Generic Poller Issues IQ 



nomic situation in the United States, the decreasing U.S. 

 advantage in science and technology relative to many of 

 the industrialized democracies is bound to be of con- 

 tinuing concern during the next 5 years. 



One factor that could have an appreciable influence on 

 the competitive economic position of the United States is 

 the effect on industry of U.S. environmental, health, and 

 safety regulations. Since regulatory policies in this coun- 

 try have in the past differed from policies in other indus- 

 trialized countries, the resultant additions to production 

 costs in the United States may in some cases place Amer- 

 ican industries at a competitive disadvantage (AAAS-6). 

 A notable example is the American pharmaceuticals in- 

 dustry, which is unable to market certain products in the 

 United States because of stringent testing procedures and, 

 as a result, has been increasing its foreign R&D invest- 

 ments more rapidly than its domestic investments 

 (NRC-14). President Reagan's regulatory reform policies 

 are expected to help address this problem. 



There may also be temptations during the next 5 years 

 to erect barriers against foreign imports to protect certain 

 endangered U.S. industries. However, because of result- 

 ing decreases in the incentives for industrial innovation 

 that normally accompany competition, such a course for 

 protecting against competition might lead to decreases in 

 needed R&D investments, with undesirable long-range 

 economic consequences (AAAS-6). 



Reciprocally, the issue of limiting U.S. exports of high 

 technology to the industrialized democracies is likely to 

 be debated. Since the export of U.S. -developed technol- 

 ogy can increase the relative competitive positions of 

 other countries, an important question is: Does the mone- 

 tary return to the United States for exported technology 

 adequately reflect the likely long-range costs in terms of 

 increased foreign competition? In approaching an answer 

 however, it is important to note that much technology is 

 transferred through American-owned subsidiaries in for- 

 eign countries and is therefore difficult to control. In 

 addition, any protectionist measures that could lead to 

 countermeasures against this country must take into ac- 

 count the important contribution to the U.S. balance of 

 trade from the exports of R&D-intensive industries at a 

 time when non-R&D-intensive industries have been regis- 

 tering trade deficits (SI-78). 



While technological competition with the industrial 

 democracies clearly is increasing, so are opportunities for 

 cooperation in a range of science and technology ac- 

 tivities. Incentives for such cooperation in increasingly 

 expensive R&D projects are likely to increase. The sci- 

 ence and technology capabilities of many of the indus- 

 trialized countries are roughly comparable to those of the 

 United States, as are some of the economic problems they 

 face. Inflation rates were generally higher in all those 

 countries in the late 1970s than they were during the 

 previous decade. In addition, rising energy costs and the 



continuing threat of interruptions in imported petroleum 

 supplies are serious problems.' 



A recent report of the Organization for Economic Co- 

 operation and Development (OECD) highlighted a num- 

 ber of problems related directly to science and technology 

 that are shared by the industrialized democracies:' 



(1) There is concern about an overall slowdown in indus- 

 trial innovation, productivity, and economic growth 

 and recognition that a strong capacity for industrial 

 innovation will be increasingly important in the fu- 

 ture. Consequently, the desirability for better coordi- 

 nation of R&D with the total system of engineering, 

 manufacturing, and marketing and for integrating sci- 

 ence and technology policy more closely with general 

 economic policy is widely recognized. In the United 

 States, recent tax and patent policy changes are ex- 

 pected to foster industrial innovation. 



(2) Broadly, there is recognition that external social fac- 

 tors may limit the potential contribution of science 

 and technology to economic growth and social ad- 

 vance. There is concern, for example, about the 

 effects of environmental, health, and safety regula- 

 tions on industrial innovation and productivity, and 

 there is recognition that disparities in regulatory pol- 

 icies among the industrialized countries need to be 

 minimized. As mentioned earlier, the Administra- 

 tion's regulatory reform initiatives are expected to 

 ease the burden of regulations on America's 

 industries. 



(3) There is general agreement that the financial and 

 human resources for conducting R&D are likely to be 

 constrained during the 1980s. Hence, there is recog- 

 nition of a need for improving both project selection 

 and evaluation procedures to optimize the use of avail- 

 able resources. 



(4) Given those resource constraints, there is concern 

 about the danger of providing insufficient long-term 

 investments in research capabilities. Considerable 

 concern exists about the decreasing growth rate of 

 academic research and the consequent recognition of 

 the desirability to take steps to preserve support for 

 basic research. There is a growing recognition that a 

 great deal of fundamental research in engineering 

 shares common characteristics with traditional basic 

 research in science and, therefore, needs similar lev- 

 els of support and protection. 



International science and technology cooperation could 

 help alleviate some of the problems. Cooperative govem- 

 ment-to-govemment programs with other industrialized 

 countries are especially beneficial to the United States 

 when the cost of solving problems is high and when the 

 problem area is remote enough from commercial applica- 

 tion possibilities so that proprietary considerations do not 



