Chapter
2. BRIEF BACKGROUND OF STUDY
In the late 1980s,
low-cost, high-quality Asian production was eroding U.S. high-tech
markets. Policy makers and corporate leaders believed that U.S. firms
needed to improve their productivity, and that sustained economic
growth through new product and process innovation would best achieve
this goal. There was evidence that firms were systematically underinvesting
in leading-edge technologies and failing to commercialize the products
of their own research activities effectively (e.g., Deretouzos, Solow,
and Lester, 1989). These concerns, buttressed by academic arguments
pointing to a potential market failure in the area of early-stage
technological developments, motivated new proposals to modify the
role of government in the innovation system. A key legislative initiative
resulting from this process was the creation of the Advanced Technology
Program (ATP) through the passage of the Omnibus Trade and Competitiveness
Act of 1988.
The ATP commenced in
1990 with the mission to foster the development and broad dissemination
of high-risk technologies that offer the potential for significant,
broad-based economic benefit to the United States. One important
policy tool is to fund research consortia. From 1990 to 1995, 96
research consortia received funding from ATP. Figure 1 shows the
total budget of ATP-funded research consortia by sector from 1991
to 1997, revealing that the total budget for consortia funding increased
substantially in later years.
Similar data are shown
in Figure 2 for Japanese R&D consortia. The comparison between
U.S. and Japanese R&D consortia is made because Japan’s
involvement in publicly supported research consortia predates U.S.
involvement and provides long-term data on the impact of research
consortia on research outcomes. These data were used to develop a
framework for analysis of U.S. data. Figure 2 shows that Japanese
funding for R&D consortia peaked in the late 1970s and the early
1980s. A comparison of Figures 1 and 2 suggests that the funding
of U.S. consortia is more evenly distributed by sector than Japanese
funding.1
Other differences are
also evident between U.S. and Japanese research consortia. The average
duration of ATP-funded research consortia is just over 4 years, as
compared to 7 years for Japanese consortia. Furthermore, a typical
ATP-funded research consortium tends to include a large firm and
several small firms plus university participants, while the size
of participating firms in a typical Japanese consortium is more evenly
distributed. This discrepancy may reflect ATP’s emphasis on
the inclusion of smaller firms among consortium participants.
Figure
1. ATP-Funded Research Consortia, Total Budget by Sector
Source:
ATP’s Business Reporting System.
Figure
2. Japanese R&D Consortia Total Budget by Sector
Source:
Sakakibara (1994).
NOTES:
