Maintaining U.S. Leadership in Science and Technology

Maintaining U.S. Leadership in Science and Technology

This article is excerpted from Dr. Mehmood Khan’s testimony before the House Committee on Science, Space and Technology on 6 March 2019. Dr. Khan is chair of the U.S. Council on Competitiveness and Vice Chairman and Chief Scientific Officer for Global Research & Development, PepsiCo. The full testimony can be found online here. IEEE-USA is a national affiliate of the Council on Competitiveness.


Given the profound impact of science and technology on U.S. prosperity, standards of living, national security, modern society and geopolitical standing, every American should be concerned with the nation’s ability to lead in science, technology and innovation.

More than any country in history, the United States has been the greatest driver and beneficiary of technology, innovation and a vibrant entrepreneurial spirit. In the 19th century, entrepreneurship and innovations surrounding agriculture, rail, oil, steel and electricity turned the United States into an industrial and economic powerhouse, laying the foundation for a manufacturing sector that provided middle class jobs and a higher standard of living for millions of Americans.

In the 20th century, American inventions and advancements in vehicle and aircraft technology revolutionized transportation and changed society and the geographic face of the country. American-born digital technologies unleashed a revolutionary new age of computing, communications and information mobility, disrupting industries and business models, changing society and culture around the world, and creating enormous new wealth. This continuum of innovation has delivered prosperity and rising standards of living to Americans, and propelled the United States to global leadership.

As we enter the third decade of the 21st Century, a new urgency, a new innovation reality, a new imperative faces the nation. Notwithstanding a currently robust economy – rising and strong economic, productivity and job growth; historically low unemployment; wage increases; an improved tax environment; etc. – the Council on Competitiveness believes U.S. leadership in technology and long-term competitiveness is under threat. This potential demands the urgent attention of our nation’s leaders, and a focused examination of our capabilities, investments and policies related to science, technology development and innovation.

The Case for Ongoing Investment

While the United States is enjoying an economic upswing on many fronts, U.S. leadership in technology is under renewed threat. In 1960, the United States dominated global research and development (R&D), accounting for 69 percent share of the world’s R&D investment. The United States could drive developments in technology globally by virtue of the size of its investment. Today, we have evolved into a multipolar science and technology world. As other nations have increased their R&D investments and capacity for innovation, the U.S. share of global R&D expenditures has dropped to 28 percent in 2016, diminishing the U.S. dominance and leverage over the direction of technology advancement. At the same time, China has risen to the account for a quarter of global R&D spending.

In addition, America’s lead in venture capital is shrinking, further diminishing its role as a driver of technology and innovation globally. In 1992, U.S. investors represented 97 percent of the $2 billion in venture finance, and accounted for about three-quarters just a decade ago. However, in 2017, U.S. investors led 44 percent of a record $154 billion in venture finance, with Asian investors (with China leading) accounting for 40 percent. Moreover, while the absolute level of venture capital coming to the United States has increased substantially, the U.S. share of the growing global pool of venture capital – which has increased more than 200 percent since 2010 – has dropped sharply from 95 percent in the early 1990s to about half in 2017.

While traditional U.S. competitors – such as Germany, Japan, France and the U.K. – continue to be strong R&D performers working at the leading edge of technology, many emerging economies seek to follow the path of the world’s innovators, transform to knowledge-based economies, and drive their economic growth with technology and innovation. A growing number of emerging economies are establishing government organizations and ministries focused on technology and innovation, adopting innovation-based growth strategies, boosting government R&D investments, and developing research parks and regional centers of innovation. Some of these economies are also working to increase their production of scientists and engineers. These actions are raising technology and development capabilities and innovation capacity around the world.

A nation’s R&D intensity expressed as R&D expenditures as a percentage of GDP provides another gauge of national R&D performance. In this measure, the U.S. position globally has lagged in recent years, as other countries have expanded the range and scope of their R&D activities. Notably, South Korea, one of the world’s largest R&D performers and another formidable U.S. competitor, ranks at the top in this metric.

At the same time, key U.S. science and technology infrastructure is eroding. Much like roads, rails and power plants were essential for the Industrial Age, infrastructure that supports knowledge creation and technology development is vital for the 21st century knowledge economy and U.S. success in innovation-based global competition. This includes laboratories, research and technology demonstration centers, supercomputers, test-beds, wind tunnels, propulsion and combustion facilities, simulators, accelerators and other user facilities.

America’s national laboratory system is considered a distinctive and globally unique competitive asset. But, across the system, core scientific and technological capabilities are potentially at risk due to deficient and degrading infrastructure and repair hamstrung by chronic underfunding, and maintenance backlogs in the hundreds of millions of dollars.

New Disrupters

At the same time that competition in technology and innovation is rising around the world, and U.S. technology leadership is under threat, we are witnessing accelerated advancement of the greatest revolutions in science and technology; a new phase of the digital revolution characterized by vast deployment of sensors, the internet of things, artificial intelligence (AI), and the big data tsunami; biotechnology and gene editing; nanotechnology; and autonomous systems. Each of these technologies has numerous applications that cut-across industry sectors, society and human activities. Each is revolutionary; each is game-changing in its own right. But they are now colliding and converging on the global economy and society simultaneously, with profound implications for U.S. economic and national security.

These technologies are crucial drivers of productivity and economic growth, altering the patterns of society and many dimensions of everyday life. For countries and companies, the ability to leverage these technologies for economic impact is fundamental to their competitiveness and economic success.

In addition to their economic potential, these technologies could solve many of the world’s critical challenges surrounding areas such as health, energy and sustainability, clean water and the global food supply.

Optimizing the Environment for Innovation Systems

Since the early 2000s, new models of innovation have emerged, and others have matured in response to the transformation of the global competitive landscape that began in the 1980s. Multiple technology revolutions and their convergence, and the nature of global challenges require models of innovation built on internal resources, external collaboration and a larger, more diverse innovation skill set. For example, in a recent survey of U.S. manufacturing firms, of those firms that had innovated, 49 percent reported that the invention underlying their most important new product had originated from an outside source. These models of innovation have expanded the scope of participants in the innovation ecosystem, and the ways in which companies, innovators, and entrepreneurs pursue innovation.

As companies have moved away from exploratory research toward nearer-term applied research and technology development that support business units, foundational technology breakthroughs increasingly come from universities, national laboratories and small start-up companies that are disproportionately supported by public R&D investments. While the public role in the innovation ecosystem has increased in importance, U.S. public investment has not kept pace. This government investment plays a key role as the seed for future applied research and technology development, and for training the next generation of scientists and engineers. However, with increasing democratization of innovation, a growing pool of innovators and problem solvers are largely disconnected from the research, development and training institutions this public investment supports.

There are many factors that affect a country’s ability to innovate and compete. This includes levels of investment in R&D, the availability of capital including venture capital to fuel start-ups and innovation at critical stages, the availability of talent, the environment for entrepreneurship, and the general business environment including taxes and the level of business regulation. These elements are different in countries around the world, and can play a significant role in a country’s competitiveness and capacity for innovation.

U.S. competitors around the world seek to build and strengthen knowledge and technology-based economies as the basis for advancing productivity, job creation, raising standards of living and, in some cases, advancing geopolitical goals. As a result, many deploy policies and programs to harness science, technology and innovation, and to create a business environment to achieve this impact. These countries are instituting their own distinctive innovation ecosystems, which may not be compatible or friendly with the U.S. innovation system.

Can the U. S. Compete?

We are seeing changes in technology, competition and the global economy, historic in terms of their size, speed and scope. The U.S. faces hyper competition, a potential new global superpower competitor in China, and the prospect of economic and social disruption brought about by the unrelenting and accelerating march of technology. Nevertheless, in a global economy ever more driven by technology and innovation, an enabling environment for innovation remains the advantage of only a few economies, with the United States in a position of significant strength:

  • The U.S. remains the world’s epicenter for disruptive innovation, thanks to its exceptional research infrastructure and low barriers to entrepreneurs and start-ups.
  • The U.S. remains the world leader in high-tech manufacturing. It has a 31-percent global share and its output is growing. China is closing the gap with a 24-percent share and its output is also growing, surpassing Japan and the EU.
  • The U.S. remains the world’s largest investor in R&D for 28 percent of global R&D spending. It now invests half a trillion in R&D per year and has built up a globally unparalleled national stock of science and technology.
  • Because the U.S. is by far the world’s largest innovator in basic research, it dominates patenting, sowing the seeds of future innovation, representing about one quarter of all international patent applications filed in 2016.
  • The U.S. has distinctive assets – its national laboratories and top research universities.
  • In the U.S. innovation ecosystem, industry, start-ups, national labs and universities collaborate on R&D across the spectrum of science and technology.
  • Vast amount of venture capital is pouring in to commercialize advanced technologies.
  • The U.S. is seen as the global technology leader. A recent survey asked researchers across the world which country they considered to be the global leader in 12 advanced industries. The U.S. was named most often in 11 of the 12 industries.

Despite these significant U.S. strengths, the competitiveness of a wide range of nations – not to mention economic and technological change – is dynamic and ever transforming. A country’s comparative position can change rapidly.

Conclusion

The United States is at a critical moment in time in national innovation systems research and action. New, transformational models driven by the democratization and self-organization of innovation are emerging and taking root across the nation. But, at the same time, U.S. leadership is under threat. The United States faces now what are perhaps existential challenges to its global leadership in innovation. America’s role in technology advancement is diminishing globally—now accounting for only one-quarter of global research & development investments, down from two-thirds in 1960. Competitors are increasing their capacity for innovation. And rapid technological change and disruption have impacted the workforce and communities.

When the U.S. controlled the direction of technology, we were positioned to control our economic destiny. That is no longer guaranteed. The United States must take stock. We must assess if our innovation ecosystems and investments are enough to maintain our global economic and technological leadership. And, as technology seeps into nearly every aspect of American life, our national leaders and our government at every level must bolster their knowledge and response capabilities to match the strengthening competition, technological change and disruptions that are coming.

One thought on “Maintaining U.S. Leadership in Science and Technology

  1. This article is outstanding. All U.S. IEEE members should take action now by contacting their Senators and Representatives to advocate at least a 4% increase in Federal support for Fundamental Research. Certainly, I shall.

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