> Incorporation of Foreign Research Assets into
>
> the US Innovation Infrastructure
>
> Christopher Pribe, Ph.D.
>
> DaimlerChrysler Research and Technology Center
>
> 1510 Page Mill Road
>
> Palo Alto, CA 94304
>
> <christopher.pribe@daimlerchrysler.com>
>
> 650.845.2547
>
> 650.845.2500 Fax
>
> September 17, 1999

# 1. Summary

> America benefits in many ways from the very forces, such as expanding
> international commerce and the worldwide proliferation of new
> telecommunications and data networking capabilities, that contribute
> to the globalization of innovation. If globalization of innovation is
> indeed a product of otherwise desirable forces, it is improbable that
> it can be combated effectively without harming other national
> interests. Rather than combat globalization directly, Federal policy
> should seek to promote the utilization of foreign researchers and
> research assets abroad by domestic innovators.
>
> Specific near term policy initiatives intended to accomplish this
> include:

-   *Develop New Visa Types*, including the association of visas with
    domestic innovators rather than foreign individuals and the creation
    of special \'group\' visas for groups of foreign researchers
    associated with a particular topic or innovator,

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-   *Foster Innovation Clusters Abroad* and help match domestic
    innovators with these clusters, and

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-   *Make Telework Work*, support access to dedicated high-bandwidth
    telecommunications to support teleconferencing and disseminate tools
    for remote operation of research equipment.

> The goal of these initiatives is not simply to give domestic
> innovators access to foreign research assets (FRA\'s). Properly
> implemented these initiatives may be used to influence the evolution
> of talent pools abroad and, to some extent, compartmentalize foreign
> research clusters in order to protect the America\'s relative
> advantage in innovation. Further, these initiatives will help make
> innovation a more attractive occupation, both inside and outside the
> United States, so that the absolute innovative capacity of the world
> is protected.

# 2. Globalization of Innovation and Research as an International Business

> America\'s innovative capacity is decreasing. Other nations are
> increasing their innovative capacity \[PS99\]. This means our relative
> advantage in innovation is being diminished. Due to a number of
> factors, innovation is an increasingly global affair. One view is that
> the globalization of innovation is bad for America. Another view,
> presented here, is that we can and should foster and exploit
> innovation capacity worldwide to shore up our own innovation
> infrastructure.
>
> The incorporation of foreign research assets into the United States
> innovation infrastructure would help protect not only our own
> innovative capacity, but also that of the rest of the world. A drop in
> our innovative capacity relative to the world\'s aggregate capacity
> should not be our main concern: It is likely that the conditions
> causing our decreasing capacity will ultimately infect others. One
> example condition is the \'digital brain drain\' that is drawing
> bright individuals from the hard sciences into information technology
> \[Deu99\].
>
> America\'s best interest lies in harnessing the world\'s innovative
> capacity. Our leadership in technology and capital can be used to help
> shape and distribute innovation worldwide. The absolute innovative
> capacity of America will be preserved, as will our relative innovative
> advantage with respect to other individual nations. The sections below
> describe the lay of the land with regard to exploiting global
> innovation capacity. These sections discuss the following points.
> Research and innovation are increasingly run as a business. And, that
> business is a service business. It, like many other white-collar
> service businesses, may be outsourced internationally. In fact,
> examples of international research \'services\' already exist.
> Technology is a fashion business.

## 2.1 Research as a Business

> Today, it is primarily groups that conduct research and innovation
> rather than single individuals. These groups usually work within a
> larger non-research organization, typically a business. Increasingly,
> these groups live off \'project funding,\' which means researchers
> must obtain internal or external grant or contract funding. This in
> turn means that the \'real\' work of innovation, investigating ideas,
> developing new concepts and so forth, is enveloped within marketing
> and \'production\' work. Senior researchers are usually responsible
> for concept development and marketing. Junior researchers or others
> conduct the production work. This work includes developing prototypes
> or running experiments. This work is starting to be outsourced.

## 2.2 Internationalization of White-collar Services

> According to the Far Eastern Economic Review, demand for off-shore
> white collar services will soar in the next decade \[Goa99\]. For
> example, the combined markets for engineering and design, network
> management and consulting, remote education, data analysis and
> management, and market research will reach \$58 billion by 2010. The
> intelligence, technical skill level, and communication ability
> required in these services are roughly comparable to those expected of
> junior/supporting researchers.
>
> In some ways, research services are better candidates for outsourcing
> abroad than \'real world\' services. The quality demands on
> demonstrators or prototypes are usually quite low when compared with
> the quality demands for finished products. Also, senior researchers
> often have wider exposure to foreigners than do many executives.

## 2.3 Examples of International Research \'Services\'

> International research \'services\' already exist and do work.
> Typically, the service work done is implementation work, rather than
> concept development. Senior researchers specify the work and it is
> conducted remotely. Naturally, this works better in some fields than
> others. However, new technology, such as improved teleconferencing and
> practical teleoperation, will further reduce impediments to day-to-day
> cooperation amongst innovators in different locales. Here are
> examples:
>
> DaimlerChrylser maintains a research and technology center in India.
> This center focuses on the implementation of ideas and concepts
> developed by other research units. The quality of the work is
> sufficient for research and the cost is far lower than in the United
> States and Germany.
>
> Intel conducts research in many areas that have the potential increase
> the demand for computer chips. Image processing is one of these areas.
> One researcher located at Intel in San Jose leads a team of 11
> researchers based in Russia. He travels to Russia once a quarter and
> uses the Internet to exchange software source code. These researchers
> cost significantly less than a comparable team in the United States.

## 2.4 Innovation Clusters as Technology Fashion Centers

> Porter and Stern describe \'clusters\' in which companies within
> related industries create a nucleus of innovation. Silicon Valley is a
> leading area for innovation in information technology. But, it is more
> than simply an innovation cluster: It is also technology \'fashion\'
> center. The value of a particular technology is sometimes determined
> relative to related technologies. For example, the JAVA computer
> language is very popular right now, but it is not necessarily superior
> to other, similar languages. Its popularity is due to the influence of
> fashion leaders. Innovators who are \'out of the loop\' with respect
> to the latest fashions are at a disadvantage. This fact motivates
> foreign researchers to work with domestic fashion leaders. The Federal
> policy initiatives recommended below will help protect America\'s
> position both as a science and technology leader and as a \'fashion\'
> leader.

# 3. Recommended Federal Policy Initiatives

> I describe three policy initiatives below: 1) Develop new visa types,
> 2) Foster innovation clusters abroad, and 3) Make telework work. These
> are small steps, but they would reflect a general stance that protects
> both the United States and other nations\' innovative capacity.

## Develop New Visa Types

> Currently, visas are issued to individuals. It would be helpful to
> issue visas or visa slots directly to domestic innovators in a way
> that promotes remote work. For example, a \'group\' visa might be
> created so that one of several individuals from a selected group would
> be able come to the United States. The individuals in the group, the
> number of individuals that could visit at any one time, and the
> cumulative allowed time for all visits would be defined by the group
> visa. Specific individuals from the group and their specific visits
> would be dictated by project demands and controlled by the domestic
> innovator within the bounds set by the visa.

## Foster Innovation Clusters Abroad 

> The U.S. government would identify and certify foreign research assets
> and help domestic innovators match these assets to their needs.
> American colleges and universities train many foreign individuals to
> be innovators. An increasing number of these individuals are returning
> to their native countries after they have been educated. How many of
> these individuals are actually used to their fullest once home? The
> United States Government (USG) should create a program to match these
> individuals and other foreign research assets with domestic
> innovators. Program officers would concentrate and direct domestic
> demand with the objective of fostering and localizing innovation
> clusters abroad. Each cluster would be used for a single specific
> strength only. This program would allow the USG to influence the
> development of innovative strength within foreign countries. One goal
> of the program would be to distribute innovative strength in such a
> way as to protect the ability of domestic innovators to lead fashions.
> Another would be to limit the downside of the globalization of
> innovation: The program would help guide global innovation through the
> careful association of clusters with countries. Intel\'s researcher
> might, for example, be directed to a country besides Russia for help.

## Make Telework Work

> Advanced telecommunications and the Internet have revolutionized work.
> They have enabled international outsourcing of services. However,
> limitations remain. Federal policy should encourage work to make
> telework work better. This might include, for example, encouraging
> means to expand communications bandwidth or reduce its cost. This
> might include access to America\'s next generation Internet in certain
> cases. It might also include funding work to enable teleoperation of
> scientific instruments. Stated simplistically, could United States
> then simply buy more instruments to help maintain its relative
> advantage in the future?

# 4. Protecting Our Innovative Capacity Worldwide

> Our relative advantage in innovation is diminishing. Certainly, we
> should act to protect our innovative infrastructure and encourage our
> innovators. But the same factors that are eroding our innovative
> capacity will eventually come to haunt other nations. Innovation is
> difficult and claiming the rewards for innovation is, in many fields
> and in any nation, more difficult still. Although, making innovation
> in advanced fields attractive to individuals in a world of instant
> Internet billionaires may be an impossible quest, the initiatives
> proposed take modest steps to protect our innovative capacity and our
> relative advantage. They will also protect and encourage the capacity
> for innovation worldwide.

# References

> \[Deu99\] Claudia H. Deutsch, Digital Brain Drain: So Many Computers,
> So Little Interest in Hard Science*, The New York Times*, September 2,
> 1999
>
> \[Goa99\] G. Pierre Goad, At Your Service*, Far Eastern Economic
> Review*, September 2, 1999
>
> \[PS99\] Michael E. Porter and Scott Stearn*, The New Challenge to
> America\'s Prosperity: Findings from the Innovation Index, Council on
> Competitiveness*, March 1999