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1Current Policy Studies

2Recent Studies

3Conferences & Workshops

4Dialogue with Policymakers

Board on Science, Technology & Economic Policy - National Research Council - 5/96

National Academy of Sciences National Academy of Engineering Institute of Medicine
2101 Constitution Avenue, NW Washington, D.C. 20418
Tel: 202-334-2200 Fax: 202-334-1667 Email: step@nas.edu

Objective is to integrate understanding of scientific, technological, and economic elements in the formulation of national policies affecting the economic well-being of the United States. Policymakers responsible for trade, economic, science, and technology policy in the Executive Branch and Congress are the principal audience for the Board's work.

Focus is on the dynamics of macroeconomic and microeconomic variables, their relationship to the industrial structure of the economy, effect on high-technology manufacturing and service sectors, and influence on U.S. scientific and technological advancement through examination of such issues as

the composition of industrialized nations' investment portfolios (plant and equipment, infrastructure, human resources, etc.) and their bearing on productivity growth;
the quality and quantity of U.S. investments in "intangible" capital -- education, training, and research and development;
the impact of new technologies on firm performance, job creation and destruction, and wage and skill levels; and
increased international competition in technology and market development and its challenges for the multilateral trading system and scientific and technical cooperation

Upcoming Events

Board Meetings:June 7, 1996

October 17-18, 1996

Technology Policy Series:

Mode of operation is to design and oversee policy studies that examine existing data bearing on an issue, seekanalysis and informed opinion, and attempt to arrive at consensus judgments and recommendations. Whether conducted by the Board or specially commissioned panels of experts, these studies result in monographs that are subject to the peer review procedures of the National Research Council. Other products include white papers, conferences, workshops and seminars designed to contribute to the policy dialogue without necessarily arriving at conclusions endorsed by the Board or the National Research Council.

Membership currently includes 14 people with national standing as corporate executives and technical officers of industrial firms of various sizes in diverse sectors, academic economists with relevant specialties, financial executives from commercial banking and venture capital, management experts, and former government policymakers [See list on page 4].

Sponsors are private foundations, multinational corporations, government agencies, and the National Research Council Fund. Since its inception in 1991 the Board's core program has been supported by a grant from the Alfred P. Sloan Foundation.

FRICTION AND COOPERATION IN HIGH-TECHNOLOGY DEVELOPMENT, COMPETITION, AND TRADE

In collaboration with two German economic research institutes, the HWWA in Hamburg and the IfW in Kiel, and with the guidance of a multinational steering committee, this project is addressing issues at the forefront of international discussions and negotiations concerning trade and technology policy. Its goals are:

to advance international understanding of the rationale for and diversity of government supports for high-technology industries;
to identify the sources of international friction arising from these programs as well as the technological and financial pressures for greater cooperation; and
to work towards an international consensus on appropriate rules of the game for technology development and trade.

Following a series of international conferences attended by policymakers, industrial leaders and analysts, the steering committee, co-chaired by Alan Wm. Wolff, former deputy U.S. Trade Representative, and Erhard Kantzenbach, president of the HWWA, is preparing recommendations for consideration by national government officials and international organizations.

This ambitious project was initiated under the auspices of the German-American Academic Council. Additional support has been provided by a diverse group of corporate donors including AT&T, General Electric, Hitachi, MEMC-Hüls, Northern Telecom, Philips, Samsung, Siemens, Trimble Navigation, and Varian Associates.

The industrial research and innovation systems of the United States and their relationship to those of other countries are undergoing significant changes. In addition to the globalization of many multinational corporate activities, these include changes in government and private sector R&D spending levels and portfolios, investment time horizons, linkages among institutions, organization of R&D performance, and, prospectively, the structure of the corporate tax system.

The STEP Board hypothesizes that together these are likely to produce substantial long-term rather than cyclical change, but there is great uncertainty about their magnitude, impact on different industrial sectors, and relationship to one another and to changes in other countries. In a 24-month project beginning in February 1996, the Board will review developments in a number of industrial sectors and will develop criteria for evaluating these changes and determining whether public policies should be adjusted to enhance positive outcomes and minimize negative ones from the standpoint of economic performance and welfare and other national goals.

A series of workshops and symposia is planned, including a conference on the implications of fundamental tax reform for investment in R&D.

Pressures to contain health care costs are driving changes in the medical marketplace that may conflict with the nation's premium on medical innovation in pharmaceuticals, diagnostics, devices and procedures, and information systems, prime sources of advances in health care and of international comparative advantage but also, according to most economists, major contributors to rapid increases in health care expenditures.

In June 1994 the National Research Council released a report of the STEP Board, Investing for Productivity and Prosperity, based on the Board's deliberations and its September 1992 inaugural conference featuring original papers by George Hatsopoulos and James Poterba on investment hurdle rates in the United States and Japan and Michael Porter on capital allocation systems in the leading industrial countries and commentaries by Robert Rubin, Warren Rudman, Margaret Blair, John Shoven, Ruben Mettler, and others.

The report concludes that in spite of moderate economic growth and the improved international competitive position of U.S. companies, inadequate saving and investment and structural disincentives to long-term investment horizons should remain principal economic policy concerns. The Board recommends continued emphasis on deficit reduction, a major restructuring of the corporate and personal tax systems, and reforms of financial regulation. The report was covered in the Wall Street Journal and several regional newspapers.

In March 1995 the STEP Board issued a report, Standards, Conformity Assessment, and Trade: Into the 21st Century, prepared by an expert panel chaired by Gary Hufbauer, Senior Fellow of the Institute for International Economics. The report was requested by Congress in the Technology Preeminence Act of 1991 to assess the use of technical standards and product testing and certification requirements as a trade barrier and/or export promotion measure and to advise on the U.S. government and private sector roles in setting domestic and international requirements. The report concludes that the largely private and voluntary U.S. standards development system generally functions satisfactorily. On the other hand, the U.S. conformity assessment system, with duplicative and conflicting federal, state, and private sector requirements, is excessively burdensome and complex. Moreover, the lack of agreement among national governments to recognize national conformity assessment mechanisms impedes international trade.

The report recommends an effort, led by the National Institute of Standards and Technology (NIST), to phase out federal procurement and regulatory conformity assessment activities and to eliminate duplication in state and local criteria for accrediting testing laboratories and product certifiers. Further, it recommends a U.S. strategy for eliminating discriminatory foreign standards and conformity assessment mechanisms in compliance with the WTO. The report was the subject of the annual meeting of the American National Standards Institute (ANSI) and has been covered extensively in the trade press. Several of its recommendations have been incorporated in House-passed legislation (H.R. 2405) amending the charter of NIST.

To illuminate the much discussed relationships among technology adoption, firm performance, job turnover, skill levels, and wages, the STEP Board in May 1995 cosponsored a major international conference that drew economists, statisticians, and policymakers from Canada, Europe, Australia, Israel, Japan and the United States. Sponsored by the U.S. Department of Commerce in conjunction with Industrie Canada and Human Resources Development Canada, the conference generated 28 new papers presenting empirical research on establishments, primarily in manufacturing, in 15 large and small OECD countries -- most of it using plant or firm-level data drawn from surveys of process technology adoption and census reports on productivity and employment changes.

The results of this meeting were immediately reported to the 1995 OECD ministerial meeting and included as part of the ongoing Group-of-Seven discussions of employment issues. An international panel of editors led by Bronwyn Hall, University of California-Berkeley, is supervising revision of a selection of papers for publication early in 1996.

In October 1994, STEP sponsored a conference to examine the policy implications of a growing body of research on the economics of public education and ways to improve it. The conference considered the paradox of increasing individual and social returns to education while the productivity of the education system has fallen or stagnated. It reviewed the evidence or lack of it for the effectiveness of some conventional school reforms such as reducing class size and raising teacher qualifications; and it considered what incentives might be instituted for increased experimentation, improved performance, and accountability.

STEP Board Member Dale Jorgenson and Rochester University economist Eric Hanushek, who organized the conference, have edited the proceedings which will be published this spring by the National Academy Press under the title, Improving the Performance of America's Schools: The Role of Economic Incentives.

Government efforts to capture the benefits of high growth, high wage industries for national economies have led to a plethora of programs designed to reduce costs and risks and raise incentives to firms engaged in the development of new technologies, usually through government-industry partnerships in various configurations. The STEP Board will soon convene a workshop, drawing on experts from industry, academia, and government, to assess the experience of recent U.S. and foreign-based research and development consortia and examine the feasibility and parameters of a future NRC study that would address questions concerning program and sectoral differences, "best practices" in national technology development programs, and principles to guide expanding international collaboration

In 1994 The White House National Economic Policy Council asked STEP to convene a meeting with leading experts on the changing environment for federal S&T investments, including the implications of corporate restructuring and global technology development and acquisition, the end of the Cold War and transformation of the defense industrial base, and changes in university-based research and engineering. A February 1994 meeting with presentations by STEP members Michael Spence and John Armstrong and former Defense Secretary Harold Brown and AAU President Cornelius Pings was attended by senior staff of OMB and OSTP as well as the National Economic Council. A June meeting featured discussions by Ian Ross, AT&T Bell Laboratories, and STEP Members Ruben Mettler and Mark Myers.

Through a luncheon seminar series, the STEP Board provides a regular forum for exchange of views and information among S&T and economic policymakers and analysts from local universities, executive agencies, congressional committees, and corporations on current issues in technology policy. Recent speakers and topics have included the chair of the White House Council of Economic Advisers, Joseph Stiglitz, on the prospects for U.S. R&D; University of California-Berkeley's Paul Romer and Silicon Graphics' Senior Vice President Forrest Baskett on allocating federal funds for science and technology; and Commerce Under Secretary Mary L. Good on the Clinton Administration's technology initiatives. Previous speakers have included NEC deputy director W. Bowman Cutter on technology and trade policy in the post-cold war era; and Lockheed Martin Chairman Norman Augustine on restructuring the defense industrial base.

A. Michael Spence, Chairman
Dean, Graduate School of Business, Stanford University

Stephen A. Merrill, Executive Director
Charles W. Wessner, Program Director
George Georgountzos, Program Assistant
Lena L. Steele, Administrative Assistant