784 



relation between government and Industry 1n the U.S., whatever its historical 

 justification and merits in spurring competition, serves often to put American 

 companies at a disadvantage abroad when competing with companies that are 

 directly supported and often subsidized by other governments. This is 

 particularly relevant in high-technology industries, as companies in other 

 countries are now able to compete as technological equals for the major new 

 markets that will determine future economic strength. There are obviously 

 many complex and contentious factors that must be addressed in this issue, but 

 they must be addressed. The economic stakes are high. 



Of course, the key determinant of America's competitive international 

 technological position is the strength and innovativeness of its high 

 technology industry. Domestic science policy, including support for RAD. tax 

 incentives, regulations, quality and adequacy of the education establishment, 

 and other elements will crucially affect the economic scene in years to come. 

 (The proposed reduction of support for science education is particularly 

 disturbing for that reason.) In addition, specific tax and other policies 

 that bear directly on industry's decisions to carry out R&D abroad or in the 

 U.S. will require examination, though it should not be an automatic conclusion 

 that overseas R&D by American firms is necessarily against the U.S. interest. 

 Depending on the specifics, it can contribute directly to American R&D 

 objectives, can enhance 'the possibilities for cooperation on large-scale 

 projects {of which more below), and can be an important contributor to 

 knowledge more generally, for the benefit of all. 



One of the greatest dangers of the current economic malaise in Western 

 countries, coincident with serious competition from third world countries in 



