T Policy for a New Global Reality,” Guile and Wagner correctly acknowledge that America is no longer the only country that does intensive R&D. Europe, Japan, and more recently Korea, Taiwan, and China also contribute a growing percentage of academic papers, patents, and commercialized high-tech products and services. As their article subtitle suggests: “US policies need to be reconfigured to respond.”
In “Innovation-Based Economic Security,” Tyson and Guile also correctly argue that innovation is an issue of economic security. Without innovation, American companies, workers, and institutions will suffer. And to innovate, America must make holding onto new, emerging technologies a national priority, and, as the authors stress, improve its “ability to capture economic or national security value from scientific and engineering advances originating outside the United States.” They argue that a better integration and coherence of US policies can help.
On the other hand, the articles don’t acknowledge that innovation has dramatically slowed over the past decade, meaning fewer new technologies are being commercialized not only in the United States but throughout the world. The result is slowing productivity and few new manufacturing industries to employ America’s middle-class workers.
For instance, the 2010s produced fewer new digital industries than did the 1990s and 2000s. The 1990s gave us e-commerce and enterprise software and the 2000s gave us smartphones and cloud computing, each producing more than $100 billion in revenues by the end of their respective decades. In contrast, in the decade ending in 2020, only one new digital technology, video streaming, had achieved $50 billion in sales, while “big data” analytic software and services, tablet computers, and OLED displays contributed between $20 and $50 billion. Artificial intelligence, virtual reality, augmented reality, commercial drones, smart homes, and blockchain have even smaller markets (as do nondigital technologies such as nanotechnology, quantum computers, and fusion).
Innovation has dramatically slowed over the past decade, meaning fewer new technologies are being commercialized not only in the United States but throughout the world.
A lack of new technologies is also a big reason why today’s so-called unicorn start-ups—those with a valuation of $1 billion or more—have much higher losses than those of previous decades. My recent analysis published on the MarketWatch website found that 51 of 76 unicorn start-ups have more than $500 million in cumulative losses, 27 more than $1 billion, and 6 more than Amazon’s peak cumulative losses of $3 billion. Many of these start-ups will be unable to overcome these losses because half of them had losses greater than 20% of revenues and one-fourth had losses greater than 40% in 2020.
The small markets for these technologies and the disappointing performance of America’s start-ups suggest that new ways of doing R&D are needed. We need university researchers to bring technologies closer to commercialization and not just write academic papers, and we need companies to commercialize more of this university research. How can America’s policymakers encourage companies and universities to work more closely together? A first step is for funding agencies to measure output from university research more by commercialized products and services than by numbers of academic papers and their citations. Improving America’s R&D system is a big challenge.
Jeffrey Funk
Independent technology consultant