Is the Decline of US Leadership in Science & Technology Real?.

    

According to an article entitled "US Competitive edge Narrows" in the January 23 issue of C&E News, the US is on a leadership decline in science and engineering. The information comes from the SEI, which is part of the NSB, which is part of the National Science Foundation (NSF). The NSF is one of the major US government agencies handing out taxpayer money as grants to academic institutions and private industries. I specify the origin of the report, to imply that this is not objective information. The NSF motivation for such report and particularly their interpretation, is likely an intention to obtain from Congress even larger sums of money for grant distribution they have in the past.
    

The C&E News summary says that scientific research and high-tech manufacturing are continuing to shift from the US and the European Union to Asian countries. Part of this is that US multinational companies are significantly increasing the amount they spend for research and production overseas. In the four years between 2004 and 2008, overseas R&D jobs from US companies increased by 41% and foreign investments increased by 30%. It is not clear why we don't have more current data. However, I will not dispute these figures.
   

Rather than looking at the picture of how we can immediately reverse this trend by throwing more US taxpayer money at it, let's look at the reasons this has occurred and perhaps we can change it.
    

Let's first look at Research and Development (R&D) jobs. For those not knowledgeable, Research and Development is a normal part of business enterprises. The intent is to spend approximately 5% of revenue investigating projects and opportunities which would contribute to expanding the business revenues and guaranteeing the continuance of the business in its present or associated lines. If in this expenditure, a better return on the buck can be obtained by doing it overseas, as opposed to the US, the obvious choice is overseas. However, let us not assume that the results of such US corporate foreign R&D is available to foreign governments or foreign enterprises. It is not. The results, which are paid for by US corporations, are the property of those same corporations.
    

With respect to high-tech manufacturing jobs, the situation is similar. If a US Corporation can use its technology in manufacturing goods in a foreign country at low cost, because of lower foreign labor cost and lower taxes, the operation can be more profitable. This is particularly advantageous with the free-trade policy of the US, where such foreign manufactured goods can be imported for sale to US customers without paying custom duties. Regulations on labor use and environmental considerations are usually significantly less in many Asian countries than they are in the US.
    

Therefore, the picture is not as bad as portrayed by this NSF report, but the fact remains that use of US R&D labor and capital investment in production are significantly reduced. The primary reason is the US government antibusiness attitude, with burdensome regulations and high taxes. This can be changed in a major way by changing the administration, but we already see some slight semblance of hope, as the Obama administration recognizes that some changes to promote job growth will be advantageous for his reelection.