Status Report

AIP FYI #12 R&D: Essential Foundation for U.S. Competitiveness In a Global Economy

By SpaceRef Editor
January 26, 2008
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The American Institute of Physics Bulletin of Science Policy News

Number 12: January 25, 2008

A new report by the National Science Board states its major conclusion in unambiguous language: “U.S. industry and the Federal Government are the primary pillars of financial support for the U.S. research and development (R&D) enterprise. The National Science Board (Board) observes with concern the indicators of stagnation, and even decline in some discipline areas, in support for U.S. R&D, and especially basic research, by these two essential patrons and participants.”

In conjunction with last week’s release of “Science and Engineering Indicators 2008,” a policy-neutral, largely statistical report (see, the National Science Board issued a companion document concluding with three major policy recommendations. This six-page companion piece, “Research and Development: Essential Foundation for U.S. Competitiveness in a Global Economy” reinforces the message of other reports published in the last few years, such as the National Academies’ “Rising Above the Gathering Storm” report. Steven C. Beering is the chairman of the National Science Board; Louis J. Lanzerotti is the chairman of the committee responsible for the report (who is also a member and Chair Designee of the AIP Governing Board.)

In formulating its policy recommendations, the Board cited the decline in the number of publications in peer-reviewed journals by industrial authors, suggesting a “de-emphasis by U.S. industry on expanding the foundations of basic scientific knowledge.” This decline is especially evident in the physical and biomedical sciences. Industrial support of academic basic research has also declined. The report continues, “Likewise, Federal Government support for academic R&D began falling in 2005 for the first time in a quarter century, while Federal and industry support for their own basic research has stagnated over the last several years.” Compounding this threat to U.S. competitiveness is the rise of “knowledge-based industries” in other nations.

There are many ways to measure the U.S. competitive position. Two measures of a country’s “contribution to knowledge” are patent applications and publications. While the percent of U.S. patent applications from inventors living in the United States declined from 55 percent in 1996 to 53 percent in 2005, the U.S. share of number of applications for patent protection in the United States, European Union, and Japan (“triadic filings”) continues to rise. The Board concludes: “The U.S. position in patent filings and in triadic patents suggests sustained U.S. leadership for inventions.”

The picture regarding publications is of concern, and here the Board highlights physics publications:

“Basic research articles published in peer-reviewed journals by authors from U.S. private industry peaked in 1995 and declined by 30% between 1995 and 2005 as industry research, and therefore publications, tended to shift away from basic research. Five broad fields – biological science, geosciences, chemistry, physics, and medical sciences – account for 95% of the industry basic research literature. The drop in physics publications was particularly dramatic: decreasing from nearly 1,000 publications in 1988 to 300 in 2005.

“The decline in physics publications by U.S. industry is likely reflected in the observed drop in share of highly influential S&E articles published by U.S. authors in peer reviewed journals: The U.S. has now dropped from first to second rank in physics over the 12-year period from 1992 to 2003. The U.S. retained the first rank in all other major fields in 2003, but overall lost share of highly influential articles, dropping from 63% to 58%. Other fields where the U.S. declined to near parity with the EU-15 in recent years are biology and chemistry, also traditional focus areas for industrial basic research publications. This most likely reflects, in part, the decline in U.S. industry authors’ publications, and flat (or decreasing as in the case of physics) industry support for its own basic research. In the field of engineering/technology, although the U.S. lost share while the EU-15 gained, the decline in U.S. share more importantly reflects the rapid rise in share by the East Asia-4 (comprising China, South Korea, Singapore, and Taiwan). U.S. annual growth in all S&E article publications in peer reviewed journals also slowed from 3.8% over the period from 1988 to 1992 to 0.6% from 1992 to 2003. Although the rate of growth also declined for the EU-15 and other S&E publishing centers, all exceeded the U.S. growth rate during both periods.”

The report later explains why it is difficult to get a complete picture of industrial innovation: “Patents and publications do not necessarily equate to innovation and thus do not reflect the totality of industrial innovation. In global, competitive, high technology industries, some innovations might be more cost effectively protected by means other than patenting. In addition, research and/or commercial priorities might direct limited resources towards further advances in research or to addressing how to apply the results of the innovation rather than publishing articles. As a result, any basic research that may have contributed to such processes is unknown to (and unrecorded in) the wider community. Further, under these conditions the wider community cannot be alerted to possible basic research directions that might be productive for achieving new breakthroughs.”

Other measurements of U.S. R&D present a mixed picture. The U.S. remains strong in its share of technology-oriented services, but the U.S. high-technology trade balance has declined significantly during the last decade. The U.S. trade balance in royalties and fees for intellectual property has remained strong, although the Board notes that this is more a reflection of previous innovations. Likewise, global R&D investment in the United States and elsewhere in the world is difficult to measure accurately.

The Board drew the following conclusion:

“The stagnation in industry support for its own basic research in this century, together with the current decrease in support of academic R&D and basic research by the Federal Government could over time have severe implications for U.S. competitiveness in international markets and for highly skilled and manufacturing jobs at home. However, the net economic effects on the Nation and on industry of the off-shoring of manufacturing capabilities are complex, and appropriate data do not exist for adequate analysis of present situations and future trends.

“For more than a quarter century U.S. industry has dominated the funding of U.S. R&D. The Federal Government continues to dominate research funding to the academic sector. The recent three-year decline in Federal obligations for academic research, the first since 1982, and the decrease of support by industry for basic research could pose significant problems in that academic researchers, primarily supported by Federal funds, are now likely to have less available funding and to be considerably less aware than previously of the major research challenges that face U.S. industry and industrial competitiveness. Further, with fewer industry researchers focusing on basic research, a company may be unable to readily tap into the expertise and facilities of the university community.”

The National Science Board offered three major policy recommendations:

1. “The Federal Government should take action to enhance the level of funding for, and the transformational nature of, basic research.”

2. “Industry, government, the academic sector, and professional organizations should take action to encourage greater intellectual interchange between industry and academia. Industry researchers should also be encouraged to participate as authors and reviewers for articles in open, peer-reviewed publications.”

3. “New data are critically needed to track the implications for the U.S. economy of the globalization of manufacturing and services in high technology industries, and this need should be addressed expeditiously by relevant Federal agencies.”

The entire report, as well as “Science and Engineering Indicators 2008” can be viewed at

Richard M. Jones
Media and Government Relations Division
The American Institute of Physics
(301) 209-3095

SpaceRef staff editor.