Expansion of the restrictions on "deemed exports", the passing of technical information to foreigners in the United States that requires a formal export license, is expected to cover a much wider range of university and industry settings.68 Companies that rely on the international members of their R&D teams and university laboratories staffed by foreign graduate students and scholars could find their work significantly hampered by the new restrictions.

Expanded or new categories of "sensitive but unclassified" information could restrict publication or other forms of dissemination. The new rules have been proposed or implemented even though many of the lists of what is to be controlled are sufficiently vague or obsolete that it could be difficult to ascertain compliance." The result could be to force researchers to err on the side of caution and thus substantially impede the flow of scientific information.

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Both approaches could undermine the protections for fundamental research established in National Security Decision Directive 189 (NSDD-189), the Reagan Administration's 1985 executive order declaring that publicly funded research, such as that conducted in universities and laboratories, should "to the maximum extent possible" be unrestricted.70 Where restriction is considered necessary, the control mechanism should be formal classification: "No restrictions may be placed upon the conduct or reporting of federally-funded fundamental research that has not received national security classification, except as provided in applicable U.S. statutes." The NSDD-189 policy remains in force and has been reaffirmed by senior officials of the current administration," but it appears to be at odds with other policy developments and some recent practices.

CONCLUSION

Although the United States continues to possess the world's strongest science and engineering enterprise, its position is jeopardized both by evolving weakness at home and by growing strength abroad. Because our economic, military, and cultural well-being depends on continued science and engineering leadership, the nation faces a compelling call to action. The United States has responded energetically to challenges of such magnitude in the past:

⚫ Early in the 20th century, we determined to provide free education to all, ensuring a populace that was ready for the economic growth that followed World War II.

The GI Bill eased the return of World War II veterans to civilian life and established postsecondary education as the fuel for the postwar economy.

The Soviet space program spurred a national commitment to science education and research. The positive effects are seen to this day--for example, in much of our system of graduate education.

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6 In 2000, Congress mandated annual reports by the Offices of Inspector General (IG) on the transfer of militarily sensitive technology to countries and entities of concem; the 2004 reports focused on deemed exports. The individual agency IG reports and a joint interagency report concluded that enforcement of deemed export regulations had been ineffective; most of the agency reports recommended particular regulatory remedies.

"Center for Strategic and International Studies. Security Controls on Scientific Information and the Conduct of Scientific Research. Washington, DC: CSIS, Jun. 2005.

70 Fundamental research is defined as "basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons". National Security Decision Directive 189, Sept. 21, 1985. Available at http://www.aau.edu/research/ITARNSDD189.html

"Note that some do not believe this is the case. See Box 3-2.

The decline of the US semiconductor manufacturing industry in the middle 1980s was met with Sematech, the government-industry consortium credited by many with stimulating the resurgence of that industry.

Today's challenges are even more diffuse and more complex than many of the challenges we have confronted in our past. Research, innovation, and economic competition are worldwide, and the nation's attention, unlike that of many competitors, is not focused on the importance of its science and engineering enterprise. If the United States is to retain its edge in the technology-based industries that generate innovation, quality jobs, and high wages, we must act to broker a new, collaborative understanding among the sectors that sustain our knowledge-based economy-industry, academe, and government-and we must do so promptly.

4

METHOD

The charge to the Committee on Prospering in the Global Economy of the 21st Century constitutes a challenge both daunting and exhilarating: to recommend to the nation specific steps that can best strengthen the quality of life in America our prosperity, our health, our security. This chapter is an overview of the committee's methods for arriving at its recommendations and for identifying the specific steps it proposes for their implementation. Chapters 5-8 identify the committee's list of action items. Appendix E is an overview of the committee's investment cost of its proposed actions and programs. Appendix F provides the rationale for the K-12 programs proposed in Chapter 5.

Despite a demanding schedule for completion of the study, members reviewed literature and case studies, studied the results of other expert panels, and convened focus groups with expertise in K-12 education, higher education, research, innovation and workforce issues, and national and homeland security to arrive at a slate of recommendations.

The focus groups, involving over 66 individual experts, were asked to identify, within their issue areas, the three recommendations they believed were of the highest urgency. The results became raw material for the committee's discussion of recommendations. The committee later met numerous times via conference call to refine its recommendations as it consulted with additional experts. Final coordination involved extensive e-mail interactions as the committee sought to avail itself of the technology that is pervading modern decision-making and making the world "flat", in the words of Thomas Friedman (see chapter 1).

REVIEW OF LITERATURE AND PAST COMMITTEE RECOMMENDATIONS

Before meeting in person, the committee requested a compilation of the results of past studies on the topics it was likely to address. Appendix D provides these background papers on topics such as science, mathematics, and technology education; research funding and productivity; the environment for innovation; and science and technology issues in national and homeland security.

The committee used those documents as a means to review the work of many other groups. Some were individual writers and scholars1 and others were blue ribbon groups, such as the one chaired by former Senator John Glenn, which produced the report Before It's Too Late for the National Commission on Mathematics and Science Teaching for the 21st Century and others at the Council on Competitiveness, Center for Strategic and International Studies,

'Richard B. Freeman, Does Globalization of the Scientific/Engineering Workforce Threaten US Economic Leadership? NBER Working Paper 11457, Cambridge, MA: National Bureau of Economic Research, 2005. Before It's Too Late: A Report to the Nation from the National Commission on Mathematics and Science Teaching for the 21st Century. Glenn Commission Report. Washington, DC: U.S. Department of Education, 2000. Council on Competitiveness, Innovate America, Washington, DC: Council on Competitiveness, 2005.

* Center for Strategic and International Studies, Global Innovation/National Competitiveness, Washington, DC: Center for Strategic and International Studies, 1996.

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Business Roundtable," Taskforce on the Future of American Innovation, President's Council of Advisors on Science and Technology, National Science Board, and other National Academies committees, such as those which produced A Patent System for the 21st Century," Policy Implications of International Graduate Students and Postdoctoral Scholars in the United States and Advanced Research Instrumentation and Facilities." Others were the committee and analyst at other organizations who have gone before us producing reports focusing on the topics discussed in this report. There are too many to mention here, but they are cited throughout the report and range from individual scholars to the Glenn Commissioning on K-12 education, the Council on Competitiveness, the President's Council of Advisors on Science and Technology, the National Science Board, and other National Academies committees. Such work and the reaction to it once published were invaluable to the committee's deliberations.

The committee decided to provide a "box" in each chapter containing alternative points of view as captured in a review of existing reports, studies, reviewer comments, and informal consultations with experts and policy-makers.

The committee examined numerous case studies to gain a better understanding of which policies had the most potential to influence national prosperity. For example, many of the recommendations on K-12 and higher education rely on extrapolating successful state or local programs to the national level. The committee also reviewed existing federal programs for higher education and research policy that work well in one place and could potentially be applicable to other parts of the federal infrastructure. The committee also studied other nations' experiences in implementing policy changes to encourage innovation.

FOCUS GROUPS

The focus groups (Appendix C) convened experts in five broad areas-K-12 education, higher education, science and technology research policy, innovation and workforce issues, and homeland security. Group members were asked to identify ways the United States can successfully compete, prosper, and be secure in the global community of the 21st century.

Their contributions were compiled with the results of the literature search and with recommendations gathered during committee interviews. More than 150 concrete recommendations and implementation steps were identified and discussed at a weekend focus group session in Washington, DC. Each focus group, following its own discussions, presented its top three proposed recommendations to the committee members and to other focus-group participants.

5 Business Roundtable, Tapping America's Potential, Washington, DC: Business Roundtable, 2005.

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Task Force on the Future of American Innovation, The Knowledge Economy: Is America Losing Its Competitive Edge? Washington, DC: 2005

The President's Council of Advisors on Science and Technology, Sustaining the Nation's Innovation Ecosystems, Report on Information Technology Manufacturing and Competitiveness, January 2004.

* National Science Board. Science and Engineering Indicators 2004. NSB 04-1. Arlington, VA: National Science Foundation, 2004.

National Research Council. A Patent System for the 21st Century. Washington, DC: National Academy Press, 2004.

10 National Academies. Policy Implications of International Graduate Students and Postdoctoral Schlors in the United States. Washington, DC: National Academy Press.

11 National Academies. Advanced Research Instrumentation and Facilities. Washington, DC: National Academy Press, 2005.

COMMITTEE DISCUSSION AND ANALYSIS

The committee itself met over that same weekend and then in weekly conference calls. Using the focus-group recommendations as a starting point, the committee developed four key recommendations (labeled A through D in this report), which it ranked, and 20 actions to implement them. It assigned ratings of either most urgent or urgent to each of the four recommendations. They are summarized here. Specific implementing actions are discussed in later sections of this report.

Most Urgent

10,000 Teachers, 10 Million Minds, and K-12 Science and Mathematics Education. Increase America's talent pool by vastly improving K-12 science and mathematics education.

Sowing the Seeds through Science and Engineering Research. Sustain and strengthen the nation's traditional commitment to long-term basic research that has the potential to be transformational to maintain the flow of new ideas that fuel the economy, provide security, and enhance the quality of life.

Urgent

Best and Brightest in Science and Engineering Higher Education. Make the United States the most attractive setting in which to study and perform research so that we can develop, recruit, and retain the best and brightest students, scientists, and engineers from within the United States and throughout the world.

Incentives for Innovation. Ensure that the United States is the premier place in the world to innovate; invest in downstream activities such as manufacturing and marketing; and create highpaying jobs that are based on innovation by modernizing the patent system, realigning tax policies to encourage innovation and the location of resulting facilities in the United States and ensuring affordable broadband access.

Unless the nation has the science and engineering experts and the resources to generate new ideas, and unless it encourages the transition of those ideas through policies that enhance the innovation environment, we will not continue to prosper in an age of globalization. Each recommendation represents one element of an interdependent system essential for US prosperity. Some of the committee's proposed actions and programs involve changes in the law. Some require substantial investment. Funding would ideally come from reallocation of existing funds, but if necessary, via new funds. The committee believes the investments are small relative to the return the nation can expect in the creation of new high-quality jobs, inasmuch as economic studies show that the social rate of return on federal and private investment in research is often 30% or more (Tables 2-1 and 2-2). The committee fully recognizes the extant demands on the federal budget, but it believes that few problems facing the nation have more profound implications for America than the one addressed herein and, thus believes, that the investment demands it entails should be given high priority.