[House Prints 110-110]
[From the U.S. Government Publishing Office]
THE GLOBALIZATION OF R&D AND
INNOVATION: SCALE, DRIVERS, CONSEQUENCES,
AND POLICY OPTIONS
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COMMITTEE PRINT
BY THE
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MAY 2008
__________
Serial No. 110-A
__________
Printed for the use of the Committee on Science and Technology. This
document has been printed for informational purposes only and does not
represent either findings or recommendations adopted by this Committee.
Available via the World Wide Web: http://www.science.house.gov
______
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
MARK UDALL, Colorado LAMAR S. SMITH, Texas
DAVID WU, Oregon DANA ROHRABACHER, California
BRIAN BAIRD, Washington ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California TOM FEENEY, Florida
LAURA RICHARDSON, California RANDY NEUGEBAUER, Texas
PAUL KANJORSKI, Pennsylvania BOB INGLIS, South Carolina
DARLENE HOOLEY, Oregon DAVID G. REICHERT, Washington
STEVEN R. ROTHMAN, New Jersey MICHAEL T. MCCAUL, Texas
JIM MATHESON, Utah MARIO DIAZ-BALART, Florida
MIKE ROSS, Arkansas PHIL GINGREY, Georgia
BEN CHANDLER, Kentucky BRIAN P. BILBRAY, California
RUSS CARNAHAN, Missouri ADRIAN SMITH, Nebraska
CHARLIE MELANCON, Louisiana PAUL C. BROUN, Georgia
BARON P. HILL, Indiana VACANCY
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
The Globalization of R&D and Innovation:
Scale, Drivers, Consequences, and Policy Options
This document is being submitted by the staff of the U.S.
House of Representatives Committee on Science and Technology,
for the information of and use by the Members of the Committee.
It has not been reviewed or approved by the Members of the
Committee and may therefore not necessarily reflect the views
of all Members of the Committee. This document has been printed
for informational purposes only and does not represent either
findings or recommendations adopted by the Committee.
Introduction
During the 110th Congress, the Committee on Science and
Technology launched a major initiative directed at better
understanding the globalization of research and development
(R&D) and innovation. Four hearings, entitled, ``The
Globalization of R&D and Innovation,'' were convened to explore
the scale, drivers, and consequences of the movement of
science, technology, engineering, and mathematics (STEM) jobs
and facilities to foreign countries. The hearings focused on
four themes: the expected economic and technology impacts of
globalization; the higher education response; the factors that
attract R&D facilities to particular locations; and the impacts
on the science and engineering workforce. Expert witnesses the
magnitude of globalization, its causes, the expected impacts on
the U.S., and the implications for policy.
The globalization of R&D and innovation is a significant
emerging phenomenon that will change how America captures the
downstream benefits--such as high-wage jobs and technological
superiority--of its investments in innovation and R&D. In
addition, the rise of sovereign wealth funds formed by
countries interested in access to intellectual property and
intellectual capital from American companies adds a new
dimension to these questions. These changes require new
directions in U.S. innovation policy.
This report, compiled by the staff of the Committee on
Science and Technology, will summarize the findings from the
series of hearings and present policy recommendations for the
Congress to address the mounting challenges of the
globalization of R&D and innovation to America's economy and
workforce.
Background
One of the new aspects of globalization is that a larger
scale and scope of jobs have become newly tradable and those
jobs are increasingly vulnerable to offshoring. Economists
estimate that a large share of American science, technology,
engineering, and mathematics (STEM) jobs is vulnerable to
offshoring. Vulnerability does not mean that all of these jobs
will be lost. It does mean that many more jobs will be subject
to wage pressures from workers in low-cost countries as those
countries actively pursue those industries. Witnesses at the
Committee's four hearings provided estimates of expected
vulnerability and examples of jobs and operations that have
already moved offshore. However, without better tracking of
these transfers, it is difficult to analyze the likely impacts
of the types and numbers of jobs moving offshore.
Some major U.S. universities have responded to
globalization by building branch campuses abroad and
establishing joint ventures with foreign universities. There
are no good estimates of the scale and scope of all of these
ventures, but they appear to be relatively small to date.
However, experts agreed that many major U.S. universities are
exploring ways to significantly expand abroad, particularly in
low-cost countries. The decision-making process and criteria
are unique to each university but two primary purposes underlie
the moves: serving a rapidly expanding population of foreign
students who would not come to the U.S. and many of whom have
job opportunities at multi-national companies operating in
their home countries; and, offering opportunities for their
U.S. students a more international experience through study
abroad and for faculty more international collaboration.
There are both positive and negative economic effects from
globalization, but witnesses disagreed about the net effects,
particularly in the long-term. Three views about the impacts of
globalization emerged from the hearings. One view is that
globalization is very beneficial to the U.S. and any resulting
disruptions--such as job loss caused by offshoring and trade--
are small, mostly benign, and can easily be addressed without
significant policy change. Another view is that globalization
will be beneficial to the U.S. in the long run, but the
disruptions caused by offshoring will be considerable and
require significant changes in policy, particularly in the
social safety net for those who are disadvantaged. The final
view is that globalization is harmful to the U.S. economy in
the long-term. This view draws a distinction between free trade
and shifts in productive capacity between countries. Current
globalization trends are mainly comprised of shifts in
productive capacity and can be harmful to the country that is
moving its productive capabilities abroad.
Another new phenomenon is competition by low-cost countries
for R&D facility sites. Other countries are targeting R&D and
innovation facilities and are increasingly successful. The
criteria companies use for locating R&D facilities are
multifaceted, including lower costs, talent, and government
subsidies and incentives. Witnesses also pointed out that some
governments are requiring companies to place R&D facilities and
transfer technologies as a condition of market access.
The witnesses also testified that domestic and foreign
firms are building up significant levels of STEM workforce
capacity in low-cost countries. Some of these workers will
complement American STEM workers while others will use workers
in low-cost countries as substitutes. Identifying precisely how
many workers are being displaced remains difficult, but a
significant share of foreign workers are substituting for U.S.
STEM workers.
Summary of Hearings
On June 12, 2007, House Science and Technology Committee
Chairman Bart Gordon chaired the first hearing on the
globalization of innovation and R&D. The hearing explored the
implications of this trend on the U.S. workforce, the U.S.
science and engineering education pipeline, competitiveness,
economic growth, and America's innovation system.
The hearing witnesses were: Dr. Alan S. Blinder, Professor
of Economics at Princeton University, Director of Princeton's
Center for Economic Policy Studies, and Vice Chairman of the
Board of Governors of the Federal Reserve System from June 1994
until January 1996; Dr. Ralph E. Gomory, President of the
Alfred P. Sloan Foundation and Director of Research at IBM
Corporation from 1970 to 1986; Dr. Martin N. Baily, senior
fellow at the Peterson Institute for International Economics,
senior adviser to McKinsey Global Institute and Chair of the
President's Council of Economic Advisers from 1999 to 2001;
and, Dr. Thomas J. Duesterberg, President and CEO of the
Manufacturers Alliance/MAPI.
The witnesses discussed the implications of the
globalization of innovation and R&D. They concluded that an
increasing share of innovation and R&D work is being offshored
but differed on the long-term implications to the U.S. They
also pointed out that innovation is much broader than just
formal R&D activities and cautioned that tracking the trends as
well as policy remedies should not be too narrowly focused on
formal R&D. While the witnesses provided a variety of policy
recommendations, they concurred that significant policy
responses are needed. They also concurred that passage of the
America COMPETES Act (P.L. 110-69) was an important and
significant first step in ensuring America benefits from the
globalization of R&D and innovation.
On July 26, 2007, Chairman Brian Baird of the Subcommittee
on Research and Science Education held the second Full
Committee hearing on the globalization of innovation and R&D,
which explored how globalization affects America's
universities. The U.S. higher education system is a principal
source of America's preeminence in STEM fields. As STEM
offshoring increases competition for U.S. STEM workers,
universities are responding by modifying their curricula to
help their STEM students better compete. Globalization also
enables American universities to venture abroad and build
programs and campuses overseas to serve the growing demand of
foreign STEM students. The hearing explored the
internationalization of American universities and the
implications for America's competitiveness.
The hearing witnesses were: Dr. David J. Skorton, President
of Cornell University; Dr. Gary Schuster, Provost and Vice
President for Academic Affairs of Georgia Institute of
Technology; Mr. Mark Wessel, Dean of the H. John Heinz III
School of Public Policy and Management at Carnegie Mellon
University; and Dr. Philip Altbach, Director of the Center for
International Higher Education and J. Donald Monan Professor of
Higher Education at Boston College.
The witnesses provided expert opinions on the university
response to the globalization of innovation and R&D. They
concurred that the American higher education system is the envy
of the rest of the world, conveying a special advantage to
America particularly in STEM fields. However, they emphasized
that other countries have recognized the importance of higher
education in fostering innovation and have begun to invest
heavily in their higher education systems. The witnesses also
testified American universities have begun establishing
campuses abroad, and said that this emerging phenomenon is
likely to reshape the nature of the American higher education
system.
There are no good data on the scale of university presence
abroad but the witnesses agreed that establishing a substantial
presence abroad is part of the strategic plan of nearly every
major research university. Because the trend is so new, the
witnesses could only speculate on how this might affect the
U.S. innovation and STEM workers but they all believed that the
positives would outweigh the negatives. They asserted that for
American universities to remain the best in the world, they
must be able to attract the best faculty and students
regardless of national origins.
Dean Wessel acknowledged a potential downside of the
globalization of higher education, saying, ``As universities
become more global, we are effectively, if unintentionally,
increasing the capacity of firms and individuals abroad, to do
jobs currently done here in the United States.'' He then went
on to say that he believed that this problem would be small and
would be easily outweighed by its benefits. The witnesses only
vaguely described their efforts to improve their curricula to
improve the competitiveness of U.S. STEM students. This latter
activity seems to be subsumed by the universities interests in
expanding foreign presence.
On October 4, 2007, Chairman David Wu of the Subcommittee
on Technology and Innovation held the third hearing on the
globalization of innovation and R&D. This hearing which
explored the factors companies use to locate their research and
development (R&D) and science, technology, and engineering
intensive facilities. Witnesses discussed the policies other
countries use to attract such facilities, and how to make the
U.S. more attractive to companies. Firms now have many options
around the globe when deciding where to locate R&D, design, and
production facilities. This hearing explored the trends in, and
factors for, site selections for science, technology, and
engineering intensive facilities and the policies needed to
ensure that the U.S. remains attractive for these investments.
The hearing witnesses were: Dr. Martin Kenney, Professor of
Human and Community Development at University of California,
Davis, and Senior Project Director at the Berkeley Roundtable
on the International Economy, University of California,
Berkeley; Mr. Mark M. Sweeney, Senior Principal in McCallum
Sweeney Consulting, a site selection consulting firm; Dr.
Robert D. Atkinson, President of the Information Technology and
Innovation Foundation; Mr. Steve Morris, Executive Director of
the Open Technology Business Center; and, Dr. Jerry Thursby,
Ernest Scheller, Jr. Chair in Innovation, Entrepreneurship, and
Commercialization at Georgia Institute of Technology.
The witnesses testified that while the globalization of R&D
is not a new phenomenon, but that low-cost countries, such as
India and China, have recently become able to attract a
significant share of STEM-intensive facilities and jobs.
Product localization, government pressure, proximity to key
customers, lower costs, and supply of high-quality low-cost
STEM workers are some of the key factors that have attracted
companies to India and China specifically. There was some
disagreement of the relative importance of each of these
criteria, but the witnesses concurred that government data
tracking the location and function STEM facility investments
are highly limited. Most believed the commanding lead that the
U.S. has traditionally enjoyed in R&D investments is being
challenged in new ways by low-cost countries. They also pointed
out that the competition from developing countries for R&D
facilities has ratcheted up competition for advanced technology
facilities by other developed countries.
The fourth, and final, hearing was held by Chairman Wu
before the Subcommittee on Technology and Innovation on
November 6, 2007. This hearing explored the impact of the
globalization of innovation and R&D on the American science,
technology, engineering and mathematics (STEM) workforce and
students. Witnesses discussed the new opportunities and
challenges for workers created by globalization, including how
globalization is reshaping the demand for STEM workers and
skills. The witnesses also addressed how offshoring is
affecting the STEM workforce pipeline and how incumbent workers
are responding to globalization.
The hearing witnesses were: Dr. Michael S. Teitelbaum, Vice
President of the Alfred P. Sloan Foundation; Dr. Harold
Salzman, Senior Research Associate at the Urban Institute; Dr.
Charles McMillion, President and Chief Economist of MBG
Information Services; Mr. Paul J. Kostek, Vice President for
Career Activities of the Institute for Electrical and
Electronics Engineers-USA; and Mr. Henry Becker, President of
Qimonda North America.
The witnesses testified that an increasing number of U.S.
STEM jobs are tradable and thus vulnerable to offshoring. In
some cases, that vulnerability has made STEM fields less
attractive to students and has made incumbent workers more
pessimistic about future prospects for their careers. Incumbent
workers are worried about determining whether their jobs are
easily out-sourced but face a void of information.
The witnesses said there is no systemic shortage of STEM
workers and that a policy response aimed at producing more
scientists or engineers, at least in traditional disciplines,
is misdirected. Instead, the key is to create a system that
produces the right kinds of STEM workers at the right times and
ensures that STEM jobs are attractive. This response to
globalization would help to address employer complaints about
not having enough American workers with the right sets of
skills while avoiding a glut of disaffected STEM workers. The
witnesses also concluded that education offerings, including
continuing education and distance learning, have not kept up
with the needs of incumbent workers and employers.
Committee Findings
The globalization of innovation and R&D is increasing in
scale and scope. It is a major structural shift making
significant impacts on the key components of the U.S. science
and engineering enterprise, and as a result it has important
implications for the economy and national security. Many of the
developments are still unfolding, making it more difficult to
predict their impacts. For instance, only very recently have
low-cost countries, such as India and China, been able to
attract innovation and R&D facilities. In response, top U.S.
research universities are beginning a new aspect of
internationalization by planning and building branch campuses
abroad, often in low-cost countries. These are both radically
new types of structural changes to the U.S. research enterprise
and no one is able to model or predict their likely effects.
Policies focusing on improving U.S. science and engineering
workers, education, and investments are critically needed to
respond to the globalization of innovation and R&D. Witnesses
at the Committee's hearings agreed that the data currently
collected are woefully insufficient and inadequate to help
policy-makers, the private sector, educators, and individuals
make good decisions. The shifts are happening very quickly
putting a premium on timely data.
There was some disagreement at the hearings about the
potential future scale and the scope of offshoring of science
and engineering jobs. In his research, Alan Blinder estimates
that most STEM jobs are vulnerable to offshoring. Others, such
as Ashok Bardhan and Cynthia Kroll from the University of
California, Berkeley, have found similar results. Martin Baily
said that while he agrees that an increasing share of STEM jobs
will become vulnerable, believes that the number of jobs
offshored will be smaller and speed of the transition will be
relatively slow--enabling U.S. workers ample time to adapt.
There is also disagreement among experts about the
characteristics of the jobs that will be vulnerable to
offshoring. Dr. Baily asserts that lower wage, lower skill jobs
as well as jobs that are easily automated are most vulnerable.
Dr. Blinder asserts that there is no correlation between
vulnerability and wage or skill level, but rather that other
characteristics like whether a job requires face-to-face
contact are more important. Other witnesses point out that many
very high-skill R&D jobs are in fact moving or are being
created in China and India. The characteristics of vulnerable
jobs are critical to identify since educators and workers are
being advised to focus on less vulnerable occupations and
skills. However, they may be making bad bets if the model they
are using for decision-making is inaccurate.
There was also contention about globalization's expected
effects on the U.S. economy and workforce. Globalization is
often confused with theories of free trade. The shifts in the
production of goods and delivery of services overseas often
result in changes in productivity in sending and receiving
countries. These productivity changes are not necessarily
benign and can actually harm the sending country. They are not
the same thing as free trade. The witnesses disagreed about
whether the effects would be harmful or helpful to the U.S. as
a whole but did agree that some workers and firms would be
harmed. As a result, all supported increasing the safety net
for workers with programs to improve unemployment insurance,
retrain incumbent workers, offer trade adjustment assistance,
and ensure portability of health and pension insurance. They
also agreed that greater investments in K-12 education and R&D
would be helpful, but some felt that this was insufficient
saying that much more needed to be done to attract and retain
high-wage jobs.
The U.S. remains an attractive place to perform R&D and
innovation. It has many attributes--top research universities,
a talented workforce, and a large consumer market--to attract
and retain R&D and innovation work. But some witnesses,
including Ralph Gomory, asserted that the globalization of
innovation and R&D is rendering obsolete the conventional
notion that investments in R&D lead to localized spill-over
benefits. Others suggested that the U.S. should be focusing
more efforts on assimilating innovative technologies developed
overseas, though some disagreed with this premise. They instead
asserted that the localized (or national) payoff from R&D
investments will continue to be large and increasing those
investments should be a centerpiece of U.S. policy.
Many countries are using policies to attract R&D and
innovation work and there is clear evidence that these
activities are moving to low-cost countries. U.S.
multinationals have been rapidly ramping up their engineering
and R&D ventures in India and China. The type of work does vary
by country, however. Witnesses testified that the R&D in China
tended to be more oriented towards product localization,
developing products for the local Chinese market whereas the
R&D in India tended to be focused on reducing costs and time-
to-market for products intended for the global market. The
conceptualization and design of new products, strategic
research planning, and product roadmapping has mostly remained
in the U.S.
The current status and expected trends in offshoring of
jobs vary based on occupation, skill set, industry sector,
intellectual property regime in the destination country, and a
myriad of other factors. For instance, the information
technology services sector has built up very substantial head
count in low-cost countries in a short period of time, while
the pharmaceutical industry has been slower to do so.
India and China are aggressively pursuing R&D and
innovation based investments and jobs and have been successful
at attracting a number of companies. Policies vary across
countries, but some examples include tax incentives, capital-
oriented grants, export subsidies, and maintaining an under-
valued currency. Also, China particularly uses governmental
pressure, either informally or by tying a firm's access to the
market to technology transfer or the establishment of an R&D
center in the country. A few hearing witnesses, including
Robert Atkinson, identified these practices as mercantilist and
unfair trade. The witnesses alleged that most of the instances
of forced technology transfer and licensing are done through
informal back-room negotiations rather than formal policies.
Multinational firm executives will not speak publicly about
these coercive tactics because they fear retribution and
retaliation. However, there are some documented instances of
forced technology transfer in the electric power, automotive,
and aircraft sectors. In a recent report prepared for the Small
Business Administration (SBA), one of the witnesses, Charles
McMillion, describes some of these instances. In the electric
power sector, McMillion cites a Wall Street Journal story about
General Electric being required ``to form joint ventures with
the state-owned Chinese power companies. GE was also required
to transfer to their new partners technology and advanced
manufacturing guidelines for its `9F' turbine, which GE had
spent more than a half billion dollars to develop.''
\1\,\2\ His report also cites aviation industry
experts David Pritchard and Alan McPherson, who conclude that,
``There is no doubt that suppliers are expected to transfer
technology to their Chinese out-sourcing partner or offshore
facility that will be utilized for China's mission to develop
its own large commercial aircraft (twin-aisle).'' \3\ In the
automotive sector, ``since 2004 China requires that each new
auto production facility be accompanied by a new or expanded
R&D center.'' \4\
---------------------------------------------------------------------------
\1\ Charles W. McMillion, ``China's Soaring Financial, Industrial
and Technological Power,'' project report prepared for U.S. Small
Business Administration, p. 9, September 2007.
\2\ ``China's Price for Market Entry: Give Us Your Technology,
Too--GE Shares Generator Plans To Win $900 Million Deal; Gray Area in
WTO Rules Kathryn Kranhold, The Wall Street Journal, February 26, 2004,
as cited in McMillion.
\3\ Charles W. McMillion, ``China's Soaring Financial, Industrial
and Technological Power,'' project report prepared for U.S. Small
Business Administration, p. 31, September 2007.
\4\ Ibid, pp. 37-38.
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The U.S. higher education system is a principal source of
America's preeminence in STEM fields. As STEM offshoring
increases, the response by higher education is critical. The
July hearing explored two types of responses by American
universities. First, what are the universities doing to modify
curricula to help their STEM students better compete
internationally? Second, how American universities are
globalizing by building programs and campuses overseas to serve
the growing demand from foreign students? The witnesses
described some efforts targeted at curricula changes for
domestic STEM students, but there was great interest by
American universities to establish overseas branches and
programs. The university representatives agreed that by
becoming more global, the universities would become more
competitive, raising standards and quality, and all students
would reap benefits from a faculty that was more globally
oriented and opportunities to study abroad.
There was also a strong consensus that the globalization of
American universities is just beginning and is almost certain
to grow rapidly as many top U.S. research universities seek to
be global institutions. Data on how many American universities
have branch campuses and programs abroad are poor.
The motivations for globalizing are manifold, and the
actual decision-making is highly customized to a company's
situation. However, U.S. national and/or local interests are
only an indirect part of the equation. While it would be ideal
if the globalization of universities yields better outcomes for
the U.S., especially the STEM workforce, the potential impact
has not been studied nor is it considered a critical decision
point. Mark Wessel, a witness at the July hearing, did discuss
possible detriments to U.S. students saying, ``As universities
become more global, we are effectively, if unintentionally,
increasing the capacity of firms and individuals abroad, to do
jobs currently done here in the United States.'' He went on to
say that he believed that the net benefits would far outweigh
any costs.
Incumbent STEM workers and students are concerned that
globalization will negatively affect their career prospects.
There is widespread support for improving K-12 science and math
education, but significant disagreement about whether there is,
or will be, a shortage of U.S. STEM workers. However, there is
no evidence that U.S. STEM shortages, if they exist, are
causing firms to offshore work. Incumbent STEM workers are
concerned that policy is overly focused on the pipeline and
hasn't spent enough time addressing under-utilization of
incumbent and experienced workers.
Issues and Policy Recommendations
Ensure That America's Capacity to Innovate Is Fully Funded
There was consensus that the types of programs authorized
in the America COMPETES Act are a significant and important
step towards ensuring America's continued competitiveness in
the face of rising competition in STEM intensive sectors.
1. LFully fund the America COMPETES Act to ensure the
U.S. is investing sufficiently in science and
engineering research, and STEM education from
kindergarten to graduate school and postdoctoral
education.
Unleash America's Best and Brightest Minds to Address the 21st Century
Competitiveness Challenge
There is consensus that America faces major challenges to
its capacity to innovate and its leadership in STEM sectors.
These challenges, which will be difficult to address, are still
evolving. They will require long-term, sustained, and wide-
ranging responses from workers, companies, and the government.
Programs need to be established to bring the best and brightest
minds to help America navigate through these uncharted waters.
1. LThe National Science Foundation should establish a
program studying the globalization of R&D and
innovation and its effects on the America's capacity to
innovate. The program will be interdisciplinary in
nature and oriented towards policy effects. A symposium
presenting results to policy-makers could be convened,
with the program drawing lessons from the International
Economic Policy Research conducted in 1981. Close
collaboration between researchers and policy-makers
would be required.
2. LA Presidential Advisory Commission to provide
advice on the implications of the globalization of R&D
and innovation should be considered. The Commission
would convene a symposium covering the current state of
knowledge within three months of its establishment.
Commission membership would include an equal
representation of leaders from STEM worker groups and
labor unions, business, and universities. It would have
authority to order research studies and papers as
needed, convene meetings, and issue interim or special
reports at the Commission's discretion. A final report
from the Commission could provide policy-makers with
recommendations for action.
Collecting Additional, Better, and Timelier Data
There is a consensus that poor data has severely limited
analysis of the globalization of innovation and R&D, thus
hindering appropriate public and private responses. To remedy
this situation, the National Science Foundation could work with
the appropriate agencies within the Departments of Labor and
Commerce to begin collecting additional, more timely data on
the globalization of R&D and innovation. The broad-based effort
would include a number of new initiatives.
1. LThe NSF Science Resources Statistics (SRS) Division
should augment existing data on multinational R&D
investments to include detailed STEM workforce data.
This data could track the STEM workforce for
multinational companies in the U.S. versus other
countries. Details should include occupation, level of
education, and experience. These data will be reported
on an annual basis and in a timely manner such that the
data are from the most recent fiscal year reported by
the companies.
2. LThe NSF SRS Division should also collect detailed
information on how much and what types of R&D and
innovation activities are being done overseas.
3. LThe NSF Social, Behavioral, and Economic Sciences
(SBE) Directorate should institute a research program
identifying the characteristics of jobs that make them
more or less vulnerable to offshoring. The program
would include a study of estimating the numbers of jobs
that have been lost to offshoring.
4. LThe NSF SRS Division should approximate the extent
of U.S. university globalization. It could then track
trends in university globalization.
5. LThe NSF SBE Directorate should identify the impacts
of university globalization on the U.S. STEM workforce
and students and institute a research program
identifying and disseminating best practices in
university globalization.
6. LThe Government Accountability Office (GAO) could
conduct a study to identify the amount and types of
U.S. Government procurement that are being offshored.
7. LThe Department of Commerce could implement
recommendations from prior studies and reports to
improve its collection of trade in services data.
Creating Better Career Paths for STEM Workers
STEM offshoring has created a pessimistic attitude among
students and incumbent workers about future career prospects.
The U.S. needs new programs to create better career paths for
STEM workers including improved continuing education, a
sturdier safety net for displaced workers, improved labor
market and career information, an expanded pool of potential
STEM workers that better utilizes workers without a college
degree, and improved rates of successful re-entry into the STEM
labor market after voluntary and involuntary absences.
1. LThe National Science Foundation should create a
program to improve the adoption and use of low-cost on-
line education targeted at incumbent STEM workers. The
program would coordinate with the appropriate
scientific and engineering professional societies. The
pilot program could assess the current penetration
rates of on-line education for STEM workers and
identify barriers to widespread adoption.
2. LThe U.S. Department of Labor could work with the
appropriate scientific and engineering professional
societies to create a pilot program for continuous
education of STEM workers and to re-train displaced
mid-career STEM workers. The program could complete an
assessment of the specific needs of STEM workers and
the barriers to meeting them. This assessment would be
made through a survey of STEM workers and scientific
and engineering professional societies.
3. LThe NSF SRS Division should issue a report on
improving the dissemination of STEM labor market
signals, and begin reporting these data on a periodic
basis. The report will assess the current state of
labor market signals, and ways in which they may be
distorted. The focus of the report would be on how
workers and students receive information on the current
and future prospects for specific STEM careers. The
report will include the appropriate data from existing
Department of Labor collections.
4. LThe National Academies could form a study panel to
identify opportunities in STEM careers for students who
do not go to college. This study would identify how
many workers enter STEM careers without formal college
degrees and the barriers for additional workers,
without college degrees, to enter STEM careers. It
could also recommend ways to overcome those barriers.
5. LThe National Academies could identify effective
strategies for displaced STEM workers to more easily
re-enter the STEM workforce. STEM workers are more
likely to leave the workforce, voluntarily and
involuntarily, for extended periods of time.
6. LThe Congress could extend Trade Adjustment
Assistance to services workers since many STEM workers
work in the services sectors.
Improve the Competitiveness of the Next Generation of STEM Workers
As universities globalize and multinational firms take the
latest tools and technologies to STEM workers in low-cost
countries, American STEM workers must find new ways to compete.
They can compete by finding new opportunities and niches in the
types of jobs and tasks that will remain geographically sticky
to the United States. Those opportunities and niches for
American STEM workers need to be identified. Entrepreneurship
and innovation training have been identified as a comparative
advantage for American STEM workers that are yet to be fully
exploited.
1. LThe National Academies could form a study panel to
identify the types of curricula reforms that are needed
in response to globalization. The goal would be to
ensure that U.S. STEM students graduate with the best
skills to compete in the world.
2. LThe National Academies could also form a study
panel to examine best practices in teaching innovation,
creativity and entrepreneurship to STEM students.
3. LThe National Science Foundation should encourage
expanded study abroad opportunities for STEM students
to improve their ability to work in global teams and
foreign language skills.
Review University Technology Commercialization Efforts
Witnesses pointed out that the statutes governing
university technology licensing are outdated, inhibit
university-industry collaboration, and need to be reviewed and
revisited. As other countries invest more in their research
universities, companies will have greater opportunities to
partner with them. To ensure that U.S. universities are
competitive, government policies on university technology
licensing such as the Bayh-Dole and the Stevenson-Wydler Acts
should be reviewed.
1. LThe National Academies could study the role of
university technology licensing to inhibiting or
accelerating the commercialization of technologies
supported by federally funded research. The study would
identify the various policies and practices that
universities use to negotiate their technology
licensing agreements.
Establish Tax and Trade Policies That Put the U.S. on Equal Footing for
Attracting High-Wage STEM Jobs
U.S. tax and trade policies currently discourage
investments in high-wage STEM jobs by companies. Changes should
be made to tax and trade policies to improve America's ability
to recruit and retain R&D and innovation facilities.
1. LThe U.S. Government could increase and extend the
Research and Experimentation tax credit. The U.S. has
fallen from first to 17th in its generosity amongst
OECD countries.
2. LThe Department of Commerce could investigate
``unfair'' trade practices such as linking market
access to a country with technology transfer,
undervalued currencies, and theft of intellectual
property.
3. LThe U.S. Government could reform the tax system to
favor the creation high-wage jobs and disfavor the
creation of low-wage jobs.