Magazine article Management Review

Technology Policy Breeds New Era of Cooperation

Magazine article Management Review

Technology Policy Breeds New Era of Cooperation

Article excerpt

The policy wonks in the White House don't like to use the phrase, but the fact is the United States now has an official technology - read industrial - policy. Unveiled by President Bill Clinton last spring, the Administration has proposed a major activist role for the federal government, directly involving it in the development of key new commercial technologies and industries.

The centerpiece of the Clinton proposal is a $17 billion legislative package of tax breaks and government spending for high-tech development over the next five years. Included in these proposals are tax incentives to encourage more investment in smaller firms, along with a permanent corporate research and development tax credit. Additionally, the Administration has promised to shift more defense research spending to civilian agencies, make joint government and business commercial research and development projects a priority, while also spending up to $10 billion on such new high-tech infrastructure programs as high-speed trains and the so-called electronic super highway.

"The sound you hear is the door finally being shut on laissez-faire government," sums up economist Lester Thurow of the Massachusetts Institute of Technology, and a long-time supporter of more government involvement in economic and technology development. As Jeff Faux, head of the Economic Policy Institute, a Washington think tank, puts it: "The breakthrough is that this is not just a discrete initiative here or there. This represents a pervasive effort across the entire federal government."

It is the very pervasiveness of the Administration's technology proposals that worries conservatives who are afraid more government involvement will muck up rather than enhance the free market's decision-making process. "The federal government is going into the venture capital business" says Allan Meltzer, an economist with the American Enterprise Institute, a nonprofit Washington policy research group. "Is the government going to be able to do a better job than the private sector? I doubt it."

Yet there are vocal segments of the business community that feel more direct corporate-government cooperation and support is needed to keep America competitive in key technologies.

"This represents the beginning of an industrial policy," says Kirk Raab, CEO of Genentech, a California biotechnology company. "And I think we need an industrial policy in the United States, as long as its perspective is one of cooperation between business and government and [it is] not dominated by the government."

"There has to be a major change in how business and the federal government view each other," says former Bush Administration Secretary of Energy James D. Watkins. "Government must get a lot more smart and aggressive in working with business. We're seeing a major strategic change in national defense and nuclear weapons policies. This is a wonderful opportunity to invest the R&D dollars the government already spends in a more productive way."

Shifting Dollars

And Cents

Central to Clinton's plan to bolster the nation's technology base is shifting significant amounts of federal research and development monies being spent on defense projects to civilian research agencies, radically redirecting billions of dollars from military programs to potential joint ventures with private industry.

Traditionally, defense and nuclear arms research has accounted for about 60 percent of the federal government's $73 billion R&D pie. By 1998, however, the split between civilian and defense technology would be 50-50. Additionally, the nation's 700 federal research laboratories would start setting aside 20 percent, up from the current 5 percent, of their $25 billion budget for technology transfer and jointly funded projects with private companies.

Most of these monies would be channeled through the National Science Foundation and the Commerce Department's National Institute of Standards and Technology (NIST). …

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