Computing Research Policy Blog

A Closer Look at the RAND Report on U.S. Competitiveness in S&T

[Dustin Cho is CRA's new summer fellow from the Tisdale Fellowship Program, which has been bringing college students to Washington, DC, for internships that explore current public policy issues of critical importance to the high-tech sector. Dustin is a recent graduate of Yale University with a degree in political science and an interest in the intersection of public policy and technology. After suffering through what is sure to be a tortuous summer with us here at CRA World HQ, Dustin plans to begin law school at Harvard in the Fall. Until then, expect to see plenty of his writing here on the blog as we wring all we can out of him. -- Peter]

I’ve just finished reading the RAND report, and as Peter points out, its authors take the contrarian position that U.S. science is as competitive as ever. They contend that the U.S. remains on top, and we’re not in danger of being overtaken because our R&D growth rates are pretty much the same as the rest of the world. According to RAND, there are only a few countries whose R&D growth outpaces ours, such as China and Korea, and all of these countries are starting from next to nothing (from 1993 to 2003, China only had to add $6B per year to grow at 17 percent, while the U.S. was adding more than double that amount annually and growing at 5.8 percent). Journalists’ interpretation: there’s nothing to worry about.

That’s a dramatic oversimplification, because the underlying message of the report is that we should stop looking at R&D as a horse race – and that R&D is crucial to the United States’ future, regardless of what other countries are doing.

The report argues that it’s nonsense to talk about R&D expenditures as “competition” between countries, since one country’s scientific advancements will end up increasing the standard of living for everyone in the world who can access its derivative technology. In fact, there are probably network effects to research such that increased funding actually has increasing returns – in other words, if there’s already a lot of worldwide R&D, then an extra dollar spent on research will allow another scientist to build off of other researcher’s developments, increasing every scientist’s productivity. So when other countries (or the U.S. itself) decide to invest more heavily in R&D, U.S. R&D productivity actually improves.

That said, the report also emphasizes the importance of maintaining the U.S.’s comparative advantage in R&D. Right now, it’s relatively cheaper to do science and technology research in the U.S. due to our infrastructure, labor, and funding advantages. But as Harvard economist Richard Freeman points out, if other countries (such as China) overtake us in these areas, their lower wages might actually give them the comparative advantage, thereby severely damaging the U.S. economy as we’re forced to retool our infrastructure toward different industries. Freeman thinks it’s likely poorer countries will somewhat succeed in this by specializing in certain subfields and producing a lot of highly educated researchers. But the U.S. will be better equipped to maintain its comparative advantage if we encourage immigration of skilled researchers, increase federal funding, and improve infrastructure for R&D.

The RAND report also shows that life sciences have received disproportionate federal funding, resulting in a glut of life sciences PhDs and hurting their salaries. In other S&T fields, employment demand has outstripped degree production. “The most notable instances of divergence between employment growth and growth in degrees are mathematics/computer sciences and physical sciences,” the report explains. “Mathematics/computer sciences degrees grew by 4 percent per year [from 1980 to 2000] – the highest rate of degree growth in S&E – while mathematics/computer sciences employment grew by more than twice that, 9 percent per year.”

In fact, the only reason we have comparable R&D growth rates to other countries in federal funding is due to increased life sciences funding – non-life sciences S&T growth has basically flatlined. Private investment in R&D has increased, but it’s no replacement for federally funded academic research: “Even though industrial R&D is much larger than academic research expenditures, academic spillovers increase the R&D performed by industry significantly, and have a comparable effect on patents.” The report argues that network effects from increased academic research improve the productivity of private R&D.

Since the bulk of the report examines ways to improve the United States’ R&D, it’s disappointing that media coverage (and the RAND press release itself) choose to overemphasize the counterproductive message that the U.S. is still the world leader in science and technology. Instead, shouldn’t we focus on how to keep it that way?