The Contributions of Academic Science to Greater Competitiveness

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Since 1946, when Vannevar Bush submitted his famous report on national science policy, Americans have put great faith in the capacity of basic research to help us build a stronger, more prosperous, more secure society. As Harvey Brooks has observed: "The implicit message of the Bush report seemed to be that technology was essentially the application of leading edge science and that, if the country created and sustained a first-class science establishment based primarily in the universities, the generation of new technology for national security, economic growth, job creation, and social welfare would follow almost automatically without explicit attention to all the other complementary pieces of the innovation system."

In keeping with this faith in science, some commentators have suggested that an important reason for our sluggish productivity and our competitive decline is that the federal government has failed to maintain our national research effort by supplying it with sufficient funds. There is evidence to support this view. From 1967 to 1987 the share of GNP that Washington devotes to research and development (R & D) dropped from 2.1 to 1.3 percent. Outlays for civilian purposes lagged much more than military R & D over this period, and nonmilitary research is far more important for our productivity. Although rising corporate expenditures have helped offset this trend, our leading competitors now spend relatively more than the United States on civilian R & D. Thus, all nonmilitary outlays total less than 2 percent of GNP in America compared with almost 2.6 percent in Japan and 2.8 percent in West Germany.

It should be noted that government funds for university research have not fallen very much as a percentage of GNP. Nevertheless, particular aspects of academic science in America have been especially hard-hit. For example, grants for research facilities have dropped by a staggering 95 percent since the 1960s, while the number of federal fellowships and traineeships has dipped by more than 25 percent. These declines help to explain a backlog in renovations needed for academic laboratories that government commissions have estimated at ten to twenty billion dollars and a shortage of American graduate students that has led leading departments of engineering and computer science to admit 50 percent or more of their Ph.D. candidates from abroad.

In the wake of these trends, many voices have been heard stressing the importance of research to economic growth and prosperity. According to the president of Carnegie-Mellon University, Richard Cyert: "It is clear that knowledge is the source of economic power in the United States. The major factor that will determine progress is the amount of funding available for research." Erich Bloch, director of the National Science Foundation, echoes these sentiments: "Investment in science and engineering research has been the source of much of our economic progress over the past four decades." Bloch adds: "Investment in the knowledge base is consequently a major instrument of competition for all nations. The most important thing a nation can do to assure its economic prosperity is to maintain its position at the frontiers of knowledge by investing in science and engineering research...."

National commissions headed by leading industrialists have made the same point in stressing the need to strengthen the research capacity of universities. According to a 1986 report by the White House Science Council:

The health of U.S. society is uniquely coupled to that of universities. To a greater degree than in any other country this Nation looks to its universities both for new knowledge and for young trained minds prepared to use it effectively. But just at a time when much is expected of our universities, after more than a decade of retrenchment and belt-tightening, they find themselves with obsolete equipment, aging facilities, and growing shortages of faculty members and students in many important fields.... Our conclusion is clear: our universities today simply cannot respond to society's expectations for them or discharge their national responsibilities in research and education without substantially increased support.

Politicians, mindful of what universities have done to spur high-tech industry in Silicon Valley, Route 128, and the Research Triangle often endorse this conclusion and echo the call for more federal funding for university-based research.

Will Strengthening Basic Research Improve Our Competitive Position?

Arguments of this kind sound convincing. Before we swallow them whole, however, there are some awkward questions we need to answer. If basic research is so important to economic progress and productivity, why did the United States become economically dominant many decades ago when little scientific research was being done in American universities, and why did we decline competitively during the last quarter century when our universities and their scientific accomplishments have led the world? Conversely, why is it that Japan has been forging ahead so spectacularly when its universities and the quality of their research have been distinctly inferior to ours?

Against the backdrop of history, these paradoxes do not seem so baffling. For centuries, nations that have excelled in scientific discovery have not managed to lead in technological innovation and economic growth. In the Middle Ages, for example, the liveliest centers of science were located in China and Islam, but the greatest economic and commercial growth occurred in Europe. In the nineteenth century, England pioneered the development of the steam engine even though the underlying scientific discoveries occurred on the Continent. Conversely, Germans developed the synthetic dye industry on the basis of a fundamental discovery made by a British organic chemist.

There is a reason for this historical pattern. Until the late nineteenth century, industrial innovation did not depend heavily on science. Technological advances had mainly to do with levers, pulleys, gears, and other devices that were the natural province of inventors and engineers rather than university scientists. Not until the nineteenth century was nearly over did the process of technological innovation begin to draw significantly on the invisible world of atoms, molecules, bacteria, genes, and electromagnetic waves that only scientists could manipulate and understand. In earlier periods, therefore, one can readily understand why success in scientific discovery did not guarantee equivalent success economically.

In the modern era, technological innovation and science have become more and more closely intertwined. Entire industries have developed out of scientific discoveries, and modern corporations will pay millions of dollars to establish collaborative relations with leading university laboratories. Nevertheless, the relationship between basic research and technological...