THE ADVANCED TECHNOLOGY FOUNDATION ACT HEARINGS BEFORE THE SUBCOMMITTEE ON ECONOMIC STABILIZATION OF THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS NINETY-EIGHTH CONGRESS SECOND SESSION ON H.R. 4361 A BILL TO PROMOTE THE COMMERCIAL APPLICATION AND DIFFUSION MARCH 14, 21, AND 28, 1984 Serial No. 98-77 125 Printed for the use of the Committee on Banking, Finance and Urban Affairs HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS FERNAND J. ST GERMAIN, Rhode Island, Chairman HENRY B. GONZALEZ, Texas STEPHEN L. NEAL, North Carolina NORMAN E. D'AMOURS, New Hampshire WILLIAM J. COYNE, Pennsylvania RICHARD H. LEHMAN, California MARCY KAPTUR, Ohio BEN ERDREICH, Alabama SANDER M. LEVIN, Michigan THOMAS R. CARPER, Delaware CHALMERS P. WYLIE, Ohio STEWART B. MCKINNEY, Connecticut GEORGE HANSEN, Idaho JIM LEACH, Iowa RON PAUL, Texas ED BETHUNE, Arkansas NORMAN D. SHUMWAY, California STAN PARRIS, Virginia BILL MCCOLLUM, Florida GEORGE C. WORTLEY, New York MARGE ROUKEMA, New Jersey BILL LOWERY, California DOUG BEREUTER, Nebraska THOMAS J. RIDGE, Pennsylvania CONTENTS WITNESSES Branscomb, Lewis M., vice president and chief scientist, International Busi- ness Machines Corp., and Chairman, National Science Board, National Heaton, George C., Jr., research associate professor of technology and policy, Wilson, Kenneth G., professor of physics, Cornell University, and member, Baruch, Jordan J., president, Jordan J. Baruch Associates, former Assistant Secretary of Commerce for Science and Technology (Carter administration).. Tribus, Myron, director, Center for Advanced Engineering Study, Massachu- 35 50 13 129 Drew, Russell C., vice president, professional activities, and chairman, U.S. activities board, Institute of Electrical and Electronics Engineers.. Frey, Donald N., chairman of the board and chief executive officer, Bell & 266 ADDITIONAL MATERIAL SUBMITTED FOR INCLUSION IN THE RECORD Letter to Chairman John J. LaFalce, dated April 12, 1984, containing 124 Prepared statement 268 Heaton, George C., Jr., prepared statement 40 Mansfield, Edwin, University of Pennsylvania, statement.. 175 Mowery, David C., prepared statement 54 "The Stevenson-Wydler Technology Innovation Act of 1980," report to the Page Tribus, Myron, prepared statement, with attachments, on behalf of the National Society of Professional Engineers 138 Wilson, Kenneth G.: Prepared statement 17 "Science, Industry, and the New Japanese Challenge," article, proceedings of the IEEĚ, January 1984...... 22 APPENDIX Merrifield, D. Bruce, Assistant Secretary of Commerce for Productivity, Tech- 284 289 THE ADVANCED TECHNOLOGY FOUNDATION ACT WEDNESDAY, MARCH 14, 1984 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ECONOMIC STABILIZATION, COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS, Washington, D.C. The subcommittee met, at 9:45 a.m., in room 2220 of the Rayburn House Office Building; the Honorable John J. LaFalce (chairman of the subcommittee) presiding. Present: Representatives LaFalce, Lundine, Vento, Kaptur, Levin, and Ridge. Chairman LAFALCE. The Subcommittee on Economic Stabilization will come to order. Today, we begin a series of important legislative hearings on H.R. 4361, the Advanced Technology Foundation Act. Its genesis was an extensive set of hearings on the declining international competitiveness of American industry. We saw during those hearings that while the United States remains the primary source of new scientific ideas, we are not devoting sufficient resources to develop those basic industries into generic technologies and cost-cutting new production processes. We devote a smaller fraction of our GNP to civilian research and development than do our competitors. As a nation, we currently spend about 1.7 percent of our GNP on civilian R&D, whereas Japan spends about 2.3 percent and West Germany about 2.5 percent. When we look at the proportion of Government-funded R&D devoted to industrial growth, the story is even worse. Only 1 percent of the Federal Government's R&D budget goes to industrial growth. Japan devotes 13 percent of its Government R&D budgets to industrial growth. West Germany devotes 14 percent, France, 8 percent, and even England, 4 percent. The United States, once again, 1 percent. The trends are obvious and the implications clear. For example, in fiscal year 1980, we spent 50 percent of our Government R&D dollars on defense. By fiscal year 1984, defense gobbled up 70 percent of our Government R&D dollar, and most of the rest was devoted to aerospace and energy. This skewing of priorities has pulled talented scientists in our prestigious institutions away from energy-related research toward defense-related research. Our priorities are clear. It is also clear that our international industrial competitiveness is being hurt. We've also learned that private firms tend to underinvest in ap |