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NBSIR 87-3671

NBS ISSUED NOVEMBER 1987

PUBLICATIONS _______

FINAL REPORT The Status

of Emerging

Technologies:

An Economic/

Technological

Assessment

to the

Year 2000

JUNE 1987 — QC

100

. u 56

87-3671

1987

C • 2

U.S. DEPARTMENT OF COMMERCE

National Bureau of Standards

Gaithersburg, MD 20899

ISSUED NOVEMBER 1987

NBSIR 87-3671

Research Information Center

National Bureau of Stanuards

Gaithersburg, Maryland 20899

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QCloo

- U~ ST C? no ' IQ F7

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FINAL REPORT The Status

of Emerging

Technologies:

An Economic/

Technological

Assessment

to the

Year 2000

U.S. DEPARTMENT OF COMMERCE

C. William Verity, Secretary

National Bureau of Standards

Ernest Ambler, Director

The Department of Commerce has concluded, in a review of

emerging technologies and their future impact on the economy,

that American businesses lag behind many of their foreign

competitors, especially the Japanese, in exploiting technological

breakthroughs

The review was ordered by Deputy Secretary Clarence J. Brown

in April 1986 to identify the new technologies that will lead to

new products or processes, analyze their commercialization, and

recommend means of reducing the barriers. It is based on an

assessment by technical experts and agency heads within the

Department. They studied scientific and industrial plans and the

commercialization process here and abroad.

Once the list of technologies was determined, the experts

determined their probable contribution to the gross national

product by the year 2000. While recognizing this as an imprecise

measure requiring some subjective forecasting, the Department

believes it to be the best proxy to judge economic impact.

Although the technologies are ranked in terms of high, moderate

or low impact, the terms are relative; all are expected to play a

significant role in future growth.

Identifying the technological opportunities and their

probable economic effect is not difficult. The real problem

facing U.S. companies is converting these opportunities into real

economic success. The review’s primary focus is upon identifying

ten barriers to commercialization and making recommendations for

overcoming them. The recommendations require action by all

sectors of American life, sometimes unilaterally and occasionally

together.

The barriers to commercialization are also ranked in order

of importance. The two most important are inadequate tax

incentives and the high cost of capital. The remaining barriers

include two that require actions by individual companies. The

Department found that there is a lack of integration and

communication among functions within companies, and it also cites

companies for being too complacent and dependent on the domestic

market for growth opportunities.

The recommendations include fostering participative

management by employees, training managers in the production

process, eliminating provisions in foreign tax laws that

discriminate against U.S. products, and updating business school

curricula. They also reiterate recommendations of President

Reagan's competitiveness initiative, such as those regarding

improving export controls, reforming product liability and tort

laws, and lifting antitrust restrictions.

Since the list of technologies was determined, there have

been significant and highly publicized breakthroughs in the field

1
of superconductors — materials that have zero electrical

resistance. Several developments must be achieved before their

economic potential can be realized, particularly an improvement

in the current-carrying capacity of these materials. Until it is

known whether this is possible, superconductors should be

considered a potential emerging technology . The accompanying appendices describe in detail the

technologies, barriers, and recommendations.

2
APPENDICES

APPENDIX A

APPENDIX B

APPENDIX C

- DESCRIPTIVE TABLES

Table 1 - Emerging Technologies (4 pages)

Table 2 - Emerging Technologies Ranked by Economic

Impact

Table 3 - Generic Barriers to Achieving Maximum

Benefits from Emerging Technologies

- DETAILED DESCRIPTIONS OF BARRIERS

- RECOMMENDATIONS OF METHODS TO OVERCOME BARRIERS

3
What

does

it

do

new

Applied

to

what

Used

by

What

Major

or

better ?

products

or

processes ?

industries ?

Higher

efficiency

Solar

cells

Ehergy

generation

photovoltaic

conversion
What

does

it

do

new

Applied

to

what

Used

by

What

Major

or

better ?

products

or

processes ?

Industries ? - 8

LA
(includes
What

dees

it

do

new

Applied

to

what

Used

by

What

Major

or

better ?

products

or

processes?

Industries? & 8

VO

i"-.
Table 2

Group A

Group B

Group C

EMERGING TECHNOLOGIES RANKED BY ECONOMIC IMPACT

(Highest) Advanced Materials; Composites

Biotechnology? Genetic Engineering

Electronics; Optoelectronics

Electronics? Advanced Microelectronics

Computing? Computing equipment

Automation; Manufacturing

Automation? Business and Office Systems

Biotechnology? Biochemical Processing

Medical Technology? Drugs

Advanced Materials; Ceramics

Automation? Technical Services

Computing? Artificial Intelligence Tech.

Medical Technology; Devices

Thin Layer Technology? Membranes

Advanced Materials? Metals

Thin Layer Tech. ? Surfaces & Interfaces

Electronics; Millimeter Wave Technology

8
Table 3

GENERIC BARRIERS TO ACHIEVING MAXIMUM ECONOMIC BENEFITS FROM

EMERGING TECHNOLOGIES

1. High costs of capital funds in the U.S. relative to foreign

competitors

2. Tax incentives for U.S. companies relative to foreign

competitors to deploy emerging technologies (including the

stability of tax regulations)

3. Poor integration of manufacturing, design, and R&D functions.

4. Inadequate laws, regulations, and enforcement protecting

intellectual property rights in the U.S. or overseas.

5. Complacency and dependence on the domestic market.

6. Restrictive trade policies in foreign markets.

7 . Federal or State regulations on corporate activities intended

to protect the public health and safety (e.g. , building codes,

environmental laws, drug approval regulations, and occupational

health regulations)

8. Export controls on advanced technologies and high-technology

products.

9. Restraints and uncertainty caused by product liability and

tort laws.

10. Anti-trust restrictions against cooperative ventures for

marketing or production methods. There may still be perceived

barriers against cooperative R&D, but legal restrictions against

procompetitive R&D were eased by legislation in 1984.

9
APPENDIX B

DETAILED DESCRIPTIONS OF

GENERIC BARRIERS TO ACHIEVING MAXIMUM ECONOMIC BENEFITS FROM

EMERGING TECHNOLOGIES 1.

High costs of capital funds in the U.S. relative to foreign

competitors.

Higher interest rates, lower debt-equity ratios, cultural

practices, and tax laws combine to make the effective cost of

capital funds for U.S. firms up to twice as high as their

Japanese competitors. For example, U.S. savings rates, as a

percentage of GNP, have historically been, and continue to

be, among the lowest of developed countries (and about half

that of Japan) . Recent declines in the value of the dollar

relative to foreign currencies have reduced some capital cost

differentials, but the above factors combine to keep that

differential high.

2.

Tax incentives for U.S. companies relative to foreign

competitors to deploy emerging technologies (including the

stability of tax regulations)

.

Foreign countries continue to employ a variety of incentives

to encourage the growth of new technologies. These range

from subsidies for the conduct of R&D to import protection of

the products derived from the new technologies, at least in

their early marketing stages. U.S. firms receive few such

subsidies. Some predict that recent changes in the tax law

will have a stultifying effect upon venture capital, thus

denying U.S. firms access to a previously major source of

funding for new high-technology firms.

Frequent changes have made it difficult for U.S. businessmen.

Drafting of regulations often lag behind legislation

significantly. These changes and delays have created an air

of uncertainty in business planning: uncertainty is always an

anathema to the businessman.

3.

Poor integration of manufacturing, design, and R&D functions.

For rapid movement of new technologies through the functions

of R&D, design, product development, and production, it is

necessary to have effective communication among these

functions. Lack of willingness and opportunity of key

technical staff to move with the emerging technology from R&D

into manufacturing, for example, has been common in U.S.

10
organizations, although much improvement has occurred in

recent years. A contributing factor in the U.S. has been the

lower status, reflected in lower salaries and recognition,

given to manufacturing relative to other branches of

engineering.

Lack of cooperation and integration among institutions in

the U.S. is just as important a barrier as among functions

within a firm. For example, more rapid application of new

technologies could be the result of closer coupling of firms

to technical activities in Universities and Federal

laboratories, and from intercompany cooperation to jointly

address generic or structural technical problems of a

longer-term nature. In this category would fall the classic

Government research (carried out by NBS , NOAA, and NTIA) to

provide technical data and standards that industry needs to

design reliable new products/processes, but single firms do

not have the incentive, expertise, or funds to develop

themselves

The Japanese are said to be particularly strong in

integrating functions; this may partly account for the rapid

speed with which their firms introduce new products into the

market. Rotation of staff among these functions in Japan

also helps this integration process.

4. Inadequate laws, regulations, and enforcement protecting

intellectual property rights in the U.S. or overseas.

U.S. businesses rely upon strong intellectual property

protection to realize the benefits of emerging technologies.

In fact, the rate of development of emerging technologies may

well depend upon patents as incentives and security for R&D

or marketing investment, and upon trademarks to build and

protect reputations for quality. Barriers exist where laws,

regulations or enforcement procedures are inadequate. When

innovation is neither rewarded nor encouraged, markets are

either forfeited, left untapped, or are underdeveloped.

Examples of domestic barriers include (1) the inadequacy of

the statutory 17-year patent term for certain agricultural

and pharmaceutical products which are subject to extensive

premarket testing, and (2) the absence of effective

protection for process patent holders against imports of

products made abroad under the patented process.

On the international front, it is well recognized that many

countries do not offer adequate intellectual property

protection and, in some cases, actually sanction abuse of

intellectual property rights. This would include, for

example, a nation's outright appropriation of foreign-owned

technologies or of creative and artistic works. This robs

11
the inventor or creator and, of course, the associated

business concern of any possibilities of realization of world

market potential.

5. Complacency and Dependance on the Domestic Market

This barrier encompasses the attitudinal problems generated

by the size and ready availability of the U.S. market for new

products and services — the lack of an immediately apparent

need to compete with Japan and other countries head-to-head

in the international marketplace. American companies,

separately and in joint ventures, must aggressively seek

export opportunities abroad and anticipate challenges in the

U.S. from new foreign competitors. This barrier also

encompasses the attitudinal differences toward "risk taking"

between U.S. and Japanese firms and the cultural differences

in approaches to production and marketing. The Japanese

preference is to produce and market technological

improvements in small increments, thereby gaining a foothold

and experience in the marketplace. The U.S. approach is to

complete as much research and development as possible before

producing and marketing a new product which "leapfrogs"

existing technology.

6. Restrictive Trade Policies in Foreign Markets

Restrictive trade policies take many forms -- laws,

regulations and practices — with an overriding consequence

of protecting a home market from foreign products. Although

most of these policies are sponsored by governments, business

practices and social mores may also act as significant trade

barriers

.

Direct Government Practices are one type of policy affecting

trade. Included here are:

Tariffs and other import duties designed to protect a

domestic market rather than to raise revenues.

Import licensing designed to create uncertainty,

delays, and discrimination for foreign products.

Government procurement (i.e., buy national products)

Product development and export subsidies programs.

Indirect Government Practices are a second type of policy.

Included here are:

Standards codes, testing, labeling, and certification

requirements which interfere with market availability

and acceptance of foreign products.

Local or domestic content (e.g. rules or origin)

12
requirements on foreign products which adversely

affect technology and process innovations.

Market reserve policies that designate certain

markets for domestic products only.

Disregard of intellectual property rights by foreign

governments which undermine the ability to exploit

markets with new products.

Non-trade and Non-government Measures and Practices are a

third type. Included here are:

Public health and safety laws that indirectly

restrict the importation of foreign products.

Local and national distribution systems that

discriminate against foreign products through

interlocking relationships among manufacturers,

wholesalers, and financial institutions.

7. Federal or State regulations on corporate activities

intended to protect the public health and safety (e.g. , building

codes, environmental laws, occupational health regulations, and

drug approvals)

Emerging technologies generally require, somewhere in their

development and production, some form of environmental

and/or health clearance or regulation. This will occur on

the Federal or State levels depending on which of the

Federal regulation (s) apply.

Those technologies involving large-scale use of new

materials, particularly in the broader electronics

categories, will have to continue to meet the existing

water, air and disposal requirements. In the case of new

and exotic materials, such as the new semiconductor

compounds (e.g. Gallium Arsenide) , OSHA regulations are

constantly being revised to protect against potential

hazards, while EPA has control of various emissions through

clean air and clean water legislation.

Solid waste reclamation also will enter into the cost of

using new technologies. Disposal of new composite materials

as scrap in products that have reached the end of their

useful life, will impose a new set of costs and possible

barriers. The present case of what to do with worn-out lead

storage batteries is a good example of what might happen to

a higher technology material with end-of-cycle toxicity.

For those technologies involved in medical and health care,

regulations covering production, product certification,

standards, OSHA considerations and disposal add to the

burden of time/testing, as well as to the cost of meeting

13
stringent health and environmental standards. The current

issues surrounding the regulation and testing of

genetically-altered naturally occurring organisms is a prime

example of an emerging technology in the early stages of

development.

The costs and time delays involved are further exacerbated

if competing countries have less stringent certification and

environmental requirements. Technologies in those countries

are often put into production faster, thus putting U.S.

suppliers at a competitive disadvantage. There are several

recent examples in the pharmaceutical industry of the effect

of these differences.

8 . Export controls on advanced technologies and high-technology

products

.

While the need for control of the export of technology for

purposes of U.S. national security has been clearly

established, the costs attributable to "over-control" are

also now becoming more apparent. That is, the Executive

Branch's inability to decontrol goods and technology -- that

are no longer strategic or are available from foreign

competitors—is now seen as inhibiting our ability to remain

technologically superior to our international competitors as

well as contributing to the erosion of our defense

industrial base . The Department of Commerce is trying to

establish interagency procedures that will facilitate the

decontrol to take place as Congress intended.

9. Restraints and uncertainty caused by product liability and

tort laws.

With increasing frequency, claims are made that innovation

and ability to compete are retarded in the U.S. by product

liability and tort laws. The resulting uncertainty and

instability have brought about a need for reform. Reasons

include

-- A patchwork of 50 different state laws on product

liability. Cases based on similar facts, but tried

in different states, can produce strikingly

different and contradictory results. — The enormous transaction costs for all parties

involved in litigation. — The high costs of insurance for product-liability

related protection.

14
Over the past 20 years our product liability law has moved

away from fault as its basic guiding principle. The

Commerce Department has taken the position that as a matter

of fairness to manufacturers and as an incentive to them to

construct new and safe products, businesses should generally

be held liable only for behavior based on fault.

10. Anti-trust restrictions against cooperative ventures for

marketing or production. There may still be perceived barriers

against cooperative R&D, but legal restrictions against

procompetitive R&D were eased by legislation in 1984.

Many U.S. anti-trust restrictions have been in place,

substantially unchanged, for over 75 years. In these times

of strong foreign competition and worldwide markets, U.S.

firms are at a disadvantage when compared to foreign firms

not subject to such strong, legal strictures. Production

economies not envisaged when the original laws were enacted

are now possible. These economics permit firms jointly to

build and operate facilities at lower cost, thus improving

world-competitive positions. Facilities housing flexible

automated manufacturing systems are one example, but other

shared facilities are also possible. Joint production by

large firms, joint marketing of the products, and mergers of

such large firms are subject to close scrutiny by U.S.

Federal agencies, even though they may increase efficiency.

This is viewed as an anachronism, particularly in the light

of foreign practice.

Cooperative funding of procompetitive R&D was eased by

changes enacted in 1984 which, among other things, reduced

damages to be assessed to losses actually incurred. These

changes are still not as widely known as they might be, with

the result that some cooperative U.S. ventures are not being

undertaken in fear of anti-trust prosecution.

15
APPENDIX C

RECOMMENDATIONS OF METHODS TO OVERCOME BARRIERS

BARRIER: HIGH COST OF CAPITAL IN THE U.S. RELATIVE TO FOREIGN

COMPETITORS

Efforts to reduce Federal budget deficits should continue

because of negative effects of the high deficits on capital

markets and on interest rates.

State and local level efforts to meet local capital needs

should be encouraged. The creation of venture capital pools

would help increase the availability of capital for the new,

high-risk developments that sometimes have very large

innovation and competitive payoffs. Investment rebates and

other incentives might also be used.

Actions should be taken to increase aggregate savings in the

U.S. Additional tax incentives (beyond the recent tax

reform) , direct appeal to savers, and other actions could

increase savers willingness to save rather than consume.

Increased savings levels are necessary to help increase

capital supply and lower interest rates. The U.S. savings

level is much lower than in competitor nations.

BARRIER: TAX INCENTIVES FOR DEVELOPMENT OF NEW TECHNOLOGIES

In order to encourage rapid commercialization of

technological advances, any future changes in the tax law

should focus on the incentives available for long-term

investment in all factors of the production, marketing, and

distribution processes. Changes in cost recovery provisions

should not force U.S. companies into a competitive

disadvantage. American businesses must have confidence that

major tax changes will not be made repeatedly.

The tax laws of foreign countries should be analyzed to

determine if they discriminate against U.S. products being

sold there. Discriminatory effects should be alleviated

through negotiation or, if necessary, compensated through

legislation.

BARRIER: POOR INTEGRATION OF MANUFACTURING, DESIGN, AND R&D

MARKETING FUNCTIONS

All managers should have a grounding in the basic production

process of the company. Beyond this, managers should

receive cross-functional training so they have at least a

16
minimal appreciation of finance, personnel, technology

development, marketing, as well as production.

Top management must foster attitudes throughout management

staff that foster flexibility, change, innovation and

adaptability.

Business schools must update curricula to train business

students in the total process — from R&D to marketing and

servicing. Business students must see any particular

specialization within the fullest context of what is

required for corporations to achieve maximum productivity.

BARRIER: INTELLECTUAL PROPERTY PROTECTION

Industrial firms in the U.S should take great care in

transferring their technology and other intellectual

property to foreign firms. For protecting the

competitiveness of the nation as a whole, firms should

establish safeguards against non-economic transfers.

Export control procedures should be changed to include

intellectual property protection agreements and concerns, so

that sales by U.S. firms are protected and enhanced.

Insist other nations protect U.S-owned intellectual

property. Treaties, reciprocal agreements, tariffs, and

other mechanisms used by the U.S. government in dealing with

other nations should incorporate strong intellectual

property provisions. U.S. laws could be strengthened to

insure reciprocity and to prevent unapproved imports of

products made abroad by processes patented in the U.S.

Enforcement in other countries is often the weakest link in

the protection process.

Ownership of rights stemming from collaborative research

should be clarified. The goal is to eliminate uncertainty

and thus maximize the incentives to rapidly commercialize

technological developments by U.S. firms. Similarly,

actions should be taken to assure that ownership rights and

other benefits from Federally-funded research flow to U.S.

organizations

Ways should be sought to obtain payments from foreign

graduate students for the intellectual property they benefit

from while doing research in the U.S.

BARRIER: COMPLACENCY AND DEPENDENCE ON THE DOMESTIC MARKET

We must foster entrepreneurial risk-taking. Several steps

can be taken. Promote greater ownership by executives of

corporate stock so that executives become owners, not simply

17
managers. Include employees in "participative management”

so that more decisions are made by those closest to

production operations. Incentive systems must be improved

so that more employees feel they have a greater stake in the

success of the company.

Shift emphasis in our business schools so that executive

responsibilities are taught more within the context of

"owners” responsibilities rather than "management”

responsibilities

.

We must promote a greater sense of the "common good" so that

government, management and labor interact on a basis of

achieving positive goals rather than on the historic

adversarial basis.

We must foster the awareness that there is no longer

anything such as a purely "domestic" market. What we think

of as the U.S. domestic market is, in fact, part of the

global market. Thus as soon as a product leaves the

shipping dock, it has hit the world market, even if it is

only being shipped across town. This perspective must

permeate all management levels.

BARRIER: RESTRICTIVE TRADE POLICIES IN FOREIGN MARKETS

Adaptability to foreign preferences should be improved by

U.S. firms. The result should be U.S. -made products that

better meet the special preferences of consumers in other

nations and better performance in the marketing/distribution

systems overseas. Increased exports and reduced trade

deficits are the obvious goal.

Foreign languages should be introduced earlier into the U.S.

educational process, so that our citizens will have a

greater ability to understand foreign needs/preferences, and

have an increased ability to successfully do business

overseas

.

BARRIER: FEDERAL AND STATE REGULATIONS FOR PROTECTION OF HEALTH

AND SAFETY

Wherever possible, domestic regulations (from such sources

as EPA, OSHA, FDA, and SEC) should be reduced and simplified

in order to minimize their negative effects on industry*

s

use of new technology. In some cases, foreign competitors

have an advantage of less stringent or loosely enforced

regulations.

A better balance should be achieved between the desirable

safety goals of domestic regulations and the economic costs

to U.S. manufacturers and businesses. In addition to the

18
added costs, firms often have the application of new

technology or marketing of new products delayed

significantly. In the current global economy, we should

recognize that economic viability is as important a national

goal as public safety. The key is to balance these goals in

a meaningful way.

BARRIER: EXPORT CONTROLS ON ADVANCED TECHNOLOGIES AND

HIGH-TECHNOLOGY PRODUCTS

The January 1987 President's Competitiveness Initiative

directs the Cabinet to review the export controls program

and provide recommendations to achieve the following:

o Decontrolling those technologies that offer no serious

threat to U.S. security;

o Strengthening enforcement controls on those technologies

that could harm U.S. security;

o Eliminating unilateral controls in those areas where

there is widespread foreign availability;

o Reducing the time required to acquire a license by at

least one-third and implementing a fair, equitable, and

timely dispute resolution process;

o Seeking agreement with our allies for concrete actions

to be taken which will make export control procedures

more uniform and enforcement more rigorous;

o Seeking overall to level the competitive playing field

while strengthening multinational controls over products

and technologies that can contribute to Soviet military

capabilities; and

o Recognizing the continued improvement in U. S ./People '

Republic of China (PRC) relations and the commitment of

the PRC to protect sensitive technology, and working

with our allies to further liberalize high technology

trade with China.

BARRIER: RESTRAINTS AND UNCERTAINTY CAUSED BY PRODUCT LIABILITY

LAWS

The January 1987 President's Competitiveness Initiative

proposes several methods to overcome this barrier. Proposed

legislation would:

o Retain a fault-based standard of liability;

19
o Eliminate joint and several liability except in cases

where defendants have acted in concert?

o Limit noneconomic damages to a fair and reasonable

amount ?

o Provide for periodic, instead of lump sum, payments of

damages for future medical care or lost income?

o Reduce awards in cases where a plaintiff also is

compensated by other sources, such as government

benefits ?

o Reduce transaction costs by limiting attorneys'

contingent fees to reasonable amounts on a sliding

scale? and

o Encourage litigants to resolve more cases out of court.

BARRIER: ANTI-TRUST RESTRICTION AGAINST COOPERATIVE VENTURES

The January 1987 President's Competitiveness Initiative

proposes several methods to overcome this barrier. The

statutory proposals include:

o Amending Section 7 of the Clayton Act to distinguish

more clearly between pro-competitive mergers and mergers

that would create a significant probability of increased

prices to consumers?

o Limiting private and Government antitrust actions to

actual (rather than treble) damages, except for damages

caused by overcharges or underpayments?

o Removing unwarranted and cumbersome restrictions on

interlocking directorates?

o Clarifying the application of U.S. antitrust laws in

private cases involving international trade? and

o Requiring that any antitrust claims remaining against

other defendants after a partial settlement in a case be

appropriately reduced.

20
Remarks by Deputy Secretary of Commerce Clarence J. Brown

News Briefing on Emerging Technologies

June 9, 1987

Good morning. It is no secret that this country has a trade

problem. Likewise, it is no secret that at least part of the

problem has been our inability to take full commercial advantage

of scientific and technological developments made in the United

States. Time and time again we have seen foreign competitors,

most notably, but not exclusively, the Japanese, turn our

technological developments into their commercial product

successes.

I think it is fair to say that the country has awakened to this

dilemma. The national attention to the general subject of

competitiveness is evidence of our awakening, The President has

put forward a comprehensive package of proposals to deal with

this problem, and the Administration is taking a series of steps

to improve our situation.

This morning, I want to take a longer view of our trade and

technology position. I want to draw attention to the future and

to the technologies that just now are emerging from the

laboratory and seem particularly promising in both a scientific

and commercidl context.
2

I am firmly convinced that America's ability to exploit a new set

of emerging technologies with huge market potential in the year

2000 and beyond will play a big role in determining the country's

economic successes or failures well into the next century,

Recognizing the importance of these technologies, I asked a group

of technical experts and top officials from Commerce Department

agencies to examine the latest scientific and technological

advancements and to report to me on which technologies seemed

especially important, what barriers stood in the way of their

commercialization within the United States, and what steps could

be taken to remove those obstacles,

This group, headed by Dr. Ernest Ambler, director of the National

Bureau of Standards, who is with us this morning, studied

scientific and industrial plans and the commercialization process

here and abroad.

They identified 17 emerging technologies in 7 major groups which

are expected to leod to new products or processes in the future.

Among other things, the review panel considered the expected

contribution of each technology to the gross national product,

Here is the list the group came up with:

SHOW P0STERB0ARD WITH EMERGING TECHNOLOGIES LIST
3

Advanced materials . These include high-performance ceramics,

polymer composites, and advanced metals. They will bring

improvements in automotive and aircraft engines, electronic

components, electrical machinery, and manufactured components.

Electronics . Here the panel singled out advanced

microelectronics critical to semiconductor devices,

optoelectronics — which covers optical fiber and lightwave

processing vital to advances in communications and computers —

and millimeter wave technology, which can be used in voice and

data communication systems.

Automation . Computer-integrated and flexible systems for

manufacturing are on the list, as are computer applications in

business and office systems as well as applications for

commercial services such as financial transactions and electronic

mail

Biotechnology . Both genetic engineering — for improved

diagnostic and therapeutic drugs and agricultural and food

applications — as well as biochemical processing for chemical

manufacturing, are critical technologies.
4

Computing . Supercomputers, artificial intelligence, and a

variety of other computing techniques deserve a category of their

own, with potential applications to literally every industry in

the United States.

Medical Technology . Progress in new medical drugs and

instruments and devices for improved didgnosis dnd treatment of

illness is fast-paced and promises to continue into the next

century. We are certain to see new technologies that are

nothing more than scientific concepts today.

Thin Laver Technologies . Electronic components, chemical

manufacturing and food processing, ond a variety of other

industrial operations are expected to benefit from rapid ddvdnces

in using ultra-thin layers of chemicals to improve the

capabilities of devices end products.

The list is not meant to be cast in concrete. For example, in

the few weeks since the original list was put together, there

have been significant and highly publicized breakthroughs in the

development of superconductors — materials that have absolutely

no electrical resistance. Basic scientific questions and great

technical problems need to be solved before we can realize the

economic potential of these hlgh-temperature superconductors, so

for now they must remain a potential emerging technology.
5

But all you have to do is to look at one possible application for

these superconductors, the transmission of electrical energy, to

realize the enormity of their promise. We now spend $160 billion

a year on electrical power in this country, and we waste a full

20 percent of that power due to losses in transmissions. If

high-temperature superconductors con be developed to the point

where they can be substituted for conventional electrical

transmission wires, we could save more than $30 billion a year.

When I talk about the potential of emerging technologies, that is

what I am talking about, a revolution that could affect every

Industry in America and around the globe.

But there are barriers.

SHOW POSTERBOARD WITH GENERIC BARRIERS

This list of generic barriers to achieving maximum economic

benefits from emerging technologies should look familiar.

The relatively high costs of capital funds and the less favorable

tax incentives in the United States compared to foreign

competitors top the list.

Management's focus on short-term, rather than longer range, goals

for returns on investments, poor integration of manufacturing.
6

design, and research and development functions within U.S. firms,

and the lack of cooperation among American institutions, hurt our

chances of exploiting emerging technologies.

So do inadequate laws, regulations, and enforcement protecting

intellectual property rights in the United States or overseas.

Complacency and a dependence on the domestic market — the lack

of awareness of the need to compete with Japan and other

countries head-to-head in the international marketplace — are a

basic stumbling block.

Restrictive trade policies in foreign markets.

Federal or state regulations on corporate activities.

Export controls on advanced technologies and high-technology

products.

Restraints and uncertainty caused by product liability and tort

laws, and

Anti-trust restrictions — real and perceived — against

cooperative ventures for R&D, marketing, or production.

All are formidable barriers to the commercialization of these
7

emerging technologies,

Now, what do we do about breaking down these barriers?

You have a description of the recommendations in your press kits,

They include:

continued vigildnce to reduce federal budget deficits

and to avoid high interest rates which affect the cost

of capital

creation of venture capital pools at the state and

local levels

additional tax incentives and other actions to increase

aggregate savings

a commitment to making future changes in the tax laws

focus on the incentives available for modernization

investment in all stages of production, marketing, and

distribution

fostering participative management by employees

training managers in the production process and

updating business school curricula
8

eliminating provisions In foreign tax laws and

regulations that discriminate against U.S. products,

and

Improving export controls, reforming product lidblllty

and tort laws, and lifting antitrust restrictions.

In a recent hearing before his Committee on Commerce, Science and

Transportation, Senator Fritz Hoi lings complained, "America may

still invest enough in research to win most of the Nobel Prizes,

but the Japanese make all the profits on them." Well, we cannot

let that continue to happen. As you can see by looking at the

barriers and recommendations for commercializing emerging

technologies, the government has an important role to play. But

the private sector — the people who work in and run America's

factories and board rooms — must take the lead.
9

This country has done enough looking back and talking about how

many different areas of technology we have already lost to the

commercial competition, Our look ahead at critical emerging

technologies should be a warning that unless we pull together and

take swift action now to break down the barriers to the

commercialization of new technologies, we are going to be facing

the same international trade problems we confront today right on

into the next century.

We have made some progress. Although we neither talk nor read

enough obout them, this country has some wonderful success

stories ond some good things hdppening to show that businesses

and even entire industrial sectors can and are taking decisive

actions to improve the situation. We have firms joining together

in research consortia, corporations cutting down on excessive

managerial positions, and companies finding new market niches

overseas.

We simply must be vigilant and make additional changes now if the

country's economic future is to be bright when the new century

arrives.

Now, I'd be happy to take any questions you may have,
NBS-114A (REV. 2-80

U.S. DEPT. OF COMM. 1 . BIBLIOGRAPHIC DATA

PUBLICATION OR

REPORT NO.

SHEET (See instructions)

4. TITLE AND SUBTITLE

NBSIR 87-3671

2. Performing Organ. Report No. 3.

Dept, of Comm.

Publication Date

June 1987

Final Report The Status of Emerging Technologies: An Economic/

Technological Assessment to the Year 2000

5. AUTHOR(S)

Ernest Ambl er, et al

.

6. PERFORMING ORGANIZATION (If joint or other than NBS, see instructions) 7. Contract/Grant No.

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE 8. Type of Report & Period Covered

WASHINGTON, D.C. 20234

9.

SPONSORING ORGANIZATION NAME AND COMPLETE ADDRESS (Street. City, State, ZIP)

10.

SUPPLEMENTARY NOTES

| | Document describes a computer program; SF-I8S, FIPS Software Summary, is attached.

11.

ABSTRACT (A 200-word or less factual summary of most significant information. If document includes a significant

bi bliography or literature survey, mention it here)

The Department of Commerce has concluded, in a review of emerging

technologies and their future impacts on the economy, that American

businesses lag behind many of their foreign competitors, especially the

Japanese, in exploiting technological breakthroughs.

The review was ordered by Deputy Secretary Clarence J. Brown in April 1986

to identify the new technologies that will lead to new products or processes,

analyze their commercialization, and recommend means of reducing the barriers.

It is based on an assessment by technical experts and agency heads within the

Department. They studied scientific and industrial plans and the

commercialization process here and abroad.

Remarks by Deputy Secretary Brown in releasing the report are included.

12. KEY WORDS (Six to twelve entries; alphabetical order; capitalize only proper names; and separate key words by semicolon s) advanced materials; automation; biotechnology; computing; electronics;

emerging technologies; medical technology; thin layer technology

13. availability 14. NO. OF

PRINTED PAGES

[23] Unlimited

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~\ Order From Superintendent of Documents, U.S. Government Printing Office, Washington, D.C.

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[5C] Order From National Technical Information Service (NTIS), Springfield, VA. 22161 $11.95

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