Innovation Policy Needs Accurate Scorekeeping

It’s too bad the international competition for science and engineering innovation isn’t as simple as soccer or baseball; keeping score would be so much easier. To make it more complicated the commentators—think tanks—are watching the game through different lenses. A recent RAND Corporation report called the country a “dominant leader” in global science and technology, but according to a paper released yesterday, the Information Technology & Innovation Foundation found the RAND study off-color, offering a rosy assessment where none was warranted.

Since the 2005 release of the National Academies’ “Rising Above the Gathering Storm” report, discussion in the research, innovation, and business communities has swirled around national indicators of science and engineering clout. International competition is always rising, and affects U.S. economic power and prosperity.

In June, RAND, with support from the Department of Defense, released its positive report on America’s science and technology competitiveness. The report cites high percentages of spending on R&D and employment of Noble Prize winners as indicators of R&D health. Additional support from foreign students and talent has helped the United States “build and maintain its worldwide lead, even as many other nations increase their spending on research and development,” write the authors.

But ITIF disagrees.

At yesterday’s event announcing the release of the think tank’s report, titled “RAND’s Rose-Colored Glasses: How RAND’s Report on U.S. Competitiveness in Science and Technology Gets it Wrong,” ITIF President Robert Atkinson, co-author, moderated a presentation with innovation policy gurus explaining how the June report is flawed both structurally and analytically. Atkinson said the RAND Corporation was invited to discuss the issue in conjunction with ITIF, but they declined. In a packed room, Stephen Ezell, a senior ITIF analyst and an author of the report, explained how the RAND study has an incomplete history of S&T policy and measurements of R&D health. The specific problems Ezell addressed include:

• Framing the wrong fundamental question regarding the S&T competitiveness debate.
• Providing an incomplete historiography of U.S. S&T policy development, particularly policies developed in response to previous challenges to U.S. S&T competitiveness.
• Using inappropriate or incomplete benchmark metrics to assess U.S. S&T and economic competitiveness. ITIF measures R&D expenditures of countries as a share of GDP, unlike RAND, which measures the raw financial expenditures.
• Under-emphasizing within the report a number of indicators, including R&D intensity, the trade deficit in advanced technology products, and a downward trend in world share of R&D investments after 1998, which clearly demonstrate trends of weakening U.S. S&T competitiveness.
• Failing to include certain key measures needed to deliver a true assessment of U.S. S&T competitiveness, such as the U.S. trade deficit of $700 billion in 2007, and a $53 billion annual trade deficit in advanced technology products.

Using available time-series data sets—ending by 2003 at the latest in most cases—that are not reflective of the competitive challenge that has emerged since 2000 and do not adequately reflect the competitive landscape of mid-2008.

According to the panel, globalization and outsourcing negatively affect R&D like they affect low-wage jobs. For example, Intel’s Israeli-based R&D program made improvements on their microprocessors, and rather than forcing the two groups to coordinate from different continents, Intel subsequently built a $4 billion manufacturing plant near the R&D facility.

“Intel’s experience in Israel—another country with a highly favorable R&D tax regime—is instructive,” the report states, “and confounds the received wisdom that U.S. companies may outsource their manufacturing but will keep higher-value added activities such as design or R&D in the home country.”

Both the RAND and ITIF reports claim that the United States currently leads the world in S&T, but ITIF believes the U.S. is losing that lead to stiff competition from Asia and Europe. These international governments are “attuned to the changing world order,” as Jim Turner and Maryann Feldman argued earlier this year in Science Progress. The U.S. government needs to catch up with history to stay ahead as innovators.

“We as a nation badly need to update our view to include the role of government in science and technology in the radically new environment of 21^st century communications technologies, and to debate new ways of working together on open innovation,” Turner and Feldman wrote.

Tags: events, Innovation

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