Can US Still Devise A Better Widget?

Having beaten back foreign competition and put its own corporate house in order for the short term, America has grown complacent about long-term research - the scientific effort that has produced everything from nylon to computer chips, advanced aircraft to the Internet.

The problem is twofold. Corporations overall no longer seem willing to boost spending on research and development. And the federal government is cutting back its own research efforts.

If proposed budget cuts go through this year, federal R&D spending could fall to 2.2 percent of the nation's gross domestic product, "pushing the United States into the second rank of industrial countries in terms of overall R&D effort," warns a new report.

"One of our big problems in the '70s and early '80s, when we got into problems, was complacency," says Erich Bloch, a fellow at the Council on Competitiveness, a private group of US chief executives that issued the report. "I hope we don't get back into that position. [But] I think there is a danger that we will."

Yet, government budget pressures and the narrowing focus of corporate research labs are such strong trends that even some of the biggest fans of R&D have quit calling for more funding. The Council on Competitiveness suggests instead that government, industry, and universities collaborate more.

Such R&D partnerships are increasingly popular. Unfortunately, say researchers who have studied the phenomenon, they're no substitute for healthy and increasing R&D budgets of corporations and the US government.

"The whole notion ... is ridiculous," says Barry Bozeman, director of Georgia Tech's public-policy school in Atlanta. "The notion that, in themselves, these institutional vehicles can somehow stem the tide of competition from other countries that are spending more on R&D is not a solution."

Partnerships are increasingly popular in corporate America because they have a compelling logic behind them. They allow corporations to narrow their own proprietary research on research issues of immediate interest and profit potential, while sharing the costs of more ancillary efforts and basic, long-term research.

"It's just optimizing the utilization of resources," says Victoria Haynes, vice president of R&D at BFGoodrich in Akron, Ohio.

The company, which exited the tire business to concentrate on specialty chemicals and aerospace, is using Georgia Tech's microelectronic engineering center in Atlanta to test materials for semiconductors. Had BFGoodrich tried to do the research on its own, "it would have taken us two years and millions of dollars to duplicate," Ms. Haynes says.

Universities are also anxious to partner. "I really do think that's the new paradigm," says Saul Fenster, president of the New Jersey Institute of Technology in Newark. Better than one-fifth of the faculty is working on collaborative research projects with industry. The university counts some of America's largest corporations as partners in its hazardous-substance management center, including Exxon, AT&T, Merck, Hoffmann-La Roche, and Union Carbide. Yet, in his 18 years as president of the institution, Mr. Fenster can only recall a couple of partnerships that failed.

But recent studies suggest that the overall impact of such partnerships is mixed. A US General Accounting Office survey of corporate partnerships with the government's Advanced Technology Program, for example, suggests that much of the research funded by the program would have been done anyway. Nearly half of the 89 research applicants surveyed who got funding said they would have continued their projects without government help; half of those surveyed who didn't get funding also went ahead with the research. Nearly two-thirds of the applicants didn't even try to get funding elsewhere before they applied for the federal program. The program is one of the main targets of the Republican-controlled Congress, which is eager to cut government and leery of federal meddling in applied research.

"The conclusions are really mixed," says Thomas Karier, a research associate of the Jerome Levy Economics Institute in Annandale-on-Hudson, N.Y.

Professor Bozeman of Georgia Tech, who has studied partnerships between industry and federal laboratories, found that despite a few big wins, which generated huge returns, most industry-government cooperative R&D didn't show much of an economic benefit.

Part of the problem is that universities and government have different R&D expectations than does industry. One increasing problem is that universities are loath to give up intellectual property rights, which they see as big potential revenue sources, says Larry Sumney, president of the Semiconductor Research Corporation in Research Triangle Park, N.C.

"There's been some misunderstanding and probably some pig-headedness on both sides," says Tom Everhart, president of the California Institute of Technology in Pasadena, Calif. The real issue is the free flow of information, which corporations sometimes try to restrict. But he sees the situation improving as universities, businesses, and government gain more experience working together.

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