The last three years have seen increasing concern over the scientific and technological competitiveness of the United States vis a vis other industrialized and developing nations. These concern reached a zenith in 2006 with the publication of “Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future” by the National Academies of Science.[1]

Examining any number of objective metrics shows that the “times are a changing” when it comes to scientific discovery: A) PhDs in Science and Engineering: By 2010 the European Union will grant roughly 2 PhDs in Science and Engineering for every one American PhD [2]. B) Scientific Publications: Since 1998 there has been an increase in scientific publications with international co-authorship with the EU, Japan, China, and Asia becoming increasingly prolific. C) Patents: American inventors in 2002 accounted for 52% of all patents granted in the United States. However, foreign patent applicants grew from 44% (1996) to 48% (2003) [3].

While there are numerous reasons for these changes (increasing population size and focus on science and engineering in China and India, more supportive basic research agenda, tax credits, etc) the conclusion that scientific and technological innovation will become more globally distributed seems certain.

The decentralization of technological and scientific innovation poses clear economic challenges for the United States. As Adam Segal noted in his 2004 article “Is America Losing its Edge” in Foreign Affairs: “For 50 years, the United States has maintained its economic edge by being better and faster than any other country at inventing and exploiting new technologies.”

One of the primary reasons this competitive edge existed was because basic research conducted in American Universities was transferred quickly to from the lab bench to the marketplace by industry. There exists a unique synergy between public research and private sector markets in the United States that can perhaps best be demonstrated by looking at the interaction and leveraged public and private sector investment that occurred from 1965 to 2000 in the area of information technology (see attached graph from National Academy of Sciences, 2003).

So, what are the likely impacts of growing decentralization of scientific and technological innovation?

First, in the short term that there will be an almost xenophobic reaction to the loss of primary production of scientific discovery in the United States that will manifest itself in concern for national security. As the Task Force on American Innovation led by former House Speaker Newt Gingrich noted “A robust research portfolio is a necessary part of a national security strategy that relies on knowledge and technology to keep the United States safe in a dangerous world.” These concerns will lead to short-term increases in research funding domestically but these will be tempered by the Iraq war, record budget deficits, and the entitlement crisis.

Second, American Universities will become increasingly involved in international scientific projects and global research partnerships. This trend will become increasingly dynamic as global problems such as climate change become crisis on the research agenda at the same time that new research talent is being produced in Asia and India.

Third, and most importantly, the American marketplace will need to develop new mechanisms for benefiting from technological innovations that are not produced in the American marketplace [5]. In these regards, the United States still appears to have a competitive edge in understanding how basic academic research can lead to applied research with industry. Increasingly, as seen in the recent King Abdullah University for Science and Technology (KAUST) recruitment efforts, American universities will be targeted not just for their academic skills but also for insight into how to build sustainable models for technology transfer.

[1]NAS Gathering Storm Report, http://www.nap.edu/catalog.php?record_id=11463
[2] Richard Freeman, National Bureau of Economic Research, July 2005.
[3]+ [4] National Science Board, National Science Indicators, 2006
[5] Richard Freeman, Does Globalization of the Scientific/Engineering Workforce Threaten U.S. Economic Leadership, July 2005, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=755693