Technology Strategy

Since World War II the federal government has accepted its role as basic research supporter. But it cannot be concerned with basic research, only. The shift to a world economy and the development of technology has meant that in many areas the scale of technology development has grown to the point where, at least in some cases, industry can no longer support it alone.

The United States, however, has been ambivalent about the government role in furthering the generic technology base, except in areas such as defense, in which government is the main customer. In contrast, our

foreign competitors often have the advantage of government support, which reduces the risk and assures a long-term financial commitment.

Nobody questions the government's role of ensuring that economic conditions are suitable for commercializing technologies. Fiscal and monetary policies, trade policies, R&D tax and antitrust laws, and interest rates are all tools through which the government creates the financial and regulatory environment within which industry can compete. But this is not enough. In addition, government and industry, together, must cooperate in the proper development of generic precompetitive technology in areas where it is clear that individual companies or private consortia are not able to do the job.

In many areas, the boundary lines between basic research and technology are blurring, if not overlapping completely. In these areas, generic technologies at their formative stages are the base for entire industries and industrial sectors. But the gestation period is long; it requires the interplay with basic science in a back-and-forth fashion. Developing generic technologies is expensive and risky, and the knowledge diffuses quickly to competitors.

If, at one time, the development of generic technology was a matter for the private sector, why does it now need the support of government?

First, it is not the case that the public sector was not involved in the past. For nearly 40 years, generic technology was developed by the U.S. in the context of military and space programs supported by the Department of Defense and the National Aeronautics and Space Administration. But recent developments have undermined this strategy for supporting generic technology:

• As I already said, the strategic technologies of the future will be developed increasingly in civilian contexts rather than in military or space programs. This is the reverse of the situation that existed in the sixties and seventies.

• American industry is facing competitors that are supported by their governments in establishing public/private partnerships for the development of generic technologies, both in the Pacific Rim and in the EEC.

• What's more, the cost of developing new technologies is rising. In many key industries, U.S. companies are losing their market share to foreign competitors—not only abroad but at home, as well. They are constrained in their ability to invest in new, risky technology efforts. They need additional resources.

But let's be clear . . . 

The "technology strategy" that I'm talking about is not an "industrial policy." Cooperation between government and industry does not mean a centrally controlled, government-coordinated plan for industrial development. It is absolutely fundamental that the basic choices concerning which products to develop and when must remain with private industry, backed by private money and the discipline of the market. But we can have this and also have the government assume a role that no longer can be satisfied by the private sector.

Cooperation is also needed between industry and universities in order to get new knowledge moving smoothly from the laboratory to the market. Before World War II, universities looked to industry for research support. During and after the war, however, it became easier for universities to get what they needed from the government, and the tradition slowly grew that industry and universities should stay at arm's length. But this was acceptable only when government was willing to carry the whole load, and that is no longer true. Today, neither side can afford to remain detached.

Better relations between industry and universities yield benefits to both sectors. Universities get needed financial support and a better vantage point for understanding industry's needs. Industry gets access to the best new ideas and the brightest people and a steady supply of the well-trained scientists and engineers it needs.

Cooperation also means private firms must learn to work together. In the U.S., at least in this century, antitrust laws have forced companies to consider their competitors as adversaries. This worked well to ensure competition in the domestic market, but it works less well today, when the real competition is not domestic, but foreign. Our laws and public attitudes must adjust to this new reality. We must understand both that cooperation at the precompetitive level is not a barrier to fierce competition in the marketplace and that domestic cooperation may be the prerequisite for international competitive success.

The evolution of the Semiconductor Manufacturing Technology Consortium is a good example of how government support and cooperation with industry leads to productive outcomes.