Views from the World
Is the United States Losing Its Edge in Science and Technology?
Titus Galama, Management Scientist, RAND Corporation
James Hosek, Senior Economist, RAND Corporation
(Keizai Koho, December 2008 issue)

A number of high-level reports have suggested that the United States is losing its leadership in science and technology. The reports, appearing since 2000, bear such titles as The Knowledge Economy: Is the United States Losing Its Competitive Edge?, Rising Above The Gathering Storm, and The Looming Workforce Crisis

  These reports come from diverse sources — government, academia, the private sector, policy think tanks — but draw the same conclusion. The growing strength of other nations in science and technology, coupled with inadequate U.S. investment in research and education, threatens to undercut U.S. leadership in science and technology. Many nations, not only the United States, are concerned with being left behind. The stakes are high. Science and technology are essential to economic growth, standard of living and national security. But has U.S. science and technology really weakened?

  Our research examined a number of measures related to science and technology inputs and outcomes. We found that that the United States has sustained its leadership in science and technology — by most measures, the United States has performed as well as, and in some cases better than, its peers. For instance, R&D expenditures grew somewhat more rapidly in the United States from 1996 to 2006 than in Europe and Japan (Figure 1, right hand panel). The growth in researchers in the U.S. has been comparable to that in Europe and greater than that in Japan. But new players are emerging such as India, Brazil, and especially China. Remarkably, China's R&D expenditures as a share of global R&D expenditures increased from 2.3 percent in 1993 to 9 percent in 2006 (Figure 1). However, at present China accounts for a very small share of outcomes, such as patents, science publications and citations. Estimates indicate that China had fewer than 400 triadic patents in 2005, while the U.S., Europe and Japan had around 15,000 each. A triadic patent represents an invention patented in the U.S., Europe, and Japan.

  What many observers fail to realize is that the globalization of science and technology, and the rise of this capability in other nations, can be economically and scientifically beneficial to the United States just as it is to other countries. This is not a zero-sum game. The use of new technology, whether created at home or abroad, can result in greater efficiency, economic growth and higher living standards as long as a country maintains the capability to acquire and implement new technologies. Investment in technology elsewhere can even lead to greater demand for a country's research in those research areas where it has a comparative advantage. Thus, the rise of China or India in science and technology does not imply the decline of the U.S., Japan, or Europe, but they must invest to sustain their capability to use new technologies and to maintain, or create, a comparative advantage in chosen areas of science and technology. This approach is consistent with Europe's Lisbon Strategy and Japan's commitment to corporate R&D capabilities as well as investment in basic science. It is also consistent with the considerable growth of U.S. R&D expenditures, much of which has come from industry. But some observers believe U.S. federal funding for basic research must be increased.

RandD Funding in Current Dollars at PPP 1993-2006 as Percentage of World
Figure 1: Total expenditures by region on research and development (federal and non-federal, current dollars at purchasing power parity) from 1993 to 2006.
Note: * Compound Annual Growth Rate (CAGR) describes the annual rate at which R&D funding grew per year as though it had grown at a steady rate (average annual growth rate).

  One presumed sign of the deterioration of United State science and technology is the apparent slow growth of science and engineering degrees. But growth in science and engineering degrees has averaged 1.5 percent per year over the past three decades and is no different from other fields of study. Furthermore, we found no evidence of a current shortage of scientists and engineers. From 1980 to 2005 the U.S. science and engineering workforce grew at the fast rate of at least 4.2 percent per year, nearly doubling the workforce to 4 million workers. Significant job creation has been supported by the influx of workers from other occupations, by the immigration of foreign scientists and engineers with advanced degrees, and by the many foreign students who study in the U.S. and subsequently find jobs in the U.S. The share of foreigners in the science and engineering workforce doubled from 6 percent in 1994 to 12 percent in 2006. Is this putting the United States in jeopardy?

  If the inflow of foreign-born scientists and engineers to the United States declined, the resulting decrease in the supply of scientists and engineers could lead U.S. firms to outsource more of their research and development to foreign countries and to locate new facilities overseas. Rather than protecting jobs, this could lead to reduced investment and employment in the United States. Yet the U.S. recently reduced the cap on H1-B skilled immigrant visas from 195,000, its peak during 2000-2003, to 65,000 currently. Further, between 1980 and 2000 the United States added 20 million workers with college degrees to the labor force, which more than doubled the college-educated workforce, but between 2000 and 2020, as baby boomers retire, only 8 million net additions to this workforce are anticipated. This suggests that competition for college-educated workers will intensify in the future. Europe, Japan, and China also have aging populations, and they will also be competing for tomorrow's college grads.

  The United States appears to remain the global leader in science and technology, but it cannot afford to be complacent. Europe and Japan have significant capabilities in science and technology, and India and China are building scientific capacity and rapidly educating their populations in science and technology. While the U.S. is likely to continue to benefit from the globalization of science and technology, globalization is a powerful force of change with an uncertain outcome. There are warning signs to heed. The heavy focus of U.S. federal research funding on the life sciences at the expense of other sciences is one. And we do not yet fully understand the consequences of an increasing reliance on foreign-born workers in science and engineering. The latest data show, for example, that more than 60 percent of engineering PhDs awarded by U.S. universities and colleges in 2005 went to foreign-born students. The persistent underperformance of high school students in math and science is another worry.

Titus Galama and James Hosek are researchers at the RAND Corporation.

Further reading: U.S. Competitiveness in Science and Technology, Titus Galama, James Hosek, RAND/MG-674-OSD, 2008, 188 pp., ISBN 978-0-8330-4424-2, $32. http://www.rand.org/pubs/monographs/MG674/

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