5

Findings

As discussed in the previous chapters, international challenges facing the United States differ from previous national and economic security risks in a number of ways:

• Today’s technologies are increasingly based on broad and enabling platforms, whereby new applications, specific technologies, or processes are built on shared and reusable elements that provide enormous advantages in speed and/or scale for discovery, development, supply chains, and/or production.
• Those platforms are increasingly being developed in the private sector instead of being initially developed by the government.
• The nature of global competition has changed. The United States faces an adversarial near-peer competitor in China, with investments in research and development (R&D) on par with U.S. investments, a well-educated labor force triple the size of that of the United States, and a worldview different from that of the United States and its allies.
• Scientific research and technology development have become much more internationally distributed and integrated.
• Increases in R&D spending and STEM (science, technology, engineering, and mathematics) education in other countries have expanded the amount of research being done in academic settings outside the United States, along with an almost instantaneous flow of information across borders and within the United States.
• Industrial research and production have become globalized, because firms either have become multinational enterprises with affiliates and customers in many countries or are increasing offshore research and production.

The above differences, coupled with the increasing speed of both information flow and technology development and application, create challenges for the United States in both developing and maintaining the strength of its technology ecosystem and controlling the loss of technologies and information via both legal and illegal pathways. The United States will need to find solutions in policy; structure; focus; investment in research, infrastructure, and human capital; and governance—including solutions in both the public and private sectors—if it is to retain the technological advantages that have historically underpinned both national security and a vibrant, open, and agile innovation engine. In a world where change is increasingly driven by platform technologies, the speed with which new capabilities can be applied in both the national security space and the competitive commercial marketplace and the shorter life cycles of technical capabilities create a very different timeframe within which competitive technical dominance can be maintained. Thus, policies, structures, foci, investments, and governance tools must emphasize the removal of impediments to innovation and speed.

The analyses and case studies presented in Chapters 2 through 4 lead to 13 key findings.

Stemming from its world-leading R&D enterprise, its attraction of top talent from around the world to work in that enterprise, and a culture of risk taking and entrepreneurship that has fostered the translation of ideas into new products or services, the United States has enjoyed long-standing dominance in the capability to develop and commercialize new technologies. As discussed in Chapter 3, the United States emerged as the world’s dominant economic power after World War II, accounting for 40 percent of the world’s gross domestic product (GDP) in the 1960s while having less than 6 percent of the world’s population. Although the U.S. share of global economic production has dropped to about 24 percent, the United States achieves this production with just 4.2 percent of the world’s population, including talented people from other countries who have come here to study, work, and otherwise contribute to the U.S. economy and society.

As discussed in Chapter 2, during the Cold War the United States could outspend its competitors to maintain its scientific, technological, commercial, and military advantages. The set of technologies that drove military competitiveness

was relatively distinct from the set driving commercial products and markets. This separation between military and commercial technologies meant that foreign researchers could enjoy abundant opportunities to learn, create, and develop technologies in the United States without raising national security concerns. Under such circumstances, the dissemination of technologies of strategic importance to the United States could be clearly and vigorously controlled without substantially slowing the development of commercial technologies.

Technologies with primarily national security applications that need to be protected include, most prominently, those developed by the U.S. government within a federally funded R&D center or other protected research environment. These technologies generally pose high barriers to entry, whether because of access to raw materials or requirements for specialized knowledge. Examples include nuclear weapons, stealth technologies, precision guidance, and other military applications of technology. As described more fully in Chapter 2, applications of such technologies as artificial intelligence (AI) and synthetic biology being used for military purposes also need to be protected, even if that is not the case for the basic technology itself. The government needs to be proactive in identifying which technologies fall into this category.

Historically, leadership in scientific research and technology development has been built on the open exchange of information, broad participation, access to collaborators and research tools, and the flexibility to follow ideas to make discoveries. As noted above, however (see Finding 1), this level of openness was predicated on the assumption of U.S. economic and technological dominance. Restricted environments have the effect of limiting participation and access to information, reducing collaboration, and constraining innovation, all of which can unintentionally hamper progress. Limiting the adverse consequences of restrictions on R&D requires defining and maintaining different types of research environments that can match the restrictions being applied to the risks posed by a technology’s dissemination.

The United States has many strengths that could support a revamped technology protection strategy, including the continued ability to attract the global talent required to maintain a disproportionate share of global GDP; the ability of

companies and government to move quickly in developing, adopting, and integrating new technologies; the ability to leverage the strong national laboratory system, which includes both open and protected environments; and the ability to develop and exploit platforms that make use of resilient architectures to avoid the pitfalls of “perimeter defense” protection approaches. Important to keep in mind as well are the limitations imposed by the nation’s values (e.g., openness), how other countries might exploit those values to their own advantage, and how the approaches they might take to this end can be mitigated. And if the United States is to maintain its technological leadership, it will have to ensure that it leverages its relative strengths, including both its robust private sector with open, competitive markets that enable businesses to use capital efficiently and the intellectual freedom of its universities.

Protecting U.S. strategic advantages goes beyond simply protecting the technology outputs of the innovation system. It is about risk management: striking the appropriate balance between protecting those outputs and promoting the conditions that favor discovery and innovation. The U.S. government has a vital role in this risk management effort. It defines which areas of technology (so called “critical technologies”) are essential to U.S. interests; it defines the conditions for trust for participants in the development, production, or use of those critical technologies; and it accepts the risks of open research when those risks are outweighed by the benefits that accrue to the nation from remaining a leader in research, discovery, and the development of new technologies. The private sector performs similar risk assessments for technologies that are essential to commercial success, but the private sector cannot be expected to consider national security risks or the national interest.

As noted above and emphasized throughout this report, the United States today faces a competitive environment very different from that of the past. Other countries have been actively challenging the nation’s long-standing leadership in fundamental research and technology innovation, most often by emulating the approach taken successfully by the United States: developing world-class R&D environments, attracting talent, and investing in and supporting technology development. Given the strong R&D ecosystems of other countries, an approach based on preventing competitors from developing many technologies similar to

those developed in the United States by restricting access to or the use of those technologies is unlikely to succeed.

For such technologies as AI, synthetic biology, and advanced materials, the feedback between research and development is important to improving innovation and incorporating those technologies into products and processes. Many of these technologies also have low infrastructure costs relative to market size, lowering barriers for competitors. They are broad enablers of innovation and are incorporated into other technologies, functioning as platforms for many technological advances. Given declines in the costs of storage and transmission of data, AI is a notable example of a technology with limited infrastructure barriers. These factors increase the incentives for other countries to develop R&D systems that enable them to work on scientific and technological frontiers and enhance national competitiveness.

Risk management decisions have become more difficult as a result of the changes in technology and technology development described in Chapter 2. Technology products used to be largely discrete with well-defined purposes, but today’s technologies are increasingly composed of systems that are highly shared, have multiple purposes and applications, and provide enormous advantages in scale and capability. The application of these highly shared technology platforms is often limited only by a developer’s imagination, and control of such platforms runs the risk of inhibiting the ability to reap the benefits of leadership in these areas. The growing importance of platforms creates new policy problems for governing the development and use of the technologies that build on these platforms. Separation of technologies from the underlying platforms is often infeasible because of the loss of function or increase in costs that would result.

Because of the growth of strategic competition described in Chapter 3, as well as the importance to national defense of technologies driven primarily by considerations of global commercial application, the U.S. research community has seen a vast increase in the number and complexity of policies, processes, procedures, and requirements for the conduct of scientific and technological R&D. This increase, combined with the growing array of government stakeholders exercising authority, has created a set of overly complex—and sometimes conflicting—rules with major differences in requirements and their adoption and implementation across federal agencies. These rules limit the exchange of ideas, participation by other researchers, and international collaboration, slowing the pace of research and making research environments less attractive to talented people.

Over the past two decades, China has systematically pursued strategies for dominating technology development in key areas. It has invested in R&D, sought to attract talent from other countries, and made massive investments in new technologies. China also does not play by the same rules as the United States. The Chinese government is deeply involved in commercial technology development; research outputs and data from competitors are subject to diversion or theft; foreign participation in the Chinese economy is limited and monitored; technology standards and regulations are managed to advantage domestic technologies; and markets are distorted to advantage domestic companies.

China’s economy has grown substantially in the post–World War II period, surpassing that of Japan in 2010 to become the world’s second-largest economy. Today, China’s economy is estimated to represent more than 18 percent of the world’s GDP, rivaling that of the United States (though China also has 18.5 percent of the world’s population). China’s R&D intensity has also ramped up in

the last 5 years and, given a continuation of current trends, will surpass U.S. funding during the early part of this decade. China’s rates of publication and patenting in science and engineering now exceed the rates among U.S.-based researchers. Also, as described in Chapter 4, China’s ability to require companies to share information and its lack of strong privacy laws allow it to integrate and control information in ways that the United States does not, and its willingness to engage with authoritarian governments that the United States keeps at a distance provides it with access to markets and talent. China is willing to obtain technology through the acquisition of companies, foreign talent programs, and the theft of intellectual property, and it has learned that the United States will often react to such actions by establishing bureaucracies that will slow the U.S. innovation ecosystem.

Given the changing nature of today’s technologies as described in Chapter 2, the ability to attract the best talent from around the world is essential in many cases to developing a technology and its applications. As a result, many nations have increased their efforts to develop, recruit, and retain talented people in their R&D ecosystems.

Compared with the U.S. immigration system, the systems of other English-speaking countries, such as the United Kingdom, Australia, and Canada, are more flexible and more focused on skills. High-skilled immigration is growing more rapidly in other Organisation for Economic Co-operation and Development (OECD) countries than in the United States, and the U.S. share of international students has been declining. Other countries have launched initiatives to recruit talent, including students who have been trained in the United States. While recent U.S. immigration reforms have allowed foreign students to work in this country longer (through so-called optional practical training opportunities) after completing their degrees, the number of temporary work visas is capped, even for those occupations in which workers are in high demand.

The strengths of U.S. graduate education are an important asset that the United States can use to its advantage. Talented people want to be around other talented people, creating a virtuous cycle of self-sustaining recruitment and retention and of continuous improvement. As described in Chapter 4, even though many STEM graduate students in the United States are from China and will eventually return home, the vast majority (more than 70 percent) of these students intend to stay in the United States and add to the innovative capacity of this country. As shown in Chapter 3, although the number of international graduate students in science and engineering enrolled at U.S. universities declined in 2020 because of the COVID-19 pandemic, this decline was smaller for science and engineering graduate students than for graduate students in other disciplines. Foreign-born workers remain an important part of the U.S. STEM workforce—making up 20 percent of that workforce overall and in some disciplines representing a much higher share.