international indicators of science and technology: how does the u. s. compare?

Scientometrics, Vol. 2. No. 5-6 (1980) 355-367

Science, Technology, and the Economy

INTERNATIONAL INDICATORS OF SCIENCE AND TECHNOLOGY: HOW DOES THE U. S. COMPARE?*

RACHEL McCULLOCH

Department of Economics, University of Wisconsin, 1180 Observatory Drive. Madison, Wisconsin 53706 (OSA)',

(Received December 12, 1979)

Because the basic determinants of innovative success are poorly understood, the data in SI-76 cannot support an unambiguous summary assessment of U. S. science. While some nations now rival the U. S. in relative expenditure for R&D, U.S. absolute: expenditure still dwarfs that of any nation except the U. S. S. R., and the U. S. remains preeminent by most measures of technological capacity. However, the technology gap continues to narrow, bringing both costs and benefits to the U.S. Advances abroad threaten the U. S. position in some markets and exacerbate the nation's trade adjustment problems. But the nation may also benefit substantially from new opportunities to import as well as export advanced technology.

Introduction

The large absolute size of the United States economy and the nation's com-

manding lead in most areas of science and technology complicate the problem of

evaluating current American research and development (R&D) activities in relation

to those of other countries. In many fields, other nations have allocated a major

part of R&D funds for adaptation of the fruits of past U.S. R&D efforts to their

own commercial and strategic requirements. Even where national defense considera-

tions have prompted the U.S. to limit access of other nation~ to its advanced tech-

nology, scientists abroad have been able to duplicate U.S. results at a small frac-

tion of the original cost.

The U.S. has also derived considerable benefits from imported scientific and

technological knowledge, but its relative position has meant that this source of

advance could be of only secondary importance. As other industrialized nations

*Some of the material in this paper is adapted from R. McCULLOCH, Research and Development as a Determinant of U.S. International Competitiveness, National Planning Association, Washington, D.C., 1978.

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R. McCULLOCH: INTERNATIONAL INDICATORS

narrow the technology gap, the U.S. will benefit accordingly. Indeed, innovations

originating abroad are likely to be of increasing interest to American producers and consumers, because labor costs in Europe and Japan are now approaching, and in some cases exceeding, those in the U.S., and because all industrialized na-

tions now face secularly rising prices for many raw materials. The United States still spends more on research and development than the

combined total for all other OECD countries. Nevertheless, critics argue that the

U.S. is "falling behind", relative to recent efforts of other industrialized nations and to its own past performance. In its evaluation of United States R&D activities, Science Indicators-1976 (SI-76) provides a number of specific international

comparisons, each shedding light on some aspect of U.S. performance in relation tO that of other nations. The authors acknowledge that each individual comparison

has serious defects as a measure of U.S. technological effort and capability, but

ttie introduction to the volume suggests that a consistent overall picture can none-

theless be inferred from these data:

Such indicators, updated regularly, can provide early warnings of trends that might impair the ability of American science and some aspects of technology to meet the needs of the Nation. Taken together, indicators can make decisionmakers more aware of the interrelatedness of the many variables which describe the Nation's scientific effort. Hence they can assist those who set priorities for the enterprise and allocate resources to ,it. (p. vii)

In my view, SI-76 succeeds instead in a more limited task, that of bringing together in convenient l~orm va/uabie measures of imputs to, and outputs from,

the nation's scientific and technological activities. But our understanding of the mechanisms linking these is at best rudimentary, and so far as international comparisons are concerned, the selection of indicators and their interpretation may seriously mislead policymakers looking to SI-76 for guidance.

Chapter 1 of SI-76, "International Indicators of Science and Technology,"

compares statistics on U.S. performance with those for other major industrial nations and measures international scientific and technological linkages. The chapter consists of five largely unrelated sections. The first, "Resources for Research and Development," surveys R&D inputs and their allocation in the seven nations that account for nearly all research and development activity worldwide. Statistics cover R&D expenditures, R&D personnel, and the allocation of government-funded

R&D among alternative broad categories. The second section, "The International Character of Science," is concerned primarily with the relative contributions of the U.S. and other nations to the progress of pure and applied science. Contribu- tions are measured by publications in scientific journals and by receipt of pres-

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R. MeCULLOCH: INTERNATIONAL INDICATORS

tigious international awards. Interactions between U.S. and foreign scientists are also enumerated. The third section, "Technological Invention and Innovation," deals with progress in applied science and technology. Much of the discussion centers on patent statistics for the United States and other major industrial innovators. This section also examines the relationship between invention and innovation. The fourth section, "The U.S. Role in Technology Transfer," presents data on international payments for the use of imported "know-how?' These statistics separate pyaments associated with foreign direct investment from other types of transactions. The final section, "Productivity and the Balance of Trade," compares productivity measurements across countries and examines trends in the U.S. trade balance, contrasting the trade performance of the "high technology" industries with that of other manufacturing. In reviewing the chapter, I have grouped my comments under the same five headings.

Resources for research and development

That the U.S. currently spends more for R&D than all other OECD counfries combined is perhaps the single most striking fact about R&D resource allocation worldwide. (The Soviet Union, not an OECD member, probably allocates an amount comparable to that of the U.S.) The enormous difference between the absolute level of expenditure in the U.S. and that of any of its major commercial rivals is not brought out in the SI-76 international comparisons, which focus upon relative measures of national resource allocation across countries: gross national expenditures for research and development (GERD) as a share of gross national product (GNP), R&D scientists and engineers relative to total population, and distribution of government-funded R&D among functional categories. Abso- lute levels of expenditure, measured in national currencies, are reported in Table 1-1 (SI-76, p. 184) of the statistical appendix, but these figures are not con- verted to a common numeraire such as U.S. dollars, nor have exchange rates for the relevant periods been provided for the benefit of a reader who wishes to compare approximate absolute magnitudes.

Absolute and relative measures of R&D resource allocation provide different types of information. Both are required in order to make a complete assessment of the U.S. position. Because the role of the United States in the world economy and the internal structure of the U.S. economy differ in important ways from that of any other nation, the exclusive use of relative measures may be misleading.

As the authors note (SI-76, p. 4), international comparisons of absolute magnitudes are complicated by exchange rate fluctuations, particularly in recent years.

Scientometrics 2 (1980) 357 3*


A Second difficulty arises because of "differences in the composition and relative costs of manpower and capital inputs into the R&D programs of different nations." However, the latter also poses a problem in interpreting ratio measures of a single nation's performance over time. Although the ratio measure does incorporate a gross adjustment for overall inflation, it does not eliminate the distortion intro- duced by systematic changes in relative factor prices. In particular, GERD/GNP will tend to overstate increases in real R&D activity if rapid expansion bids up prices of specialized factors of production, for example, the salaries of highly trained scientists, engineers, and technicians. To assess changes in "real" R&D activity, a special price deflator for this sector would be required.

International comparisons of GERD/GNP statistics and their time trends do provide a useful measure of the priority accorded R&D activities by the major industrial nations. However, even these comparisons should be made with caution. The discussion of the OECD classification of member countries by resources devoted to R&D (SI-76, p. 4-5) is somewhat confusing, as it implies that the relative, rather than absolute, level of resources determines whether a nation is able to undertake a wide range of R&D projects. International comparisons are also hindered by inevitable differences in definitions and techniques of data collection. These problems no doubt also complicate the comparisons of R&D personnel statistics across nations. The authors note that reported figures for the U.S. and U.S.S.R. do not include capital expenditures associated with performance of R&D, while those for other nations do; it would be helpful to the reader to have some estimate of the magnitude involved.

It is not merely the aggregate level of resources allocated to R&D but their distribution across the very broad range of possible uses that is important in de- termining the consequences of R&D expenditures. One interesting statistic missing from the discussion of R&D allocation is the breakdown of total expenditures into government-funded and industry-funded expenditures. The relevant ratios can be inferred from Appendix Tables 1-1 and 1-3. Although the U.S. had a larger GERD/GNP ratio overall than any of its major commercial rivals as of 1973, Japan and the Federal Republic of Germany were spending proportionally larger sums for industry-funded R&D (1.6 percent for Japan and the Federal Republic of Germany, in comparison to 1.0 percent for the U.S.).

The breakdown of government-funded R&D by categories seems curiously un- informative, particularly in light of the space the authors devote to describing the OECD methodology in assembling the data (SI-76, p. 7). Given the recent wide- spread interest in the role played by government support of commercially useful R&D (e.g. SI-76, p. 25-28), the reader might well try to learn how nations compare in this regard. The distribution provided and the accompanying text give lit-



tie clue. I would assume that most direct support of this type is buried in the broad category of "economic development". Perhaps a more important considera- tion is that direct funding provides only a small part of the total impact of government programs on industrial R&D. For this reason, some comparison of indirect support (or the lack of it) would be useful. Some material from the MIT and University of Sussex studies might be appropriately included here (see SI-76, p. 25-28, for references).

The International character of science

Knowledge is a "public good" in the sense that it cannot be used up and therefore yields the greatest social benefits when made freely available to all potential users. Furthermore, the progress of science and technology is cumulative, each new advance building upon past achievement. For these reasons, free dissemination of new scientific and technical knowledge, both nationally and internationally, promotes world welfare. This section includes a number of indicators that focus upon publication of scientific literature, one important vehicle for the national and international dissemination of new knowledge. Contributions to scientific publications are also used to compare science "output" across nations. However, the incentives faced by scientific innovators may discourage rapid dissemination of new knowledge. The personal, institutional, or national rewards to success in scientific innovation depend in large part upon the few spectacular leaps forward, rather than the small advances which may nonetheless have the greater aggregate scientific and social impact. As readers of The Double Helix will re.call, even pure science may therefore become a competitive rather than a cooperative endeavor.

The motives for submission of new fmdings to scholarly publications are many; the choice among altemative journals is likely to depend in part upon such con- siderations as prestige, speed of publication, and size of the potential audience. Because of the far greater absolute size of the U.S. scientific community, the most prestigious U.S. journals typically reach a far larger audience than do the best journals published abroad. Thus, the overall incentives for foreign scientists to publish in U.S. journals are likely to be greater than they are for U.S. scientists to publish in foreign journals. Language of publication may also be a factor, but many non-U.S, journals are published in English or are bilingual or multilingual.

The data on puhlications are drawn from a study of 276 000 recent contributions to the 2400 "influential journals" listed in the Science Citation Index. From these data, numerous statistics have been computed for each of nine major fields in the physical and biological sciences. U.S. share of word publication (Table 1-4,

Scientometrics 2 (1980} 359


SI-76, p. 11) and distribution of authorship of publications in U.S. journals (Fig- ure 1-5, SI-76, p. 12, and Appendix Table 1-4, p. 188) tell similar stories. While U.S. authors account for a large share of total published material, the share varies considerably across fields. The U.S. share of world publications is a little more than one-third over all fields, but ranges from a low of 22 percent in chemistry to 45 percent in earth and space sciences; psychology is an outlier, with three- fourths of world publications accounted for by U.S. authors. Although the per- centages are higher for U.S. journals, the rankings of fields are not very different, with chemistry again lowest and psychology again highest.

This raises an intriguing question. Are U.S. psychologists really more productive relative to their foreign counterparts than are their peers in other disciplines? An- other indicator sheds some light on this mystery. The ranking of fields according to the U.S. share in foreign citations (Table 1-6, SI-76, p. 13) is almost exactly the reverse of that for the share of U.S. authors in world and national publication totals. In psychology, only 29 percent of foreign citations are to U.S. publications, while chemistry leads the list with 65 percent. This suggests that psychology is a field with a relatively low degree of international integration. The field of "psychology" as well as the standards of excellence in the field may differ significantly from country to country, while this is not the case in chemistry. If coverage in the lndex favors publications of the U.S. type but captures a few of the others, this would account for the high proportion of U.S. authors in both U.S. and world publications as well as the very low percentage of foreign citations to this body of literature. This hypothesis is supported by the fact that psychology also ranks lowest in the percentage of foreign citations which appear in U.S. publications (Table 1-9, SI-66, p. 15). This set of findings underscores the caution with which such data must be interpreted. The analysis depends critically upon the uni- verse of journals selected. While 2400 sounds like a large number of journals, more than 100 highly specialized subfields are covered.

The publication data are also used to measure "international cooperation of U.S. authors". This is inferred from the incide.:~cr of jointly authored publications for which the authors' institutional affiliations -'_:nclude at least one outside the U.S. According to Appendix Table 1-10 (SI-76, p. 193), international collaboration of this type accounts for about 14 percer_.-t cff ~ publications jointly authored by scientists affiliated with different institu.~ic~nz. Across fields the figure ranges from 7.6 percent for clinical medicine and 9.3 perce~t for psychology to 33.7 percent for mathematics. However, the significance of this particular indicator may be somewhat different from that suggested by the text.

In many instances of apparent cross-institutional collaboration, the work underlying the publication was largely completed while the authors were in fact in phys-



ical proximity at a single institution. Given the lag between completion of a research project and the publication of its findings, normal interinstitutional mobil- ity would tend of inflate greatly the appearance of cross-institutional collaboration. Thus, the observed differences across fields may be a better measure of the extent of such movement, rather than of international cooperation. In mathematics, where elaborate research facilities are not required and language differences are perhaps less critical than in other scientific disciplines, even short-term international travel by researchers often yields publishable results. In some laboratory sciences, it is customary to list the head of the research laboratory as the first author of any publication emanating from the laboratory. In such instances, the international cooperation statistics may reflect mainly doctoral or postdoctoral training of foreign scientists in U.S. institutions.

International migration of scientists and engineers is a major force in the world integration of the scientific community and the international transmission of new knowledge. While permanent migration (the "brain drain") has received most attention, what Jagdish Bhagwati has termed "to-and-fro" migration of scientists is both more common and perhaps more socially productive, but has not been reported in SI-76. In the ease of to-and-fro migration, scientists visit institutions abroad for a year or sometimes a number of years, but plan to, and do, return to their own countries. Statistics distinguishing these to-and-fro migrants from those who move permanently might help to defuse concern over the brain drain phenomenon.

Technological invention and innovation

As late as the 1960s, the "technology gap" between the United States and other industrialized nations was seen by many as a permanent fact of life. Indeed, some Europeans envisioned Europe as falling ever farther behind, eventually be- coming "an economic and technological colony of the U.S." (Brooks, 1973). How- ever, the statistics in this section show that the major commercial rivals of the U.S. may be closing the technology gap quite rapidly.

Growing incomes abroad have allowed other industrial nations to increase their R&D spending at the same time that the U.S. has been cutting back, at least in relative terms. In the early phases, much of the expenditure in these nations was aimed at adapting to local conditions innovations which had originated in the U.S. The strategy of emphasizing adaptation of imported technology was in itself the subject of controversy among European policymakers and scientists, some of whom feared that their nations would fail to develop a genuine innovative capability.

Scientometrics 2 (1980) 361

R. MeCULLOCH: INTERNATIONAL INDICATORS

Patent statistics can provide a crude measure of "inventiveness". However, the decision to apply for a domestic or foreign patent is basically an entrepreneurial rather than a technological one. As the text indicates (SI-76, p. 20), the legal criteria for granting patents differ across countries, as does the protection afforded by patents. More to the point perhaps, obtaining a patent is an investment, whose profitability depends upon economic and legal characteristics of the granting country. For this reason, the "patent balance" (SI-76, p. 20-21, and Appendix Table 1-15, p. 197), defined as the number of patents granted to U.S. nationals by other countries less the number granted to foreign nationals by the U.S., is not likely to be a useful indicator of "the relative success of countries producing in- ventions of potential significance to warrant international patent protection". For a given underlying distribution of inventiveness, this balance would decline if the U.S. market become more attractive or if legal protection afforded by U.S. patents increased.

If patent statistics are to be used for international comparisons of commercial inventiveness, a more meaningful measure would be relative penetration of third country markets. Thus, to compare the U.S. and Japan, one could calculate the fraction of total United Kingdom (or French or the Federal Republic of Germany) patents issued to nationals of each country. This method compares national performance in the face of a common set of legal and economic conditions.

A subsection on "international trends in technological innovation" notes, "the point has often been made that the United States would do well to examine and learn from other countries' experiences in fostering innovation," and goes on to cite some results from a recent five-country study sponsored by NSF. Curiously, the authors chose not to report what may have been the most striking findings of the study. In the cases examined by the researchers, managers most often perceived government involvement as a negative rather than a positive influence on project performance. Except in the case of environmental and safety regulations (perceived by managers as a negative influence on the innovative process), the rate of project success did not appear to depend upon government involvement. This suggests that government involvement affected the success rate only for those projects which would not otherwise have bene undertaken. It is interesting that while four of the countries studied had measures explicitly designed to encourage development of the computer industry, government's perceived impact was slight in three and negative in the fourth (U.K.) (Allen, et al., 1977).

One anomaly emerging from data on major innovations by- country (Table 1-20,

SI-76, p. 28) is that the United Kingdom, which trails the Federal Republic of

Germany and Japan in the U.S. patent statistics, comes out far ahead on this meas-

ure. Only the U.S. is responsible for a larger number of major innovations over



the period 1953-73. It perhaps noteworthy too that the United Kingdom is

second only to the U.S. in total Nobel Prizes received by its scientists (S I -76 , p.

18-19) and actually leads the U.S. when the numbers are adjusted for population.

While the data are not strictly comparable for many reasons, including differences

in the time periods covered, they suggest considerable heterogeneity in scientific

and technological "output" . The U.S. and the U.K. have devoted much of their governmental research sup-

port to basic science with a relatively low commercial payoff. The output o f this

activity has become available to other nations without major investments on their

parts. This represents a socially desirable outcome for the world as a whole, be-

cause knowledge is a public good. But, the U.S. and U.K. may have paid a dis-

proportionate share o f the total cost o f these advances. Other nations have been

able to concentrate their own efforts on producing knowledge with more imme-

diate commercial application. I f the U.S. and U.K. were to follows this policy also,

overall progress would be retarded as basic research activity dwindled in favor o f

applied science and technology. Thus, the same public good problem which com-

plicates R&D resource allocation within a single country may be an even more

important issue worldwide.

The U.S. role in international technology transfer

The indicators in this section measure international payments for the use o f in-

tangible property including patents, licenses, trademarks, and the like. Current pay-

ments reflect technology transfer transactions at various times in the past. How-

ever, because payments are usually proportional to use, current payments do give

some measure o f the current use o f imported technology and other intangible prop-

erty. A large part o f the growth of U.S. payments for imported technology ref-

lects an increase in foreign direct investment in the U.S. According to S I -76 (p. 33):

If the recent trend toward increased foreign direct investment in the United States continues and if Western Europe and Japan maintain advanced levels of sophisticated technology, U.S. payments for foreign know-how will correspondingly continue to grow. This may not be altogether a negative factor, however. A recent study of several technology-intensive industries indicates that foreign companies are investing in the United States more to take advantage of the large, politically unified and stable market than to have access to U.S. technology. It also suggests that the United States probably re- ceives a net technological benefit from this phenomenon due to the necessity that foreign companies introduce their most sophisticated technologies to compete effectively in the U.S. market.



This statement warrants several comments. First, although there are many reasons for the recent increase in U.S. direct investments of foreign firms, increasing U.S. protectionism is surely a major factor. For many foreign firms the chief motiva. tion for setting up a U.S. subsidiary is to protect already established U.S. markets currently served through exports. If these finns were assured of free access through trade, or even continued access on current terms, fewer investments of this type would be made. (A similar argument holds for many U.S. direct investments abroad.) Thus, the increase in payments for foreign technology is somewhat illu- sory, reflecting the substitution of direct payments for the use of the imported technology in U.S. manufacturing subsidiaries for indirect payments included in the prices of imported goods produced by the parent firms abroad.

Whether the relative technological gains of other nations (and thus our pur- chases of know-how from them) should be a source of concern to the United States is a difficult question to answer. It is the nation's absolute rather than its relative technological gains that are the primary determinant of its economic growth and welfare. Furthermore, in many eases the U.S. can derive benefits from technological advances abroad as these result in opportunities to import improved or lower-cost goods or the know-how required to produce them. Nevertheless, rapid changes in economic conditions, regardless of their source, can pose serious internal adjustment problems for the U.S.. Just as import competition has been a conspicuous source of internal adjustment problems in the recent past, it is likely that U.S. manufacturing subsidiaries of foreign-based finns will pose adjustment problems. But in both eases, it is the required adjustment to changed economic conditions, not the foreign technological progress itself, that is at the heart of the problem.

Productivity and balance of trade

The gains in living standards experienced in the United States over the past century reflect a dramatic increase in real output per worker. This rise in "labor productivity" has resulted from the combined effects of increased education, more and better capital goods, and improved technology. In recent decades, the same factors have led to similar productivity gains abroad; Figure 1-26 (SI-76, p. 35) shows that relative productivity grew at a slower rate in the United States than in any of its major industrial competitors over the period from 1960 to 1976. The figures for the U.S. are influenced in part by the recent increase in environmental and safety regulation. Because improved safety and environmental quality are not included in output measures, the higher costs associated with meeting the



new standards show up as decreased output per worker. Furthermore, as the au-

thors note, countries starting from a lower base would be expected to enjoy high-

er growth rates. However, SI-76 goes on to say (p. 35):

.. .it is also undeniable that a continued slowdown in U.S. productivity growth rates coupled with accelerated growth abroad may have serious long-term implications for the nation's economic position in the world.

If all this means is that other nations are likely to catch up to the United States in terms of output per worker and living standards, I would certainly agree. There does not appear to be any reason why the same growth process should not work in other nations as it did in the U.S.

The links between R&D and productivity growth and between R&D and the U.S. trade balance have received great attention in recent years. Interest has fo- cused upon the striking contrast between the large trade surplus of the high-technology industries and the deficit position of the remainder of the manufacturing

industries (Figure 1-28, SI-76, p. 37). U.S. competitiveness in international markets appears to be strongest for new and unique products, weakest for standardized products in which high labor costs outweigh the U.S. factor productivity advantage. Furthermore, as new products and processes become standardized and as the required technology is diffused abroad or successfully imitated, the U.S. advantage

is often eroded. Thus, the products which account for the high-technology surplus are changing over time.

The facts are clear enough but their interpretation is more treacherous. For example the text (S1-76, pp. 37-78) says:

Clearly the technology-intensive product group has been responsible for yielding surplus- es and largely covering deficits in trade from specific non-R&D-intensive product groups throughout the period until 1976. Its importance in maintaining an overall favorable trade balance is unquestionable.

If the statement is meant to be causal rather than arithmetic, it is not only ques- tionable but misleading. The problem arises from the implicit assumption that the performance of one industry is independent of that of another. In fact, each industry is connected to the rest of the economy in a number of ways, including

factor and product market linkages, behavior of exchange rates, and endogenous elements of U.S. and foreign commercial policy.

The R&D activities of a given industry may improve its competitive position, increasing foreign sales and decreasing penetration of its domestic market by im-

ports. However, spillover effects will also influence the costs, growth rates, and



international competitiveness of other industries. Thus, a government policy which succeeds in promoting R&D in a particular industry is likely to increase that industry's trade balance but will also influence the trade balances of other industries, through three types of interactions.

First, superior inputs become available to industries which buy from those developing new or improved products. Improved products sold by one industry can show up as cost reductions for others, with superior intermediate goods and capital goods making production of existing products less expensive and sometimes also facilitating development of further new products. Thus, successful innovation can induce a secondary wave of benefits in downstream industries.

Second, industries tap an interconnected market for productive factors. Even if incentives provided are not specific to particular sectors of the economy, differences in the profitability of making R&D investments are likely to imply that more activity will be generated in relatively "new" industries, where the rate of return on such activity at the margin has riot yet been forced down by past innovation and imitation. Thus, the high-technology industries will probably have the largest induced responses. The innovating industries will expand as profitable new products and processes are generated. New products and lower (quality adjusted) costs will allow these industries to increase their market shares, both domestically and abroad. The necessary expansion of these industries will draw capital and labor out of other parts of the economy and may also lead to an expansion of overall employment. As the technologically progressive industries expand, drawing in capital and labor, the prices of some productive factors will rise, resulting in higher costs for other industries requiring these inputs. This pull creates a natural and desirable incentive for stagnant sectors of the economy to contract, but may also cause some dislocations as declining industries become unable to compete in international markets. Older industries with slower growth rates are likely to suffer from the exodus of capital, entrepreneurial talent, younger and more skilled workers, as these resources are drawn into the more profitable expanding new sectors.

And third, spillover comes through consequences of successful innovation for the balance of trade and for exchange rates. With a flexible rate system, the expansion of exports by the technologically progressive sectors will induce an exchange rate appreciation. This makes other sectors of the economy less cost-competitive, even if they have been unaffected by factor market spillovers. When exchange rates are fixed or "managed", improved trade performance in some sectors may influence overall commercial policy by weakening the case for protectionist or mercantilist options. Thus, vigorous trade performance by some sectors may lead to a more liberal trade stance and less likelihood that broad-based balance of trade measures such as import deposit requirements, import surtaxes, or disguised export induce-



ments will be adopted or retained. While this is highly desirable for the economy

as a whole, it may exacerbate the already considerable adjustment problems of

stagnant industries. Thus, even if increased R&D incentives are in the nation's over-

all interest, they should not be supported as a panacea for lagging trade perform-

alice.

How does the U.S. compare?

Because the basic determinants of innovative success are poorly understood, the

data presented in SI-76 cannot support an unambiguous summary assessment of the

adequacy of current U.S. effort in the areas of science and technology. However,

some important generalizations do emerge from the data. First, while some nations

now rival the U.S. in relative expenditure for R&D, U.S. absolute expenditure con-

tinues to dwarf that of any nation except the U.S.S.R. And, although the U.S. has

slackened the pace of its R&D efforts as other nations have accelerated their own,

the U.S. remains preeminent by most measures of technological capacity. Neverthe-

less, continuation of present trends means a further narrowing of the technologi-

cal gap, with both costs and benefits for the U.S. Advance abroad will inevitably

threaten the U.S. position in world trade for some goods and services, thus ex-

acerbating the nation's current trade adjustment problems. But the U.S. may also

benefit substantially - as other major nations have in the past - from opportuni-

ties to :aise living standards through imports as well as export of advanced technology.

References

1. T. J. ALLEN, Jo M. UTTERBACK, M. A. S1RBU, N. A. ASHFORD, J. H. HOLLOMON, Government Influence on the Process of Innovation in Europe and Japan. Research Policy 7 (1978) 124-129.

2. H. BROOKS, Have the Orcumstances that Placed the United States in the Lead in Science and Technology Changed? in: Science Policy and Business: The Changing Relation o f Europe and the United States, D.W. EWING (Ed.), The John Diebold Lectures, 1971, Harvard University Graduate School of Business, Boston, 1973.


international indicators of science and technology: how does the u. s. compare?

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