Organizations Sound Alarm on U.S. Standing in Innovation

SSTI, like other organizations, found few S&T winners in the Administration's FY 2006 federal budget proposal (download SSTI's special budget issue at http://www.ssti.org/Digest/2005/FY06_Federal_Budget.pdf). Now, two organizations are sounding the alarm that the U.S.'s standing as the world leader in innovation is in danger of slipping, if it has not already begun.

AeA, a national trade association for information and communication technologies, says the country is neglecting the factors that sparked the U.S. technology revolution in its study, Losing the Competitive Advantage?: The Challenge for Science and Technology in the United States. The Task Force on the Future of American Innovation, a coalition of high tech industry, scientific societies and higher education associations, asserts the same notion in its similarly titled report, The Knowledge Economy: Is the United States Losing Its Competitive Edge?.

Also, in its analysis of the FY 2006 federal budget, the American Association for Advancement of Science (AAAS) shows cuts to key R&D programs outnumber spending increases -- a budget in which R&D funding would fail to keep pace with inflation for the first time in years for agencies such as the National Institutes of Health (NIH).

In each of their reports, AeA, the Task Force (of which AeA is a member) and AAAS call upon U.S. leadership to act to protect the country's standing. Their findings are highlighted below.

AeA

"Even if we were doing everything right, the United States still faces major new challenges from an intensely competitive world," said William Archey, AeA's president and CEO, in a press statement.

Losing the Competitive Advantage? finds other countries such as China and India are catching up to the U.S. in critical areas. These countries have restructured their economies to benefit from the free market system they once resisted, AeA notes. They are increasing the skill sets of their workforce, investing in R&D, and adopting advanced technologies, all to create wealth and spur economic growth.

The report analyzes how R&D funding supports innovation by investing in the technologies that advance society, increase productivity and ultimately improve standards of living. AeA points out the Internet, MRI scanning technology, Doppler radar, and GPS were born from U.S. federally sponsored research. While funding remains available, it has decreased from its peak in 1987 and has declined substantially as a percentage of the economy, AeA says.

AeA also states the American K-12 educational system is failing to provide the math and science skills necessary for kids to compete as knowledge workers in the 21st century. The U.S. higher education system, the agency adds, is not graduating enough engineers, computer scientists and mathematicians to support the growth of the U.S. high-tech industry.

At the same time, the U.S. has raised the bureaucratic barriers for high-skilled immigration. One out of five U.S. scientists and engineers are foreign-born, AeA observes, and these workers make significant contributions to the U.S. economy by creating intellectual property and hundreds of thousands of jobs. Yet, the number of skilled workers immigrating to the U.S. has declined by 27 percent between 2001 and 2003, according to AeA's report.

Losing the Competitive Advantage? includes a list of recommendations and priorities to address these challenges. To support R&D specifically, AeA calls for increased National Science Foundation funding - specifically for physical sciences, engineering, and math and computer science research - and increased funding for college and university research to support academic R&D and facilitate graduate education. AeA also states it is encouraged by the Administration's FY 2006 budget proposal to make the R&D tax credit permanent.

To obtain a copy of the AeA report, visit: http://www.aeanet.org/competitiveness

The Task Force on the Future of American Innovation

“We are and remain the world’s leader in innovation,” said John Engler, National Association of Manufacturers president and former governor of Michigan. “But we do not enjoy that status by divine right, and we cannot assume that we are safely ahead of the world."

Engler, also chairman of the SSTI Board of Trustees, was addressing those in attendance at a Task Force meeting that recently convened in Washington, D.C. Business and academic leaders comprising the group pointed to a set of benchmarks in such areas as education, workforce, ideas, and research investment in which other regions and nations - particularly the rapidly developing economies of Asia - are sharply pursuing the U.S. They reminded policymakers that leadership in these fields has been critical to the country’s economic strength and national security.

Examples of benchmarks identified by the group include the following:

• The proportion of U.S.-citizens in science and engineering (S&E) graduate studies within the U.S. is declining. From 1994 to 2001, graduate S&E enrollment in the U.S. declined by 10 percent for U.S. citizens but increased by 25 percent for foreign-born students. In 2001, approximately 57 percent of all S&E postdoctoral positions at U.S. universities were held by foreign-born scholars.
• There are rapidly increasing retirements from S&E jobs, leading to a potential shortage in the S&E labor market. More than half of those with S&E degrees in the workforce are age 40 or older. Unless more domestic college-age students choose to pursue degrees in critical S&E fields, the task force says, there is likely to be a major shortage in the high-tech talent required by the U.S. defense industry, key federal research and national defense agencies (e.g. the Department of Defense, Department of Energy and NASA), and the national laboratories.
• The U.S. share of S&E papers published worldwide declined from 38 percent in 1988 to 31 percent in 2001. Europe and Asia are responsible for the bulk of growth in scientific papers in recent years. U.S. output was passed by Western Europe in the mid-1990s, and Asia’s share of the total is rapidly growing.

Other benchmarks cited by the group include:

• Within the U.S., federal funding of basic research in engineering and physical sciences has experienced little to no growth over the last 30 years, as a percentage of GDP. Funding for physical science research has been in a 30-year decline. In addition, since the 1980s, there has been a shift in the source of funding for R&D. Private sector investment in R&D now far exceeds federal investment in R&D, providing more than 68 percent of all domestic R&D. However, private funding tends to focus on short-term results. Of these private funds, 71 percent were for development, not basic research.
• The U.S. share of worldwide high-tech exports has been in a 20-year decline. From 1980 to 2001, the U.S. share fell from 31 percent to 18 percent. At the same time, the global share for China, South Korea, and other emerging Asian countries increased from just 7 percent to 25 percent.

The Knowledge Economy compiles all of the above benchmarks, but does not provide recommendations. The report and a press statement containing some of the comments made by Task Force members is available at: http://www.futureofinnovation.org/

AAAS

"After a tough 2005 budget, we expected a tight 2006 budget, but it's striking how much the budget retreats from federal investments in science and technology in important areas," said Kei Koizumi, director of the R&D Budget and Policy Program at AAAS. "From the Hubble telescope to environmental R&D to defense support of basic research to investments in commercial technologies, the president's proposals would undo the gains of the last several years."

In his preliminary analysis of the Administration's FY 2006 budget, Koizumi shows the total federal R&D portfolio would rise $733 million to $132.3 billion, a 0.6 percent increase that would be below the expected 2 percent rate of inflation. "In real terms," Koizumi says, "the total federal R&D portfolio would decline for the first time since 1996."

The numbers do not bode well for America, Koizumi says, as world economic authorities are expressing concern about the U.S. deficit and the borrowing needed to close the gap. If approved by Congress in its current form, he adds, homeland security would be the clear winner, "the only R&D priority exempt from tough budgetary choices." The Department of Homeland Security's R&D budget would rise to $1.5 billion, an increase of $282 million, or 23.8 percent. Total homeland security spending, including programs in all federal departments, would rise 10.7 percent to $4.6 billion.

Although NASA's R&D budget would increase 4.9 percent to $11.5 billion, the agency would face "daunting challenges," according to the analysis. New funds would go to completing construction of the International Space Station and preparing for future Moon and Mars missions, but earlier proposals to send a robotic mission to service the Hubble Space Telescope would be scrapped, effectively ending its life.

Koizumi's preliminary analysis also details the FY 2006 R&D portfolios of federal agencies such as the Environmental Protection Agency, Department of Defense, National Science Foundation, NIH and the Department of Energy. The analysis and numerous tables and charts highlighting budget information by federal agency and historical data are available at: http://www.aaas.org/spp/rd/