The United States confronts a global competitive landscape that has radically transformed in the past decade. Fueled by global deployment of advanced telecommunications, trade liberalization, and economic reforms in many countries, globalization and integration of the world’s national economies have accelerated, and emerging economies represent a growing share of global business commerce. While these changes spread increased growth and economic opportunity around the world, the competitive arena is more crowed than ever before.

The United States must now compete against many other nations to attract and retain the R&D investment and business activities that drive our economy, and an increasing number of Americans at all skill levels find themselves in direct competition with foreign workers. High wage advanced economies will find it more difficult to compete in the global marketplace to perform many routine tasks, routine manufacturing and routine service delivery. In this environment, U.S. competitiveness will depend on our ability to develop and deliver “first to the world” products and services. Ensuring America remains the world’s leader in science, technology and innovation will be key to meeting this challenge.

This report examines the powerful forces driving this global economic transformation, and outlines an action agenda for policy makers to begin making the dramatic changes in support for innovation that will be necessary to ensure U.S. leadership in innovation in the 21st century.

A Transformed Competitive Landscape Some of the key factors driving today’s global economic competition include:

• China and India are becoming powerful actors on the global stage. China’s economic growth—averaging 10% since 2003—owes much to the extraordinary share of GDP devoted to capital investment. China is attracting substantial foreign direct investment, a significant portion of which is accounted for by non-Chinese producers locating manufacturing facilities there. Given its size and rapid growth, China’s economic transformation will have a large impact on the global marketplace.

Services are driving economic growth in India, accounting for more than half of India’s output. The Indian economy has posted an average growth rate of more than 7% since 1996. India is capitalizing on its large numbers of well-educated English-speaking people to become a major exporter of software services, IT workers, and IT-enabled services.

• Business enterprise has become increasingly global. The digitization of work processes and the slicing of these processes into value chains of separable activities, coupled with highspeed telecommunications, have dramatically reduced the costs of coordinating production and supply chains among globally distributed suppliers.

This has expanded the scope of tradable products and service tasks to IT, accounting, customer service, product design, R&D, and more. Multinational corporations increasingly employ global sourcing and delivery strategies. They develop products and services, and serve overseas customers through foreign affiliates, partners, and foreign business ventures.

While the digital infrastructure and globalization of supply chains have improved productivity in the United States—a key to improved living standards—and increased economic growth and opportunity around the world, they also present new competitive challenges for the United States.

• A global “trade in tasks” has arisen and created new competitive challenges. Billions of people from emerging economies have entered the global free market system. Many workers in these nations are educated, skilled, and ready for work. As a result, a growing number of American workers at every skill level are in direct competition with workers around the globe.

• Competition in high technology industries has grown more important. High technology industries are vitally important to the U.S. economy, and are driving economic growth around the world. High technology industries report about 30% more value-added than other manufacturing industries, they generally pay higher wages, and they are major performers of R&D.

Competition in high technology industries is expanding. South Korea and Taiwan are increasing their global presence in high technology manufacturing. National policies that combine government measures and corporate investments have spurred growth in high technology industries in places such as Ireland and China, exports by Asia’s high technology manufacturing industries have grown especially rapidly. ...

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ASTRA’s 14-Point INNOVATION ACTION AGENDA
(Not ranked According to Priority)

FEDERAL FUNDING: STRENGTHEN U.S. R&D ENTERPRISE

1. BALANCE DEFENSE/CIVILIAN SHARE OF FEDERAL R&D PORTFOLIO

2. INCREASE FEDERAL FUNDING FOR PHYSICAL SCIENCES AND ENGINEERING RESEARCH

The Congress and the Administration should fulfill the physical sciences and engineering R&D commitments made in the American Competitiveness Initiative (ACI). However, to ensure that funding expands beyond increases in inflation, the timetable for these investments should be accelerated. In addition, investment should be increased beyond the ACI recipient agencies.

3. INCREASE AND STABILIZE FUNDING FOR APPLIED RESEARCH

The Federal government should increase and stabilize funding for applied research and advancing promising, high-risk technologies with substantial economic potential to bring them to a stage of maturity that is attractive for private sector investment. This includes funding for the new Technology Innovation Program (TIP) and other programs that meet this objective.

In addition, the approach to SBIR funding should be reviewed to determine how this program could maximize its ability to contribute to the U.S. innovation base.

4. FOCUS R&D ON LEADING EDGE OF SCIENCE AND TECHNOLOGY

A large share of Federal R&D investment should focus on the leading edge of science and technology, especially in fields expected to have revolutionary impacts, such as nanotechnology, biotechnology, and high-performance computing.

5. INCREASE R&D TO SUPPORT GROWING SERVICES SECTOR

The Federal government should increase R&D to support the U.S. service economy, including support for services innovation, productivity, efficiency, competitiveness, and technical workforce development.

6. INCREASE FOCUS ON INTERDISCIPLINARY AND MULTI-DISCIPLINARY RESEARCH, NEW FORMS OF COLLABORATION, AND NURTURING INNOVATIVE CAPACITY IN GEOGRAPHIC REGIONS WHERE INNOVATIVE CAPACITY EXISTS BUT IS UNDER-USED

While investigator-driven research remains the cornerstone of Federally-supported academic R&D, the Federal government should increase attention to emerging opportunities for interdisciplinary and multidisciplinary research, including a focus on centers of research excellence where rapid development of innovations requires this type of collaboration. This includes reaching out to academic institutions in geographic regions in which the potential for innovative capacity exists—such as high quality research and researchers—but needs further nurturing.

7. PROVIDE INCENTIVES FOR BENEFITS OF FEDERAL R&D TO BE CAPTURED WITHIN THE U.S.

To ensure that the US. reaps the benefits of Federal R&D investments, the Federal government should examine what incentives can be put in place to enable adequate returns from public R&D to be captured domestically For example, the U.S. should consider devoting a small part of the Federal research portfolio to investments in applied research, technology prototyping, demonstration, testing, pilot-scale production and other precompetitive activities to increase the likelihood of eventual commercialization on our shores.

WORKFORCE & STEM* EDUCATION: DEVELOP A WORLD-CLASS WORKFORCE FOR THE INNOVATION ECONOMY

8. EXAMINE ADEQUACY OF U.S. SKILLS FOR INNOVATION ECONOMY

The U.S. needs to examine whether prevailing skill levels are adequate for an innovationbased economy, and for our success in the growing global “trade in tasks” in which routine knowledge work is easy to ship offshore.

9. IMPROVE STATISTICAL AND CAREER INFORMATION ABOUT THE U.S. SCIENCE, TECHNOLOGY AND ENGINEERING WORKFORCE

The U.S. should provide better and more detailed information on the nation’s need for scientists, engineers and information technology workers. The National Science Foundation should: encourage employers to better articulate their current and prospective STEM workforce needs, and the types of skills and disciplines needed; ensure students and workers understand what these specific skills and disciplines are; as well as encourage a significant shortening of the feedback loop between employers and their needs, and the responses by education and training institutions. This includes providing career information and nurturing to groups underrepresented in STEM—such as minorities and women—to increase their knowledge of opportunities in STEM education and careers.

10. IMPROVE HIGHER EDUCATION FOR SCIENTISTS AND ENGINEERS BY FOCUSING ON GLOBAL AND CULTURAL AWARENESS, COMMUNICATIONS, BUSINESS AND MANAGEMENT SKILLS

The Federal government should encourage university educators to broaden the skill sets of U.S. scientists, engineers and information technology workers. University educators should ensure that scientists, engineers and IT professionals have: global and cultural awareness; knowledge that helps them understand business, markets, marketing and customers; the ability to work as a member of and communicate effectively in teams of diverse disciplines; some understanding of business finance such as cost-benefit and return on investment concerns; as well as project management abilities.

11. STRENGTHEN EFFORTS TO ATTRACT TOP FOREIGN STUDENTS AND STEM PROFESSIONALS TO THE U.S.; REMOVE BARRIERS TO IMMIGRATION OF TALENT

The U.S. should strengthen efforts to attract top foreign students and PH.D.-level professionals in science, engineering and technology. This includes developing a national strategic plan for recruiting top international students, scientists, engineers and technologists, and evaluating the U.S. immigration system to remove barriers to these talented individuals migrating to the U.S.

CREATE A BUSINESS ENVIRONMENT TO SUPPORT INNOVATION AND COMPETITIVENESS

12. PERFORM WHITE HOUSE REVIEW OF LAWS, REGULATIONS AND POLICIES; ADDRESS INHIBITORS TO INNOVATION

The next President should launch a White House level initiative to perform a comprehensive review of U.S. laws and regulations relating to the business climate for innovation. This would include regulations promoting human health and safety, standards for environmental protection, as well as tax, trade and antitrust policies, to determine whether changes are needed to meet the nation’s public policy goals while, at the same time, promoting innovation and competitiveness.

13. DEVELOP A MEANINGFUL SET OF INNOVATION INDICATORS TO GUIDE U.S. INNOVATION POLICY AND STRATEGY

The Federal government should lead efforts to determine where the priorities are, and to begin the process of developing some high level indicators around the key drivers of innovation that are known and recognized.

14. CREATE, AND PROVIDE ADEQUATE SUPPORT FOR, BETTER GOVERNMENT ANALYSIS OF U.S. AND FOREIGN INNOVATION SYSTEMS

The U.S. must create—and provide meaningful financial resources to—institutions within the Federal government capable of performing high quality analysis of U.S. and foreign innovation systems, and formulating a Federal innovation policy and investment agenda commensurate with the new economic realities and 21st century competitiveness challenges.

About ASTRA:

ASTRA Background

ASTRA, the Alliance for Science and Technology Research in America, was founded in 2001 as an Internal Revenue Code (IRC) §501(c)(3) entity after a trial period beginning in 2000. Key scientific and academic institutions across the U.S. donated seed monies for ASTRA’s start-up. As its logo suggests, ASTRA is a unique collaboration made up of many sectors of the Scientific, Engineering and Technology communities.

ASTRA’s membership is well-balanced between industry, academe, nonprofit trade and professional organizations, small businesses and entrepreneurs. Dues payments are tax deductible to many.

ASTRA’s Mission

ASTRA’s core mission since 2000 has been to increase federal funding for fundamental research in the physical, mathematical and computational sciences and engineering. ASTRA has grown to a 100-plus membership organization with 6,600-plus “friends” nationwide.

Since 2000, ASTRA has performed the research, surveyed the public created new networks, and developed advocacy materials and programs to help the general public understand the importance of science and engineering to our economy, standard of living, and national security.

ASTRA has assisted in laying out the policy framework for important efforts like the America COMPETES Act, the American Competitiveness Initiative and other agency-specific issues related to federal R&D funding.

For More Information ...

ASTRA hosts two Web Sites: www.aboutastra.org and www.usinnovation.org. These sites provide extensive materials related to science and engineering policy and news. Podcasts, videos, survey data, RSS feeds from various science sources and survey capability are among the features of the ASTRA Web Sites.

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