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The Imperatives of Innovation and Cooperation

E. William Colglazier, Ph.D.
Science and Technology Adviser to the Secretary 
The Innovation Policy Forum on U.S.-China Policy for Science, Technology, and Innovation at the U.S. National Academy of Sciences
Washington, DC
October 23, 2013


I would like to focus on three topics: (1) the fundamental pillars for building an innovation-based economy, (2) current trends and developments in U.S. policies and investments in research and development (R&D), innovation and science and technology (S&T), and (3) current collaborations between the governments of the U.S. and China regarding innovation.

The fundamental pillars for maximizing the contributions of S&T to innovation, economic development, and societal problem-solving are well known, but challenging to implement and sustain at the highest level. The pillars include increased support for STEM (science, technology, engineering, and mathematics) education and S&T human resource development at all levels; vibrant research universities, research institutes and national laboratories; government funding for fundamental and applied R&D; private sector R&D; international S&T cooperation; and government policies that facilitate rather than retard a knowledge and innovation-based economy. The latter element is the most complex and a priority topic of my conversations with every country.

Nearly every country is focusing on increasing its S&T capabilities for supporting innovation and economic development. The U.S. and China have many competitors seeking to be the leading countries in S&T, but these countries are also potential partners. To stay at the forefront, the U.S and China need their researchers to collaborate in S&T with the best in the world wherever they reside.

My experience prior to coming to the State Department had been largely in the non-governmental, not-for profit S&T sector, research universities and the U.S. national academies. My experience inside the government for the past two years has, somewhat surprisingly, increased my appreciation of looking at innovation from the non-governmental business perspective. Listening to private sector views about problems and challenges can be very useful.

As I am sure you are aware, there are a number of reports from international organizations that compare innovative capabilities in various countries. These include the World Bank “Doing Business 2013” Report, WIPO’s “Global Innovation Index 2013,” and the World Economic Forum’s “Global Competitiveness Report 2013-2014.” While one can quibble with innovation and competitiveness metrics and rankings, these reports offer useful insights on how the strengths and weaknesses of a country’s innovation ecosystem are viewed. I believe that every country, including my own, can benefit from reviewing and strengthening its policies that facilitate and strengthen its innovation capabilities.

When I was at the National Academy of Sciences and National Research Council, the U.S. government requested a report examining the S&T strategies of six countries, one of which was China. The task given to the expert study committee was to compare and contrast the S&T strategies of these six countries to the U.S. S&T strategy, estimate the likelihood of these six countries achieving their S&T goals , and recommend nation-specific indicators to monitor progress in high-impact research. The committee that wrote the report examined many quantitative metrics in each country’s strategy, including the level of government investment. Their surprising conclusion, however, was that progress toward creating a national innovation environment is limited by a country’s socioeconomic and cultural factors and that non-traditional measures are the best predictors of S&T achievements. The two countries of the six that were rated as having the highest potential to achieve S&T goals were China and Singapore. The report acknowledged China as having made impressive progress, but noted the important challenge of creating a bottoms-up innovation environment and evolving from a national innovation environment to a global innovation environment.

I am sure you will hear much more today about another important report on innovation from the U.S. National Academies. This 2012 report, “Rising to the Challenge: U.S. Innovation Policy for the Global Economy,” assessed innovation policies from a number of countries in order to make recommendations for what the U.S. needs to do to remain a world leader in science, technology and innovation. I believe this report provides an excellent overview of the U.S. innovation ecosystem, assessing its strengths and weaknesses, and lays out a useful set of recommendations for our policy-makers to consider.

In seeking to distill what I have learned from these reports and my conversations about S&T strategies with representatives of many countries, including with their private sector companies, I focus on several elements that I believe are important for the U.S. They include, of course, investing in human resources, STEM education and infrastructure, research and development at our research universities and national laboratories, and collaborating in S&T with the best and brightest from around the world. But key elements also include working to remove and to ease the bureaucratic impediments to starting new business that utilize cutting-edge S&T. They include continually reviewing and improving government programs that seek to facilitate and incentivize entrepreneurs and innovative companies, that attract foreign direct investment and venture capital, and that encourage companies to invest in R&D and cooperate with universities and national laboratories. And they include optimizing policies that promote efficient markets, protect intellectual property, and minimize corruption.

I also believe that it is in the interest of the U.S. and China to help other countries become more capable in S&T and spread knowledge-based economies around the world. Making progress on solving the many challenges that face the world in the 21st century – in energy, environment, security, health, etc. -- will be greatly enhanced by S&T cooperation between the U.S. and China.

Now I would like to turn to current trends and developments in U.S. R&D, innovation and S&T policies. President Obama with the help of John Holdren (Special Assistant to the President for Science and Technology) has made S&T a key element of the U.S. national innovation strategy. The President’s proposed S&T budgets have each year have included significant increases. However, the U.S. Congress has not been as generous.

Over the past three years, the U.S. Government budget for R&D has been approximately $140 billion per year, and within that the budget for basic and applied research has been approximately $65 billion per year. Key science agencies that receive funding are the U.S. Department of Health and Human Services, with the majority going to National Institutes of Health; the Department of Energy; NASA; the National Science Foundation; and the Department of Agriculture, among others. We have a diffuse federal system with around 17 scientific and technical agencies engaged in basic and applied research. For the most part, our science agencies determine their own research priorities with guidance from the Administration and advice from the U.S. science and engineering community. Priorities in fundamental basic research are determined primarily through a bottom-up process of proposal submissions from researchers that are evaluated using expert peer review from the scientific community.

The importance of the private sector in R&D and in the innovation system in the United States cannot be overestimated. While the Federal government is the largest funder of basic science, nearly 70% of R&D is funded by the private sector, which means that total R&D spending is about $400 billion.

The American Association for the Advancement of Science (AAAS) issues a report each year on the federal R&D budget. The most recent report, Research and Development, FY 2014, provides a sobering summary of the current situation: “since the 2004 peak, nondefense R&D has generally either ticked downward or held steady, save for the one-time contribution of the American Recovery and Reinvestment Act of 2009 (the stimulus bill)” and “fiscal year, FY2013, has so far seen the largest reductions yet…adjusted for inflation, estimated FY 2013 funding for nondefense R&D would fall to 10.7% below the 2004 peak, primarily due to sequestration.” If the President’s budget for the current fiscal year, FY2014, were enacted, non-defense R&D funding would be at an all-time high. If you have read about the current debates over the U.S. government’s budget, you will know that there is great uncertainty regarding whether the S&T budget for our current fiscal year will remain at the sequester level or be increased.

I would like to highlight some of the key priorities of the President’s proposed S&T budget for FY2014. The intent is to sustain a world-leading commitment to science and research, spur innovation, maintain our commitment to three key science agencies (NSF, NIH, and DOE), make America a magnet for manufacturing, advance clean domestic energy, improve our understanding of the threat of global climate change, support research to improve the health of all Americans, educate our children in STEM, and use S&T to make smart choices regarding many public policy issues. Defense-related S&T investments are across a diverse portfolio, including advanced manufacturing, energy efficiency, cybersecurity, robotics, clean energy, explosives detection, a safe and secure nuclear arsenal, and biodefense. Advanced manufacturing is a special initiative in the 2014 budget, which includes increased R&D and a national network of manufacturing innovation institutes. Increased energy investments are in energy efficiency and renewable energy, ARPA-E, hydraulic fracturing, and natural gas carbon capture and storage. There is also proposed increase in global change research to advance our understanding of the threat of climate change. Brain research is being advanced through the special initiative called BRAIN (Brain Research through Advancing Innovative Neurotechnologies). And lastly there are significant increases proposed for strengthening STEM education, including preparing and supporting teachers, improving undergraduate STEM education, and creating an Advanced Research Projects Agency for Education (ARPA-ED).

The U.S. does not have five year plans like in China as the U.S. has a decentralized science, technology, and innovation ecosystem. But the best clues to the S&T plans of the U.S. government are contained in our S&T budgets, and unfortunately this year there is more uncertainty than usual.

Lastly, I would like to briefly review current collaborations between the governments of the U.S. and China regarding innovation. Our governments participate in multiple discussions and support concrete collaborations in innovation. A government to government dialogue -- the annual high-level session of the U.S.-China Innovation Dialogue -- is a strategic science and technology and economic policy conversation between the world’s two largest economies. The Dialogue was established in 2010, and has served as an important mechanism for our continued discussions about the proper role of government in the innovation process. We had productive discussions in July 2013 on the role of government in financing innovation, and we hope to continue to use this mechanism to make tangible progress on areas of mutual concern in the future.

In addition, our governments engage with representatives from think tanks, universities, companies at events like the Dialogue on Comparing U.S. and Chinese Approaches to Science, Technology, and Innovation Policy Decision-Making, which the University of California, San Diego hosted in August. Speakers from the Chinese Academy of Sciences and the Chinese Ministry of Science and Technology (MOST) joined U.S. government officials and experts from outside government for discussions of how innovation policy is formulated in our two countries, the roles of the major players in that formulation, and the similarities and differences in our approaches to the role of government in encouraging innovation.

Finally, I would like to highlight a program that supports concrete cooperation in innovation in the areas of energy and the environment. The U.S.-China EcoPartnerships Program – led by the Departments of State and Energy on the U.S. side and National Development and Reform Commission (NDRC) on the Chinese side -- offers a high-profile opportunity for U.S. and Chinese localities, companies, universities and non-profits to jointly demonstrate innovative, replicable solutions to energy and environmental challenges.

I believe that it is extremely important for the U.S. and China to continue our dialogues regarding science, technology, and innovation and to increase our cooperation in using science and technology to help solve the many challenges facing our planet in order to produce a secure, prosperous, and healthy future for all people.

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