PREPARING FOR THE 21ST CENTURY
TECHNOLOGY AND THE NATION'S FUTURE
National Academy of Sciences
National Academy of Engineering
Institute of Medicine
National Research Council
Since Abraham Lincoln approved the Congressional charter of the National Academy of Sciences in 1863, the Academy complexnow made up of the National Academy of Sciences, the National Academy of Engineering, the Institute of Medicine, and the National Research Councilhas been advising government about the impact of science and technology on society. The Academy complex provides independent advice to government by appointing committees of experts who serve without compensation, asking these committees to prepare draft reports by consensus, and subjecting these drafts to rigorous independent scientific review before release to ensure their quality and integrity. To avoid potential conflict of interest and bias, careful attention is given to the composition and balance of study committees.
As the 21st century approaches with science and technology assuming increasing importance in society, the Governing Board of the National Research Council has synthesized, summarized, and highlighted principal conclusions and recommendations from recent reports to inform decisions in a number of key policy matters. The resulting series of papers do not address all the intersections of science and technology with public policy, but they do address some of the most important. They are directed to federal administrators, members of Congress, university administrators, leaders of nongovernmental organizations, and all others involved in the development and implementation of public policies involving science and technology.
This paper focuses on government policies regarding technology development and proposes measures to facilitate the translation of new knowledge to new capabilities. Another paper in this series, "Science and Engineering Research in a Changing World," describes policies that can strengthen linkages between science and engineering research and national objectives.
Previous reports from the Academy complex have had a major effect on the technology activities and policies of the federal government. For example, two 19th-century reports provided advice on restoring the Declaration of Independence and controlling landslides during the construction of the Panama Canal. The issues summarized in this paper from past reports continue to be relevant to the work of the Academy complex and to the nation.
This document, with direct links to the text of all reports cited herein, is available on the Internet at http://www2.nas.edu/21st. A box at the end describes other ways to obtain information on the Academy complex and the topics discussed in this paper.
FOR THE 21st CENTURY
TECHNOLOGY AND THE NATION'S FUTURE
Private firms have the primary responsibility for the development and adoption of technology in this country, but federal and state governments play an important role in enhancing civilian technology development and adoption through their economic, regulatory, and trade policies, their support for research and development, and their own procurement of technology.
As the 20th century draws to a close, the technological landscape is changing. The United States is now only one of several technologically powerful nations. The end of the Cold War has heightened the importance of commercial technologies in maintaining both economic and military security. New technologies depend increasingly on scientific and engineering knowledge; this interdependence strengthens the reciprocal links between understanding and capability.
In the United States, technology development and adoption occur through a complex system that encompasses many individuals and organizations. Researchers in academic, government, and industrial laboratories create new knowledge on which many advanced technologies are based. Colleges and universities educate new generations of scientists and engineers who will put that knowledge to work. Private companies invest financial and human resources in developing new technologies and adapting existing technologies to meet perceived needs.
Several key objectives set forth in Academy complex reports can help guide the development and implementation of public policies related to technology. Among these objectives are the following:
|Knowing Where You Are
When Captain Scott O'Grady parachuted into Bosnia-Herzegovina after his F-16 fighter was shot down in 1995, he carried in his vest a portable radio receiver tuned to a network of 24 satellites known as the Global Positioning System (GPS). While hiding in the woods, O'Grady used the receiver to determine his position behind enemy lineslongitude, latitude, and altitudeto within a few tens of meters, and he was able to signal that information to the Marines who successfully rescued him.
GPS technology originated in the creation of atomic clocks for studying relativity and Einsteinian physics. It first found use in military applications, including the Gulf War. GPS technology became commercially available a few years ago, and since then the range of its applications has been exploding. Delivery and emergency vehicles now use GPS to pinpoint destinations and map their routes. Shipping companies and private boaters use GPS for navigation. Commercial airlines have saved billions of dollars by honing their flight plans with GPS. The current worldwide market for GPS receivers and technology is already estimated at over $2 billion and is expected to grow to over $30 billion in the next 10 years.
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The most-important role of government in technology development and adoption is maintaining an environment conducive to private-sector innovation and investment. Many policies affect that environment, including policies on taxes, trade, investment, patents, product liability, environmental and consumer protection, international arms control, and human resources. Those policies have multiple and sometimes competing aims. By explicitly recognizing the effects of public policies on technology development and adoption, government could better integrate its pursuit of technological, economic, and social objectives. (A-1)
The government's economic and regulatory policies have an especially broad influence on technology development and adoption. For example, government policies help to determine levels of investment in the economy, which in turn drives productivity, economic growth, and job creation. Public and private investment in research and development leads to new products and processes that can spur productivity, and investment in new facilities and equipment gives companies an opportunity to incorporate more-productive technologies into their operations.
Private investment is closely related to the level of public and private saving in the economy, and today the levels of both saving and investment are severely inadequate. As a percentage of gross domestic product (GDP), public and private saving has been below 3% since 1990, compared with norms of 8-10% among other industrial countries (20% in Japan). Half the saving shortfall in this country is a result of the need to fund the federal budget deficit. The other half results from a low and declining rate of private saving by households and companies. The resulting low level of investment will not sustain a growth in productivity sufficient to meet Americans' legitimate expectations for an improving standard of living.
|Standards and Conformity Assessment
As an example of how government policies can have both beneficial and harmful effects on technology development and adoption, consider today's policies governing standards and conformity assessmentthe testing and certifying of products and processes for their conformity to standards. A wide range of federal, state, and local government agencies are involved in developing standards for products, processes, services, interfaces, and materials and in assessing conformity to standards. Unnecessary duplication and complexity among government policiesespecially in conformity assessmenthave led to increasing costs and burdens for manufacturers, procurement agencies, testing laboratories, product certifiers, and consumers.
Government agencies should increase their use of private-sector consensus standards for both regulatory and procurement purposes and cooperate more effectively with private-sector standards developers. For example, the Department of Defense's experience in procurement reform indicates that relying on commercial standards instead of government-unique standards can substantially reduce acquisition costs. Recent legislation (P.L. 104-113) implemented National Research Council recommendations to extend and strengthen this policy throughout the federal government.
In addition, conformity assessment is performed most efficiently and effectively by the private sector. To simplify the system and lower costs, the federal government should immediately begin to phase out its conformity-assessment activities and to rely instead on private testing, certification, and accreditation services that are recognized as competent by the National Institute of Standards and Technology (NIST). NIST also should work with state and local governments to eliminate duplication at those levels.
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To address the saving shortfall, the administration and Congress should set benchmarks for private investment, net saving, and productivity growth. (A-2) Moving toward saving and investment rates of 8-10% of GDP over a 3-10 year period would contribute measurably to enhancing productivity and economic growth in the United States. These benchmarks do not need to be achieved immediately, but public officials need to set goals and develop a public consensus behind them, so that the actions needed to move toward the goals are not crowded out by short-term pressures.
Structural changes in US tax policy would be the most direct and effective way to increase investment and saving. While retaining the progressivity of the tax structure, the United States should move toward a system in which saving and investment are taxed less and consumption is taxed more. (A-2) Efforts to reduce the cost of capital in the United States and to emphasize long-term investments also could boost saving and investment rates.
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In some cases, government has a compelling rationale for directly enhancing the development and adoption of technologies. For example, federal and state agencies pursue a number of public missions that depend heavily on technological advances, such as safeguarding public health, ensuring national security, and protecting the environment. In the past, technologies developed with public funds to meet those government missions often have had important commercial applications. For example, federal R&D funding and procurement contributed substantially to the development of such high-technology products as airframes and aircraft engines, a wide range of pharmaceuticals and biomedical devices, satellites, semiconductors, computers, biotechnology, and nuclear power.
In select cases, the government also has a rationale for supporting the development of commercial technologies beyond those explicitly linked to federal agency missions. For example, there is a role for government in facilitation of the development of "path-breaking technologies"those with the potential to create major new industries or transform existing industries and thereby yield high returns to society as a whole but whose development poses risks too high to attract sufficient private-sector investment. Examples of past and present path-breaking technologies are nuclear medicine, biotechnology, semiconductors, aircraft engines, and communication satellites. Similarly, government has a role in facilitating the development of "infrastructural technologies"those that enhance the performance of a broad spectrum of firms in the near to intermediate term but do not offer sufficient private returns. Examples of these technologies are the development of engineering methods, compilation and validation of technical data, measurement tools, and the refinement of manufacturing processes.
Identifying technologies that meet those criteria is difficult and requires a combined public-private effort. The federal government should work with the private sector to ensure that the United States has world-class capabilities in technologies that promise to have a major and continuing impact on broad areas of industrial and economic performance. (B-1) But the government need not invest in fields in which the private sector already has programs of development in place. (B-2)
The concept of a government role in subsidizing the development of commercial technologies is controversial. Firms motivated by market forces and judged by their performance in satisfying demand have a better record than governments of investing in new technologies with large commercial payoffs. Insulated from market forces and critical evaluation, government support for commercial technologies risks being influenced more by political than by economic considerations. (B-3)
To sustain public support for technology development, government needs to develop criteria and mechanisms for evaluation, feedback, and institutional learning so that successes and failures can be identified and better understood. Government must be prepared to discard programs that do not work and reallocate resources to programs that do. Government R&D efforts also should avoid competition with commercial firms; government can then work more effectively with market forces and the private sector to leverage national strengths in science and technology to the enhancement of US productivity and economic growth. (B-2)
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The Academy complex has not conducted a comparative analysis of public- and private-sector responsibilities in civilian technology. But it has analyzed the roles of private and public organizations in several technological fields. These analyses point toward a number of ways in which government can play a constructive role in technology development and dissemination.
A notable example involves information technologies. Over the last 5 decades, information technologies have grown to a $500 billion industry, and the personal computer has become a defining symbol of our age. In 1945, it was not known that computers would become a revolutionary device that would profoundly affect industry, commerce, the financial world, government, science, education, communications, entertainment, and society as a whole. Today, information technology and its applications continue to advance steadily. Computers and communication technology will become even more valuable to society as they are increasingly able to recognize and simulate speech, build huge automated libraries, control robots, and even create virtual worlds where people can learn, work, shop, and be entertained.
The federal government has supported the development of information technologies in a number of ways. In the early days of the industry, government procurement, especially for defense and space applications, was a powerful influence on technological advances. Government also has funded a broad spectrum of research and development, from basic computer science to the development of prototype technologies, including the advanced networks that evolved into the Internet. Today, it is continuing to invest in a variety of new ideas and approaches. For example, the federal government supported the development of the Mosaic browser for the World Wide Web, which has led to the development of several commercial products that have greatly increased access to resources on the Internet.
The private sector will remain the principal source of research and development in information technology. But to ensure continued US leadership in information technology, the federal government needs to maintain strong support for a broadly based program of research. (C-1) Although sometimes the benefits from publicly supported research programs in information technology have been of unexpected types, the record of accomplishments suggests that government investment in computing and communications research has been very productive and has yielded high social returns despite the high risk involved.
It is important to maintain the information infrastructure. The competitive drive of private industry will dominate the process by which the National Information Infrastructure (NII) evolves. Private firms will build it; their business plans must justify the investments; and competition and the desire for new markets, not a pursuit of abstract visions or societal goals, will define and shape it. That reality provides the impetus that will make the NII happen; at the same time, it triggers many fears and concerns. In this context, opinions differ considerably on whether there is an appropriate government role in advancing the NII and, if so, what it is.
Most people can agree that an ideal information infrastructure would have such qualities as extended interoperability, broad accessibility, and support for broad participation. It would also allow multiple channels for many-to-many communications and information-sharing, as well as one-to-one communications (familiar today through telephony) and one-to-many communications (familiar through broadcast and cable television). Progress toward that ideal is more likely if the government can set an example with its own services and help to promote a consensus on a vision of the future by removing barriers to its realization. (C-2)
|Other Government Roles in the Development
of Information Technologies
Government also has a major influence on information technologies in its roles as customer, publisher, regulator, arbiter, conveyer of public interests, and leader in the interest of equity and a productive society. For example, although most communications standards are developed in the private sector, government is an essential partner.
New forms of communicationsuch as teleconferencing and electronic mail, publications, and bulletin boardsraise tough questions. For example, who is liable when someone posts a defamatory message, pornography, or copyrighted material on a publicly accessible electronic bulletin board? What is the role of regulation and law versus that of ethics, informal norms of community behavior, and the marketplace? Government will be a key player in building on existing traditions and rules to accommodate new media and new forms of human expression.
Cryptography is one important tool for protecting information that is very difficult for governments to control. Cryptography supports the confidentiality and integrity of digitally represented information (such as computer data, software, and video) and the authentication of individuals and computer systems communicating with other computer systems; these capabilities are important in varied degrees for protecting the information-security interests of many different private and public stakeholders, including law enforcement and national security. Furthermore, cryptography can help to support law-enforcement objectives in preventing information crimes, such as economic espionage.
Current national cryptography policy is not adequate to support the information-security requirements of an information society. US national policy should be changed to support the broad use of cryptography in ways that take into account competing US needs and desires for individual privacy, international economic competitiveness, law enforcement, national security, and world leadership.
The framework for national cryptography policy should provide coherent structure and reduce uncertainty for potential vendors and nongovernment and government users of cryptography in ways that it does not today. For example, no law should bar the manufacture, sale, or use of any form of encryption within the United States. Furthermore, national cryptography policy affecting the development and use of commercial cryptography should be more closely aligned with market forces. And export controls on cryptography should be progressively relaxed but not eliminated.
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Rapid progress toward a harmonious national environment of interrelated information services and capabilities would be valuable to the nation. A rational set of public and private services is unlikely to emerge from the action of market forces alone. However, the proper role for the government is to be a partner and participant with the private sector and to exercise its regulatory authority with restraint.
Another industrial enterprise in which government support for basic research and technology development has contributed substantially to US industrial leadership is aeronautics. In recent years, foreign aircraft manufacturers have made inroads into the global aircraft market, to the detriment of US interests. Foreign governments, in close relationships with their aircraft industries, have invested heavily in the basic aeronautics research and technology that is necessary for developing and maintaining a competitive posture, meeting future constraints on air-traffic management, and reducing the environmental impact of aircraft.
Technology alone does not ensure economic success in the aircraft industry; but without competitive technology, US manufacturers will fail economically. The federal government needs to work with commercial interests and universities to define the aeronautics technologies with the greatest potential payoff and work in a concerted fashion toward their development. (C-3) Government cannot adequately address the needs of industry unless industry is involved from the beginning. By the same token, cooperative programs can be structured so as not to jeopardize the autonomy of basic research or the constraints of fair trade.
New biomedical technologies often derive from the combined efforts of the public and private sectors. Academic, government, and industrial laboratories are all involved in the development of many new technologies, and ideas and people flow quickly among all three types of institutions. Efforts to control cost and regulate health care should be designed to encourage continued technological discovery and experimentation.
How services are provided and goods are produced, delivered, used, and disposed of affect the environment. An ecology of industry that is characterized by entire systems of production and consumption is a concept that can be used to enhance environmental quality. Advances in technology, applied usually by private firms, present the primary opportunities for improvement within these integrated systems. There are also opportunities for societies to become less resource-dependent and to develop and deploy environmentally safer materials, processes, and systems using technologies that are more environmentally sensitive. Corporate decisions and the personal choices of consumers are important determinants of environmental quality.
Policymakers need to formulate effective economic incentives to foster a systems approach to improving environmental quality. (C-5) In particular, they need to reduce liability barriers and regulatory barriers and develop ways of providing consumers with credible information about environmental impacts via such actions as marketing and labeling. (C-6, C-7)
The Partnership for a New Generation of Vehicles (PNGV), a cooperative R&D program between the federal government and the US Council for Automotive Research, has the goal of developing technologies for a new generation of vehicles that could achieve fuel mileage up to three times that of comparable 1994 family sedans. At the same time, the new vehicles should maintain performance, size, utility, and ownership and operating costs and should meet and exceed federal safety and emissions requirements. The intent of the program is to develop production prototype vehicles by 2004. The PNGV program also aims to improve national competitiveness in manufacturing substantially and to implement commercially sustainable innovation of conventional vehicles.
The United States enjoys the world's most-effective and most-extensive road transportation system. Over 175 million passenger cars and light trucks travel more than 2 billion miles a year on 3.9 million miles of public roads. Some extremely attractive technologies under consideration for the PNGV have the potential to introduce large changes in the demands on the infrastructure, which will result in requirements for new capital, labor, and natural resources. The extent of these changes will vary widely, depending on body and structural materials, power plants, and energy-storage systems.
The PNGV must continue to address infrastructure issues as an integral part of its program. A careful assessment of infrastructure issues associated with alternative technologies should be an essential part of the technology-selection process. (C-8)
As a final example of the government's varied roles in technology development, consider the collection and use of the geographic information that describes the arrangement and attributes of features and phenomena on the earthknown as spatial data. Many federal, state, and local agencies and private organizations generate and use such data for many purposes, including agriculture, land-use planning, and environmental management. An entity called the National Spatial Data Infrastructure acquires, processes, stores, and distributes the information. Data-sharing can minimize duplication, reduce long-term costs, and streamline analysis and decision-making. The public and private sectors should work together to integrate the collection, use, and distribution of spatial data into the National Spatial Data Infrastructure. (C-9) An integrated system would eliminate much of the overlap and duplication that occur today, while creating many new opportunities for the use of spatial information.
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The skills, capacity for continuous learning, and effective management of a nation's workforce largely determine the nation's ability to attract and retain high-value-added, high-skill industries and its ability to absorb and exploit new technology for economic benefit. US producers of goods and services must adopt more-productive approaches to the organization of work and the management and motivation of their workforce if they expect to cultivate and take advantage of their employees' skills, ingenuity, and creativity.
The United States has one of the largest, most-diversified, but poorly coordinated training enterprises in the world. In the United States, work-related training and continuing education are provided by a broad spectrum of private and public institutions, including 2-year colleges and technical institutions, noncollegiate postsecondary vocational schools, 4-year colleges and universities, apprenticeship programs, professional associations, unions, vendors, and employers. Across this vast and diverse training enterprise, there are few common standards, the quality of training is uneven, and important subsets of the nation's current and potential workforce are poorly served, particularly with regard to job-related training and continuing education within industry.
The United States should foster the timely adoption and effective use of commercially valuable technology throughout the economy by supporting experimentation at the federal, state, and local levels with a wide range of public and private initiatives for increasing the quantity and quality of school-to-work transition programs and of job-related training and continuing education for the nation's workforce. (D-1)
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Policies that influence the development and adoption of technologies must reflect two mutually reinforcing trends that build global networks of R&D, production, and marketing: (1) expanding international trade, foreign direct investment, and corporate alliances, and (2) converging technological capabilities of the industrialized nations.
Economic and technical interdependence among nations is growing, and this increasing interdependence is creating both opportunities and challenges for the private and public sectors. It opens doors to new markets, new technologies, and new sources of competition, which spur the creativity and productivity of US companies and workers. Many of the fastest-growing markets are now in other countries, and increasing openness in trade gives companies opportunities to compete in those markets. International interdependence also helps to disseminate new technologies and management practices. All those factors can contribute to productivity increases, wealth generation, employment growth, and higher standards of living in the United States.
At the same time, deepening interdependence has accelerated the pace of structural and organizational change within the US economy and has increased demands on individuals, organizations, and communities to adapt to changing circumstances. Those able to respond to demands can reap significant benefits, but those unable to adapt quickly and effectively can suffer severe economic hardships. The loss of control over national markets that is associated with international interdependence also can greatly complicate the task of advancing national interestseconomic, political, and military. In addition, shifts in the balance of economic and technological strength among nations can raise concerns about access to markets and technological assets. High-technology products and their development require particular attention in light of their importance to the national economy and because these industries are the target of industrial policies of many participants in the multilateral trading system.
A particular challenge that has been intensified by international interdependence involves the protection of intellectual property. Today, the competitiveness of many firms is determined by their ability to develop, commercialize, and, most important, capture the economic benefits of innovations. Intellectual-property rights, such as patent rights and copyrights, allow firms to protect their investments in innovation and R&D. But with innovations traveling so quickly around the globe, protection of intellectual-property rights needs to extend internationally to maintain current incentives for companies to innovate and invest in R&D. (E-1, E-2)
Growing international interdependence is not without its costs, but on balance this trend is a positive force both for the United States and for the rest of the world. Furthermore, it cannot be reversed or slowed substantially without unacceptable cost to the American people and the rest of the world. The critical question is how to respond to the trend more effectively so that we can maximize the associated benefits, reduce the associated costs, and find ways to distribute both the benefits and costs of globalization more equitably at home.
A case in point is the growing involvement of foreign companies, researchers, and students in US R&D. Through transnational alliances and direct investment in US companies, foreign firms are increasingly engaged in the US industrial R&D base. Similarly, foreign students, researchers, and firms are becoming more and more involved in publicly funded R&D performed in US research universities and federal laboratories.
Some policymakers and business leaders, noting the extent to which foreign researchers and companies draw upon the US R&D enterprise, have expressed concern about the transfer of technologies developed in the United States to other countries and about a corresponding loss of opportunities to US citizens. The concern is intensified when the technologies have potential national-security implications or when the foreign entities involved originate in countries that deny US citizens reciprocal access to domestic markets and R&D assets.
At the same time, it is clear that the United States derives substantial benefits from the involvement of foreign nationals in the country's research enterprise, as do foreign countries from the R&D activities of US firms. Each needs to work in the other's markets to be successful in their home markets. For example, foreign science and engineering talent in the nation's research universities, federal laboratories, and industrial R&D enterprise contributes substantially to our nation's technological and economic strength. The US affiliates of foreign-owned firms bring large amounts of technology and know-how into our country and employ over 100,000 Americans in US-based R&D. Given the magnitude of those benefits and the rapid growth of foreign technological capabilities in recent decades, US policymakers, in their attempts to address specific concerns related to foreign competition, should avoid actions that would deny the United States the benefits of foreign participation in US R&D. (E-3, E-4) Public policymakers should avoid restricting, whenever possible, transnational cooperative efforts among firms, provided that sufficient competition is preserved.
|Interdependence in Commercial Aircraft
The commercial aircraft industry demonstrates both the risks and the rewards of the globalization of R&D, production, investment, markets, and technology. For more than 50 years, US leadership in aircraft manufacturing and aviation has been a major component of our economic strength and national security. But today, as markets, capital, and technologies are increasingly global, international alliances and other cross-border linkages are increasingly common. In particular, the importance of companies based outside the United Statesincluding those in Europe and Japanis already substantial and growing rapidly.
For example, the growing strength of Japanese companies, particularly in the supply of aircraft components and equipment, constitutes one long-term challenge to US preeminence in transport aircraft. Yet US companies and the federal government have more to gain from promoting a balanced flow of technology between the two countries than they do from retreating into a defensive stance.
A private-sector effort, the National Aviation Advisory Committee (NAAC), composed of knowledgeable leaders from industry, academe, and elsewhere should be established to develop a shared vision for maintaining US leadership. The NAAC would provide input to government in identifying critical aerospace technologies, assessing international technology transfers, and improving civil-military integration in aircraft-technology development and manufacturing.
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There is a productive tension between the ideal of growing international interdependence and openness and the current unresolved issues in high-technology competition. The preferred approach is to arrive at mutually beneficial "rules of the game" for transnational corporations and their home and host countries. The rules cover a wide variety of policies, including antitrust restrictions, government procurement, intellectual-property rights, industrial targeting and subsidy practices, foreign direct investment, local content, and international standard-setting. While continuing to address unresolved issues, the federal government should further efforts to open foreign markets to US trade and investment through negotiation in bilateral and multilateral forums. (E-2, E-4)
The ability of the United States to capture the benefits of the global technical enterprise will depend primarily on the success with which private corporations operating within US borders seize the opportunities presented by the emerging global technology base. Policymakers can influence this success by recognizing the interdependence of domestic and international policies that affect technology development and adoption.
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The widespread perception of the middle to late 1980s that many American companies were less effective than their foreign competitors at harnessing the output of R&D is giving way to a more-optimistic view. Through their collective efforts, US companies are now more effective in responding to foreign competition. Overall, the US economy remains the most productive and competitive in the world. In many technological fields, the public and private sectors have worked together effectively to combine their contrasting capabilities.
Continued cooperation between the public and private sectors will be essential to meeting the objectives of both industry and the public at large. New technologies and new concerns will continue to emerge. Balancing the benefits and the risks of change will require communication, planning, and collaboration between government and business.
|For Further Information:
The World Wide Web site http://www2.nas.edu/21st includes up-to-date versions of all the documents in this series and on-line versions of the reports referred to in this document.
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