Growing our lead in science and technology
The manufacturing sector plays a vital role in fostering an environment for research and technological developments. In 2003, approximately 60% of the $123 billion spent on research and development in the United States was spent in the manufacturing sector, which totaled $123 billion.1
The public and private support for research and development is frequently an incentive for companies to locate in the United States and in specific regions. In many cases, as companies are trying to decide whether to invest at home or abroad, they are looking to the American workforce for its capacity for innovation and the public sector support of that innovation. Siemens was recently cited as spending $50 million annually in training its U.S. employees.2 Such investments of companies across the board totaled $228 billion in 2010, a significant jump from the just $153 billion in 2009.3
Technological advancements, while they can translate to the direct commercialization of a product and mean economic growth for a company and the economy, also contribute to the well being of the American workforce. In addition to the 25-fold increase in U.S. per capita income since 1820, the benefits of technological advancements have greatly improved the lives of American workers.4
Despite the demonstrable positive impacts of innovations, the National Science Board has reported a significant decrease in the amount spent by the federal government in research and development, a decrease from a full 63 percent in the 1960s to 27 percent currently. The private sector has made the converse jump, increasing from 30 percent to 68 percent today.5 Overall, the United States currently spends only 2.8 percent of its GDP on research and development efforts, less than many other countries: Sweden spends 4.3 percent; Japan spends 3.1 percent; South Korea spends 3.0 percent.6We should be funding research and development at least on par with other countries.
While the private sector is helping to compensate for the drop in federal funding for research and development, the federal government needs to step up to the plate. There are many good ideas in the marketplace, but these are a great start:
1 Extend the term of research and development tax credits
Incentivizing companies to invest in research and development is a key way of ensuring that we continue to move forward. The 2007 research and development tax credit provided $8.8 billion in credits to 12,548 corporations and 56,000 individual taxpayers.7 Such tax credits are estimated to “translate dollar-for-dollar into increases in current research spending, especially over the longer run as businesses develop their research enterprise.”8 Congress reviews the research and development tax credit for private institutions on a year-by-year basis. This sort of episodic renewal does not give companies a chance to plan of the future.
I support creating legislation that includes a tax credit over a multi-year window that would allow private companies to invest in research and development ventures with time horizons longer than a single year. Artificially constraining these ventures with such short time horizons can be artificially constraining the successes of those innovators and contributors.
2 Spur Advanced Manufacturing Technology
We can also focus on harnessing our resources to spur growth and expansion of our research and technological advancements. Universities are the ultimate Petri dish for basic research. There is often little financial return for private companies to invest in basic research — basic research takes time and the end results are difficult to predict. Private firms invest in research that has an anticipated return, and basic research may not have that. Despite this, basic research, like the initial work on the predecessor to the World Wide Web, is invaluably foundational.
We need to fund this research as it can help to move our economy forward. Universities and other such public settings are key centers for such work.
President Obama Administration’s 2012 budget currently includes dramatic increases in funding for science organizations “to catalyze breakthroughs for advanced manufacturing applications and provides funding to initiate the Advanced Manufacturing Technology Consortia Program, a public-private partnership that will help spur innovation in manufacturing systems and shorten the time needed for innovations to reach the market.”9Additional programs to foster such connections between the public and private sector can help to drive innovations and make that innovative process meaningfully profitable. Facilitating the relationships between the private sector and our research institutions can help increase the pace of research and development, which can directly, positively drive economic growth and expansion.
3 Patent Our Innovations
The essence of our science and technology sectors is the ability to protect the intellectual contributions of innovators. The licensing and patenting of knowledge being produced in universities and in the private sector takes place on a time horizon that is far beyond what is practical for the market. We should focus on and incentivize the patenting and licensing of innovations at rates that allow innovators and entrepreneurs financially benefit from their work.
This means we need to work on facilitating the processing of patents. Currently, the U.S. patent office faces a “backlog of 719,000 patent applications, and the average delay between patent application and patent grant has risen to 35 months.”10 These delays are in many cases prohibitive for entrepreneurs and other private sector participants. The Obama Administration’s plan to streamline the patenting process and to hire on additional reviewers can go a long way to improving the rate at which patents are processed, which will, in turn, go a long way toward incentivizing submission of patent applications and the innovation process.
|As a successful entrepreneur in the burgeoning technology field, I saw the need for students who were prepared to be competitive in a global economy. That’s why I co-founded the Center for Entrepreneurship and Technology (CET) at UC Berkeley — a nationally recognized program in innovation management and new venture creation. I now have the great honor and privilege of teaching our amazing young people about engineering, technology, innovation and how to compete in the global marketplace. We have incubated and helped create 18 new companies out of the CET environment, all with young entrepreneurs at the helm. These talented young people will be the innovators of America’s future. So my belief that science and technology are the high ground of our manufacturing economy should come as no surprise. If we keep and grow our lead here, we’ll be able to regain our lead in manufacturing. That’s why our government needs to continue to be supportive of our academic institutions and private enterprises—so that our innovators and entrepreneurs can continue to pursue important innovations across the board to help move our economy into the twenty-first century.|
4 Protect the accessibility of H-1B visas
Immigration reform has been a focus of politicians for years, and a key part of the conversation on immigration reform is how to keep those immigrants who specialize in fields like science, technology, engineering and math — specializations which can help make the United States a top global manufacturer again — from leaving our nation and going to work abroad.
We need a national immigration reform plan that includes protections for immigrants who are educated in our nation’s schools, who have grown up in our nation’s cities and whose parents pay taxes to our nation’s government.
But in lieu of such a comprehensive reform, the H-1B visa, which allows employers to continue employing skilled immigrant workers legally, is a temporary fix to the problem of losing our skilled workforce.11 We need to continue to support the extension of the H-1B visa to help protect the future of the American economy until a more stable solution is created.
1 Robert E. Scott, “The Importance of Manufacturing, Key to recovery in the states and the nation,” (Economic Policy Institute, February 2008), available at http://www.gpn.org/bp211/bp211.pdf.
2 Matt Compton, “Everything You Need To Know About Insourcing,” (The White House, January 2012), available at http://www.whitehouse.gov/blog/2012/01/11/everything-you-need-know-about-insourcing.
4 “Economic Report to the President,” (Council of Economic Advisors, 2011), available at http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President.
5 Darrell West, “Technology and the Innovation Economy,” (The Brookings Institution, October 2011), available at http://www.brookings.edu/papers/2011/1019_technology_innovation_west.aspx#_edn1.
7 “Economic Report to the President,” (Council of Economic Advisors, 2011), available at http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President.
11 Bill Clinton, “Back to Work, Why We Need Smart Government for a Strong Economy,” (Alfred A. Knopf, 2011).