Support for industry-led technology development partnerships. The accelerating pace of technological advance, increasing cost of research and development, ever-shorter product cycles, and rapid worldwide diffusion of technologies mean that many companies are finding it harder to afford investment in risky or longer term research and development than in the past. For example, in the electronics industry, the lifetime of a personal computer model is less than two years, forcing firms to manage three generations of the technology at once and squeezing out resources for longer term technology-base R&D. In the semiconductor industry, new plant investments can exceed 1 billion dollars, with the next generation running two or three times that much, again drawing resources away from the longer term R&D that would form the base for future industries. Overall, we find that industries are devoting 80 to 90 percent of their R&D resources to short-term product development and process improvement. We are thus seeing a gap in the innovation system, in funding for mid- and long-range R&D, which threatens to dry up the wells of new technology from which our companies must draw in the future to remain competitive. Pressure to realize near-term returns is aggravating, in particular, the gap in R&D in the five- to seven-year time frame.
Individual companies are particularly reluctant to move forward with research and development projects, when a substantial fraction of the total return may not be captured by the investing company. Government risk-sharing can provide a bridge that mitigates underinvestment in research and development and supports broad diffusion to society of the benefits of R&D. The social rate of return on R&D investments, where the benefits accrue to many firms and to consumers in the form of less costly and higher quality products, is about twice as high as the average private rate of return on investment for individual firms.
The problem of capturing private returns on precommercial research and development investments is especially great in widely dispersed and fragmented industries such as building and construction. And where the benefits of technological advance include public returns-to the environment, public health, or national defense-the arguments for government risk-sharing are especially strong. If government fails to support advances in precommercial technologies for these purposes, at least on a cost shared basis, it is very likely that they will not get developed?or will be developed by international competitors.
The Administration has redesigned government partnership programs to ensure that they are:
Market-driven, with industry leading the joint research agenda.
Cost-shared, with the private sector providing half or more of the money, as a test to make sure the technological risk is worth taking.
Competitive, merit-based, and peer-reviewed.
Evaluated periodically and rigorously to make sure the projects have the intended effect.
Industry-government partnerships such as the Partnership for New Generation Vehicles, Advanced Battery Consortium, American Textile Consortium, and projects in the Advanced Technology Program all are examples of the industry identifying its longer term needs and sharing the risks and uncertainties in pursuing those developments with the government. In addition to the government, universities are increasingly being sought not only as sources of educated students but also as partners in joint research and development. Addressing longer term research and development needs in a commercial environment that emphasizes near-term returns is a growing challenge for industry and public policy. Joint government-industry funding can extend time horizons, increase the number of riskier projects in the national portfolio, and fill the gaps that open in our nation's complex and dynamic science and technology system.
Facilitating the rapid deployment of civilian technologies. Stimulating the development of technologies is only part of successful innovation. Another essential aspect is to make sure that all U.S. industry, including the small and medium-sized firms that constitute the foundation of American manufacturing, get access to efficient, up-to-date production methods. The Manufacturing Extension Partnership operated by the National Institute of Standards and Technology (NIST) in the Department of Commerce is a grassroots effort to provide such information and training to improve the competitiveness of the nation's 380,000 smaller manufacturers. Currently, the network includes 43 centers, and the goal is to create a national network of 100 centers able to meet the needs of America's smaller manufacturers. NIST is also addressing work force involvement in technology development to ensure that technology is adopted and diffused as effectively as possible and that work force education and training issues are considered from the start of the technology development cycle.
The fullest use of technologies developed by our public laboratories is also a continuing challenge. If our public R&D investments are to continue to pay the kinds of economic dividends we have enjoyed in the past, government must improve on the management of its own technology-related assets. We must narrow the time gap of technology transfer by bringing technology creators and users closer together. One such mechanism is the cooperative research and development agreement (CRADA) between companies and Federal labs which creates market pull on the Federal research enterprise.
Building a 21st-century infrastructure. Development of the National Information Infrastructure (NII) and the emerging Global Information Infrastructure (GII) is a top priority. Our nation leads the world in developing and applying information technology that can revolutionize the way we live, learn, and work. Because of the strategic value of these technologies and their potential for fostering economic growth, nations around the globe are investing heavily in the development and deployment of computer systems and telecommunications networks. Our vision for Federal investment in information technology is to accelerate the evolution of existing technology and to nurture innovation that will lead to universal, accessible, and affordable application to enhance U.S. economic and national security in the 21st-century.
The NII includes the Internet, the public switched network, and cable, wireless, and satellite communications. It includes public and private networks. As these networks become more interconnected, individuals, organizations, and governments will use the NII to engage in multimedia communications, buy and sell goods electronically, share information holdings, and receive government services and benefits. Information security is critical to the development and operation of a viable NII. One of the goals of The National Information Infrastructure: Agenda for Action is to ensure information security and network reliability. Without confidence that information will go where and when it is supposed to go-and nowhere else-the NII will not be used to support health, education, commerce, public services, and advanced communications to the fullest extent. In the NII, elements of effective security include assuring confidentiality-the assurance that information will be held in confidence with access limited to appropriate persons; integrity-the confidence that information will not be accidentally or maliciously altered or destroyed; reliability-the confidence that systems will perform consistently and at an acceptable level of quality; and availability-the assurance that information and communications services will be ready for use when expected. These are important building blocks of the NII strategy.
Also of prime importance to economic growth in the next century is a renewed and efficient transportation system. Our highway, air, and rail systems have given Americans the benefits of flexibility, low cost, and personal freedom, but they are in urgent need of renewal. In addition, other countries experiencing rapid economic growth are investing heavily in infrastructural development, creating major opportunities for U.S. goods and services. A coordinated public and private research and development effort should meet these domestic and international objectives for future transportation needs: safe and reliable physical infrastructure, information infrastructure for transportation, and next-generation transportation vehicles.
Support for basic science. America's future demands an expanding knowledge base, which requires investment in our people, institutions, and ideas and cooperation with international partners to expand our access to data and information. Science lies at the heart of that investment-it is an endless, sustainable, and renewable resource with extraordinary dividends. Today's investments in basic science build a foundation for commercial products and services of the future. The nation's commitment to world leadership in science, engineering, and mathematics created the world's leading scientific enterprise, whether measured in terms of discoveries, citations, awards and prizes, advanced education, or contributions to industrial and informational innovation. Our scientific strength is a treasure we must sustain and build on for the future, and this Administration is firmly committed to its support.
The United States has refined a system for selecting excellence in ideas, individuals, and institutions that is extremely competitive and productive. It is a system that achieves quality by emphasizing peer review and promoting creativity. The system cannot always predict the exact areas or nature of scientific breakthroughs or the timeline for fundamental discoveries. Over decades, however, it reliably produces discoveries that enrich the lives and prospects of our citizens and, when transformed to practical cost-effective products, reorganizes old businesses and creates new ones.
Firms are increasingly turning to universities as partners in research as a result of shrinking private-sector resources for these long-term investments. This pooling of resources can invigorate university research and is a healthy development as long as it does not compromise the basic research conducted by universities which serve as the well-spring of new knowledge.
The Federal Government has long played a vital role in ensuring American leadership in science, mathematics, and engineering, and investment in basic science continues to be an essential component of our innovation portfolio.
Education and training. The Administration is committed to sustaining a high-quality system of education. Few enterprises touch the lives of as many people as those concerned with education and training. High-quality education and training benefit the individual whose knowledge and skills are upgraded, the business seeking a competitive edge, and the nation in increasing overall productivity and competitiveness in the global marketplace. It is essential that all Americans have access to the education and training they need and that the teaching and learning enterprise itself becomes a high-performance activity.
The Administration has developed a research and development initiative aimed at using the power of modern information technology to achieve the Administration's lifelong learning goals-including the Goals 2000 and School-to-Work programs. We believe computer and multimedia technology will make individualized, learner-centered, exploratory learning possible at affordable prices. And by using communications systems to connect homes, schools, and workplaces, we enhance the potential for learning outside school and continuing learning throughout our lifetimes.
Federal investment priorities include five main areas: (1) demonstrations that test advanced concepts in learning technologies will expand the state of the art in curriculum design, learner-centered and exploratory instructional strategies, and use of advanced software design; (2) fundamental research on the way people learn will focus on the way new technologies can be used to enhance learning; (3) development of learning tools will ensure availability of tools for synthetic learning environments, collaborative problem-solving environments, software interfaces, instructional software development tools, interactive instructional systems, intelligent learning associates, and tools for searching multimedia databases and digital libraries; (4) development of assessment tools will undoubtedly change our expectations about learning and about the kinds of skills that can be measured; and (5) digitization of Federal resources will provide key resources for commercial developers interested in marketing interactive systems to both education and entertainment markets.
While virtually all other sectors of the economy have been transformed by technological innovation and accompanying structural reorganization in the 20th century, methods used for education and training look much like they have for generations. By accelerating the development and adoption of information education and training, we hope to ensure all Americans access-anytime and anyplace-to quality education and training tailored to their needs.
Dual-use technologies. The role of the Administration's dual-use technology policy in supporting our nation's defense needs was described in Chapter 2, with a focus on its value in strengthening defense capabilities. The other half of the dual-use strategy is its contribution to economic growth. Commercial benefits arise from the "spinoff" of technologies from military use to commercial markets, the "spin-on" of technologies from civilian to military use, and the process of dual-use technology development. Commercial industries have historically benefited from the spinoff of technologies developed for defense purposes into commercial markets. For example, this spinoff of technologies has been central to the launching of the U.S. aerospace, computer, and semiconductor industries, all of which are major sectors of today's economy. In addition, both industry and the military are benefiting increasingly from the opposite, spin-on process as well. As described in Chapter 2, commercial technologies are leading military technologies in performance and cost in a growing number of areas. Increasing the use of civilian technologies in military applications increases the markets available to commercial firms through Department of Defense procurements and strengthens innovation. This spin-on of technologies is enhanced by the Administration's commitment to defense acquisition reform. Finally, there is the strategy of dual-use research and development which captures the energy and capabilities of both our civilian and military technology bases to speed innovations in advanced technologies. The National Flat Panel Display Initiative is an example of a program which develops an advanced technology by combining military need with the vitality and incentives of the commercial markets.