ESSAY Technology and

competitiveness

by B. R. Inman and Daniel F. Burton

The once commanding u.s. advan­tage in technology has slipped away. The culprit? Internation­

al competition. The consequence? U.S. government and business relationships have been fundamentally altered, with maj6r implications for u.s. science and technology policy. Although the reper­cussions are still being sorted out, the basic message is clear: when it comes to technology, U.S. public policy can no longer afford to be preoccupied with basic research and military issues; eco­nomic security and industrial competi­tiveness are also vital considerations.

Five technology stories illustrate the changing public policy debate: consum­er electronics, semiconductors, super­conductors, the FSX fighter airplane and high-definition television. Taken together, they hold important lessons for U.S policymakers.

The decline of U.s. consumer elec­tronics was the first shot across indus­try's bow. American inventors pio­neered this field with such innovations as the phonograph, radio broadcasting, television receivers, the transistor, col­or television, portable radios and vid­eocassette recorders. Until 1970, Amer­ican industry dominated the consum­er electronics business. Since then, it has lost virtually the entire market. The industry learned too late that techni­cal breakthroughs must be relentless­ly followed up with manufacturing sys­tems capable of high-quality, low-cost, volume production. The federal gov­ernment contributed to the demise of the industry by allowing imports to be dumped in the U.S. market while foreign markets remained essentially closed to American producers.

If the collapse of consumer electron­ics could be dismissed in some cir­cles as a low-wage, commodity indus­try without real importance to the U.S. economy, semiconductors could not. Semiconductors personified Silicon Val­ley high tech to many Americans, and the trials of this industry captured the

public imagination. Following on the heels of consumer electronics, the se­quence of events seemed all too famil­iar. Invented in the U.S., semiconduc­tors spawned a vital American indus­try that captured a worldwide market. In 1976, however, Japan launched the Very Large Scale Integration (VLSI) pro­gram. Ten years later the Japanese had captured 65 percent of the world mar­ket for computer memory products. The lesson learned was a hard one: even high-tech U.S. industry could be devastated in short order by foreign competition. The decline of the U.S. semiconductor industry reaffirmed the fact that leading-edge product technol­ogy by itself is not enough; process technology, world-class manufacturing capability and government-industry co­operation are also essential.

Close on the tracks of the semicon­ductor fiasco came the superconductor breakthrough. The series of events that followed highlighted two key issues. First, these events demonstrated just how quickly technical knowledge is dif­fused around the world. The finding at the IBM laboratory in Switzerland set off an international chain reaction of intense verification efforts and new re­search advances throughout Japan, the U.S., Europe and China. Second, super­conductors riveted U.S. government at­tention on one overriding issue: how to translate basic research into products and processes that yield the sought-af­ter military and economic benefits. The demise of the U.S. consumer electron­ics and semiconductor industries was not lost on public officials.

In the spring of 1989 another techno­logical issue made headlines-the FSX fighter. The debate revolved around a proposed joint venture between the U.S. and Japan to produce a new tac­tical fighter based on General Dynam­ics' F-16 aircraft. Critics feared it would be a giveaway of American technol­ogy and would help Japan achieve its long-standing goal of creating a civilian aerospace industry. Proponents argued that it would actually keep Japan from building its own plane and that the U.S. would gain access to Japanese tech­nology. Although a modified version of the agreement was eventually signed, the debate brought out a deeper policy question: Should American economic interests be given as much weight as traditional security concerns in the for­mulation of U.S. foreign policy?

For the past two years, Washington has been embroiled in a policy dispute over high-definition television. Backers of HDTV hail it as the most significant development since color television and think it will drive several related tech-

126 SCIENTIFIC AMERICAN January 1991

nologies. Critics have downplayed it as a technical advance that is limited to a narrow market. For many, the con­troversy has come to symbolize the government's difficulty in developing a coherent technology policy. Technical feaSibility, standards, market demand, military implications and the role of foreign industry are all hotly debated issues. In addition, the HDTV contro­versy has drawn attention to the fact that a solid manufacturing base is es­sential to technological leadership. It has also emphasized the close linkages among several related technologies. As one government official stated, "The next generation of televisions is the next generation of computers."

Taken together, these developments have prompted recognition of the need for a workable U.S. public policy frame­work for technology. Although the de­bate is still unfolding, there is growing awareness that action is essential in four areas: strengthening the U.S. man­ufacturing base, upgrading the policy­making machinery for technology, re­building the technological infrastruc­ture and widening federal R&D efforts to include more commercially relevant technology. In each area, the need is clear ; the means are less apparent.

The debate about technology and competitiveness has enormous impli­cations for U.S. national security and economic growth. As such, it promis­es to have a far-reaching impact not only on the strategic objectives the na­tion pursues but also on the institu­tions that shape our poliCies. In the past, U.S. poliCies have tended to im­pede rather than to assist efforts of the private sector to bring new tech­nology rapidly to market, because the U. S. government has not addressed the commercialization of technology as a public policy issue. We can no longer af­ford to ignore this issue. Arcane topics, such as technical standards, patent law, R&D funding and intellectual property, that once were viewed as the respon­sibility of obscure bureaucrats will in­creasingly engage public officials at the highest levels. And government agen­cies will have to be refocused to ad­dress the new priority of technology and competitiveness.

The broad contours of a responsive technology policy are beginning to take shape. The challenge ahead is to imple­ment speCific poliCies and programs that produce concrete results.

B. R. INMAN is president of Inman Associates. DANIEL F. BURTON is exec­utive vice president of the Council on Competitiveness.

© 1990 SCIENTIFIC AMERICAN, INC