"R&D Trends in the U.S. Economy" Released

U.S. dominance as a source of technology for other economies is in serious trouble, according to "R&D Trends in the U.S. Economy: Strategies and Policy Implications," a new report by Gregory Tassey, senior economist with the Strategic Planning and Economic Analysis Group of the National Institute of Standards & Technology (NIST).

The report highlights trends and global developments that are changing the nature of innovation and underlying research and development activities. NIST concludes that without the merger of R&D policy and a long-term economic growth policy, the U.S. role in innovation and the world economy is threatened.

Only seven percent of US industries have the necessary R&D intensity, measured by R&D-to-sales ratios, to maintain world class innovation, Tassey observed. Equally discouraging is the shift of US private R&D objectives to shorter-term projects and quicker paybacks.

The report reviews the economic dimensions of technology policy, the role of technology in the increasing volatility of the global markets, characteristics of market failure in technology life cycle, trends in R&D investment and the values of maintaining an R&D capability.

The Federal government's support for industrial R&D is "inefficiently funded and managed" due to a lack of the technology based model for economic policy and a true understanding of the government's role in supporting industrial R&D investment, Tassey argues. He sees three critical policy implications as a result:

1. The U.S. cannot maintain its position of world leadership in technological innovation nor economic growth with such a small high-technology sector.
2. To remain competitive, all sectors of the economy are becoming dependent on technology and, unless U.S. technology investments increase, U.S companies will become more dependent on foreign companies to supply the necessary technologies.
3. Domestic R&D must be recognized as consisting of networks of industry, university and government inputs and treated as such in policy decisions.

Tassey notes several insufficiencies in current U.S. R&D investments: an insufficient total industrial investment in R&D: an underinvestment in the formation of new firms (i.e. an insufficient supply of venture capital); insufficient early-phase generic technology research investment; and underinvestment in supporting technology infrastructures. He considers the roles and failures of tax incentives and direct funding initiatives, and looks at the federal budgetary and policy shift toward civilian R&D.

To request a copy of "R&D Trends in the U.S. Economy: Strategies and Policy Implications," NIST Planning Report 99-2, contact Denise Herbert at (301) 975-2657 or denise.herbert@nist.gov. The report is available on the Web at http://www.nist.gov/director/prog-ofc/report99-2.pdf