NBSIR 78-1435

A Decision Model for U.S.

Computer Export Administration,

A Preliminary Investigation

Dr. Patrick L. Eagan

Institute for Computer Sciences and Technology

National Bureau of Standards

Washington, D C. 20234 \

February 1978

Final

U.S. DEPARTMENT OF COMMERCE

NATIONAL BUREAU OF STANDARDS

NBSIR 78-1435

A DECISION MODEL FOR U.S.

COMPUTER EXPORT ADMINISTRATION,

A PRELIMINARY INVESTIGATION

Dr. Patrick L. Eagan

Institute for Computer Sciences and Technology

National Bureau of Standards

Washington, D C. 20234

February 1978

Final

U.S. DEPARTMENT OF COMMERCE, Juanita M. Kreps, Secretary

Dr. Sidney Harman. Under Secretary

Jordan J. Baruch, Assistant Secretary for Science and Technology

NATIONAL BUREAU OF STANDARDS, Ernest Ambler, Director
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SUMMARY AND RECOMMENDATIONS

This is a preliminary report on the feasibility of designing a statistical decision model of U.S. computer export administration.

The study is based upon interviews with U.S. Government officials involved in export administration and with academic analysts of U.S. and

Soviet decision-making. Published materials related to East-West trade

in high technology were also consulted.

The report addresses three general questions;

(1) Is a statistical decision model of U.S. computer export administration feasible?

(2) What method (s) will be required in developing a model?

(3) How can the model assist those responsible for U.S. computer

export administration?

Interviews and research materials indicate that a decision model of U.S.

computer export is feasible. The major difficulty in designing such a model arises from the lack of commensurable indicators of the national

security. Political and economic priorities are at stake in computer

export administration. Without comparable measures of these priorities,

operational utility statements for a decision model most be derived

from estimates and informed value judgments of persons having substantive

expertise in the strategic, political, and economic ramifications of U.S.

high technology exports.

Development of the model will require the use of two techniques. The

first is the writing of several scenarios projecting the outcomes of

alternative decision sequences involved in the export of U.S. computers

to the Soviet Union. Written by those knowledaable in U.S. and Soviet

strategic, political, and economic decision making, these scenarios

should incorporate three contingencies which are increasingly salient

for contemporary U.S. computer export administration -- 1) improved

safeguard technique, 2) erosion of COCOM* effectiveness in regulating

the transfer of strategic goods to communist nations and 3) the instability of a U.S. competitive advantage in computer development and applications .

A second methodoloay is required for deriving the model's utility functions. Using Delphi techniques, questionnaires developed from the scenarios can be administered to panels of government officials, technical

experts and academic specialists. In this manner, the estimates and

* coordinating COMmittee of the group of all NATO nations except Iceland,

plus Japan, which have agreed to cooperate in controlling exports to

Communist Block countries.

i
informed judgments of various organizational, technical, disciplinary,

and political perspectives can be organized and pooled into operational

utility functions for the model.

Development of the model can be of assistance to those responsible for

U.S. computer export administration in three ways.

(1) The model will facilitate a more efficient administration of

U.S. export policy by providing interagency decision makers and

technical experts with a common grounding of communication and

analysis.

(2) The model will contribute to a more effective administration

of U.S. export policy by serving as an analytical framework for

assessing present policy options in the context of changing

international political and economic conditions, e.g. erosion

of COCOM controls over high technology export.

(3) The model will provide policy makers with a common frame of

reference for

(a) responding to current constraints upon the administration

of U.S. computer exports, e.g. technology export by multinational corporations, and

(b) assessing alternative policy choices that will better

secure U.S. priorities in response to anticipated shifts

in the environment of international trade, e.g., increasing

U.S. reliance upon foreign energy resources.
. TABLE OF CONTENTS

Summary and Recommendations i

Introduction 1

Part I - Feasibility of Model 1

1 . Problem 2

2. Decision Makers 3

3. Export Administration Process 3

4. U.S. Utilities 4

a) National Security 4

b) Political 4

c) Economic 6

5. U.S.S.R. Utilities 6

Part II - Methodology 7

1. Selection of Experts 7

2. Organizational Format 7

3. Pooling Expert Judgment 8

Part III - Utilization of Model 9

1. Previous Modeling Effort 9

2. Recommended Model Use 10

Part IV - Schedule of Model Design 11

1. Scenario Prospectus 11

2. Scenario Writing 11

3. Questionnaire Design 12

4. Selection of Delphi Experts 12

5. Administration of Questionnaires 12

6. Derivation of Utility Functions 12

Summary of Design Schedule 1

3

iii
Paqe

NOTES 14

APPENDIX I - List of interviewed Personnel 16

APPENDIX II - Interview Schedule 17

iv
INTRODUCTION:

This report explores the feasibility of designing a statistical decision

model of U.S. computer technology export administration. Methodological

issues and potential uses of the model are discussed and a schedule for

designing the model concludes the report.

Material for the report was obtained from interviews with U.S. government officials involved in the administration of the export of strategic

material and with academically based analysts familiar with the policy

priorities and decision processes of the Soviet political system.^-

Other perspectives were obtained from published policy research dealing

with the transfer of U.S. computer technology to the Soviet Union. This

report is especially indebted to and draws freely from the published

work of R. E. Klitgaard, N. Leites, J. Stein, C. Wolf, and others who

have extensively analyzed various dimensions of East-West trade, particularly exports of U.S. computer technology.^*

PART I - FEASIBILITY OF MODEL

This Section of the report examines the policy options and constraints

for a model of U.S. computer export. The objective is to determine the

feasibility of converting the policy options of the model into operational utility functions.

The initial model identifies two decision nodes -- the U.S. decision to

license or not license the export of a given computer system, and a _ Soviet decision to divert or not divert the system from stated end uses."^

The model also contains a "safeguard" variable. "Safeguards" function

as a constraint on both decision-makers, depending upon perceived efficacy of alternative devices or systems. (Figure 1)

1
To ascertain the feasibility of specifying operational utility functions

for the alternative policy options in the model, some specific characteristics of East-West trade in U.S. computer technology will be reviewed.

The basic problem will be defined, characteristics of the decision-makers

and the decision-making process reviewed, and the costs and benefits of

the alternative policy options examined.

1 . The Problem

Interview respondents and published research consistently emphasize the

central analytic problem for decision-makers involved with East-West

trade in U.S. computer technology:

How are national security, economic, and political costs and

benefits of this trade to be weighed, compared, and translated

into effective policy choices and administrative practices?

Interview respondents differed on the effectiveness of existing export

policies and administration, and most were critical of the present process

for administering high technology export policy. Vagueness of existing

policy, undercutting by high-level diplomatic initiatives, competing

perspectives among agencies participating in export administration, and

an increasing unreliability of COCOM cooperation as a brake on the

transfer of strategic goods were mentioned as reasons for change in

existing policies and administration.

Interviewees discussed mounting pressures for change in the current

patterns of U.S. export administration. Allies don't like the system;

it impedes their economic development. Less developed nations don't

like it; they perceive the necessity of new technology for their own economic growth. U.S. business firms don't like it; they view the

commodity control lists as consistently reflecting archaic technology

assessments. Finally, the Soviets, Chinese, and Eastern Europeans don't

like it; they perceive it as contradictory to stated' U.S. diplomatic

postures, and they want access to sophisticated computer technology

that they may understand but cannot produce.*^

Within U.S. government itself, the three agencies traditionally involved

in export administration adopt distinct postures towards the task.^ The

Department of State tends to favor relaxation of export controls. The

Department of Defense tends to oppose relaxed controls and the Department

of Commerce has mixed positions with Office of Export Administration

officials generally opposing the East-West trade promoters favoring

liberalizing the commodity control lists.

Nevertheless, consensus on the basic puzzle was clear -- the administration of U.S. computer export requires measuring the tradeoffs of potential losses in national security against potential economic and political benefits. The proposed model should reflect the structure of this

fundamental problem and this may be the most difficult task in constructing an appropriate model.

2
2. The Decisionmakers

Decisionmaking in the control of U.S. computer export is superficially

multi lateral Internationally, the flow of strategic materials to

communist nations is regulated by a consortium of nations, COCOM. U.S.

preferences, however, have traditionally held sway, although much less

so in recent years.

Within U.S. Government, many agencies (DOD, DOS, DOC, et al . ) are called

upon to review the Commodity Control Lists and to decide upon exception

requests in interagency committees composed mainly of middle-level administrators and technical advisors. Administrators from DOD and the

Intel licence agencies have held virtual veto power in exception requests.

Despite appearances of diversity of decision-makers, ultimate formal

power for export control decisions rests in the White House. Some interview respondents noted recent signs of a more assertive leadership from

the White House in the aeneral area of international technology transfer,

indicatinq arowino concern with the lack of coordinated oolicy objectives

this area,

in

3. Export Administration Process

Representatives from the U.S. Department of State, Commerce, and Defense

make up the interaaency committees which review the lists of embargoed

commodities. Drawinn upon technical expertise from their own aaencies

and the intelligence community, these committees identify goods and

processes which have military use(s) and which are beyond the production

capabilities of restricted nations. Items so identified are entered

on the lists of embargoed export. Generally, the U.S. Government has

been able to secure the cooperation of COCOM members in maintaining

embargo of listed goods.

Exception requests to export embargoed items to restricted nations are received by COCOM delegates. U.S. Government's response to these exception requests are the result of an adversary, case-by-case process in

which an absent petitioner attempts to provide evidence that the proposed export is clearly intended for "civilian" purposes, and that this

end-use can be safeguarded. Decisions from these proceedings on exception requests can be appealed, with occasional cases going to the White

House for final disposition.

From interviews and research materials, it must be concluded that eroding

effectiveness of the COCOM arrangement significantly affects both the

U.S. and Soviet utility functions. Although COCOM members have traditionally followed U.S. leadership in the embargoing of "strategic" goods

to communist nations, there are clear indications that continued COCOM

deference to U.S. preferences is eroding. ° Economic pressures and the

incentive to exploit their own technological development prompt some COCOM members to reassess the value of COCOM cooperation for their

national Interest. The consequences of this trend upon decision-maker's

utilities should be weighed in developing the model.

3
4. U.S. Utilities

a. National Security Utilities

Calculation of utilities for decision makers in administration of

computer export administration requires the weighing of risks to national

security arising from decisions to permit export of computer technology

to a potential adversary.

Current U.S. policy practice appears to define national security as technological lead. Shipment of many items to communist nations is allowed

despite their potential "strategic" value as resource-freeino goods.

Goods and processes that might enhance military capability are restricted.

All items considered essential to upgrading an adversary's military performance levels and requiring significant time investment for development

are embargoed.^ The overriding assumption is that U.S. technolooical

lead indicates a qualitatively superior national security position.

This assumption is too restrictive for a useful model of U.S. computer

export administration.'^ Defining national security primarily in terms

of technological lead (assurina superior military capability) obscures

several important considerations. As the Vietnam experience indicates,

military lead may not be a valid indicator of strategic advantage, nor

does technological lead imply superior military performance.

Acquisition of advanced technology by an adversary does not necessarily

translate into loss of U.S. national security. Better Chinese anti-tank

weapons along the Si no-Soviet border might indeed enhance U.S. national

security. The position of advanced technology cannot be equated with

gains in military performance if that technolony is used to execute

functions (inventory control) already beina performed by other means. Soviet acquisition of high performance U.S. computers may bring on the same resource-freeing effects that resulted from U.S. wheat sales to the

Soviet Union, without significantly improving their military performance

levels.

These considerations simply indicate that the cost of securing a technological lead may not be equal to the value of having it. The relationship between the measure of technological lead (time to get it, perfor- mance differential, cost to get it, cost for others to catch up) and

national security is not clear. Just how the costs, price and value of

technological lead impinges on national security is the primary problem

in stating the utility functions for a model of U.S. computer export.

b. The Political Utilities

In addition to the metrics of national security, there are political

utilities to be calculated for a model of U.S. computer export administration. Interviews and research have focused on four general areas of

political costs and benefits associated with sales of U.S. computers to

the Soviet Union.''

4
One political benefit from less restrictive U.S. trade policy may be the

reduction of communist hostility towards the West. Increased trade, it

is claimed, will promote better communication and establish a pattern of

inter-action that may ease tensions in other areas of East-West conflict.

It is also suggested that increased trade will foster communist adoption

of Western economic practices, establish a network of common interests,

nourish Eastern economic development and stimulate the civilian sector

of communist nations. These developments would reduce hostility towards

the West.

A second political benefit of increased trade may be to lessen cohesion

among communist nations and provide incentives for independent initiatives by Soviet satellite countries.

A third benefit of less restrictive trade may be the gratitude of COCOM

allies whose economies are thirsting for expanded export markets. Less

restrictive trade practices may also result in the gratitude of less

developed nations who perceive advanced technoloay as essential to

advancing their own political and economic objectives.

Finally, it is suggested that increased trade with the Soviet Union will

favor the U.S. as its effect may be to blunt the threatening aspects of

potential U.S. dependence upon them, e.g. eneray resources.

All these anticipated political benefits may be offset by the potential

liabilities of a relaxed U.S. export administration. Relaxation of cur- rent trade restrictions may whet the strateaic appetites of the Soviets

rather than reduce hostilities. While increased trade will surely foster

more communication, more U.S. penetration into the Soviet Union and

Soviet adoption of Western economic practices, these are hardly convincing indicators of altered Soviet intentions. Increased U.S. computer

imports clearly serves Soviet self-interest which may be best served by

adopting conciliatory and moderate appearances without altering longrange goals. Given this perspective, the political gains from reducing

hostilities through relaxation of export administration policies are short-run if they exist at all.

There is little evidence, especially since Czechoslovakia's experience

in 1968, that increased East-West trade will prompt independent political

movement among the satellite communist countries. Nor can the gratitude

of COCOM partners be assured, given a relaxation of present U.S. trade

policies. The negative conseguences of a U.S. competitive advantaae,

especially in the information technologies sought by the Soviet Union,

might guickly outweigh the anticipated gains for new export markets.

Finally, increased exports of U.S. computer technology may simply com- pound U.S. dependence upon foreign (Soviet, LDC) energy resources (oil

in payment for computers), and simultaneously permit potential adversaries to "catch up" with U.S. production technology.

In conclusion, interviews and research indicate that the political

effects of U.S. computer export administration defy precise calculation.

As a result, their incorporation into operational utility functions for

6
a decision model will have to be based upon the informed value estimates

of experts acquainted with the political priorities and processes of U.S

and foreign policy makers.

c. Economic Utilities

The economic costs and benefits for a decision model of U.S. export

administration are also beyond the tools of precise analysis and reliabl

data.

While U.S. computer manufacturers focus on losses in sales resulting

from present export controls there are two reasons for not affixing a positive value to less restrictive U.S. computer export administration.

First, export regulations are only one block aaainst the benefits of

increased computer sales. Increased Soviet purchases of computers are constrained by hard currency limits, trade balance priorities, political

decisions and other national economic goals. Relaxed controls on U.S.

computer exports to the Soviet Union may simply result in decreases in

other U.S. exports. These contingencies factors make estimation of

the impacts of present export administration policy extremely speculative.

Second, it is not at all clear as to just how large a demand for U.S.

computers really exists. Stein attempts to estimate demand by first

assuminq removal of export controls, communist ability to pay and U.S.

ability to deliver computers meeting Soviet specifications.'^ By subtracting estimated Soviet production capability from this upward limit

of demand, he concludes that throuah the next ten years the U.S. could

expect yearly computer sales of $289 million, which represents 75% of

the total estimated Western nations' computer sales to the Soviet Union.

It is not clear from present trends and available data what the economic

burdens and benefits of U.S. export policy and administration really are Specification of operational economic utilities, like national security

or political utilities, for a decision model of computer export will

have to depend upon the informed judoments of substantive expertise in

various fields and organizations concerned with East-West trade in hi ah

technol ogy

5. U.S.S.R. Utilities

Estimating Soviet national security, oolitical and economic utilities

associated with U.S. export administration decisions is an extremely

speculative task. Interviewed Government officials and academic experts

generally agreed on the enormous difficulties and uncertainties of ranking Soviet priorities or anticipating Soviet responses to relaxed U.S.

export administration.

Definition of Soviet utility functions applicable to a decision model

of U.S. computer exports may have to rest upon tenuous knowledge of

Soviet budgetary allocations. Interviewed experts expressed great

6
reservation about the reliability of this data. There was clear disin

cllnatlon to suggest patterns In Soviet decision-making as a grounding

for operational utility functions In a decision theory model.

The Impediments to defining Soviet utilities cannot be underestimated.

It has been shown that comparing national security risks, political

effects and economic benefits of U.S. export policy is a problem of

measuring and ranking incommensurables . A Fortiori , the metrics for

comparable Soviet utilities must rely upon compounded uncertainties.'^

PART II - METHODOLOGY

Without an acceptable theoretical base or reliable empirical indicators,

assessment of the national security, political, and economic effects of

U.S. computer exports to the Soviet Union must rest upon the estimates

and informed judgment of experts. This section examines procedures for

selecting, organizing, and pooling the judgments of experts into operational utility functions for a model of U.S. computer export administration.

1 . Selection of Experts

The compounded uncertainties of defining and comparing the security,

political, and economic priorities of computer export indicates that a broad range of expertise will be required. A variety of generalists and

specialists with different disciplinary backgrounds would be desirable.

Experienced representatives from U.S. agencies responsible for export

administration, academics and analysts from policy research institutes

will have to be used to identify U.S. and Soviet priorities. In addition,

technical expertise in computer operations will also be required for

assessing alternative safeguard possibilities. The use of nongovernmental experts is especially advisable for identifying strategic, political, and economic aspects that may have been obscured by the organizational biases of conventional export administration.'^

2. Organizational Format

The formation and administration of U.S. export policy involves various

organizational and technical areas of expertise. The proposed model

provides an analytical framework which served as a common base of com- munication for those interviewed, regardless of their distinct organizational commitments or technical backgrounds.

Repeatedly, the interviews with government officials and academic analysts focused on three contingencies which were cited as increasingly

important for calculating utilities in an export model -- 1) more effective safeguard techniques, 2) diminishing effectiveness of technology

embargoes, and 3) decline in U.S. competitive status in computer production. These developments were mentioned in interviews and published

research as increasingly important for analyzing the effects of present

policy and for anticipating future U.S. export policy needs. It is

7
concluded that these factors should be systematically incorporated into

the derivation of the model's utility functions.

3. Pooling Expert Judgment

Derivation of operational utility functions in a model involving com- pounded uncertainties can be accomplished by pooling the judgments of

informed experts. This is a two-stage process.

First, experts in U.S. and Soviet decision making can be utilized in

writing a series of scenarios of U.S. decisions to export computers to

the Soviet Union. These scenarios would incorporate the expert's informed estimates of decision responses and take into account variations in

safeguard technology, COCOM effectiveness, and U.S. competitive advantage

in computer production.

These scenarios can then serve as a base for generating questionnaires to

be distributed to interagency officials, technical specialists (safeguard technology and computer capabilities) involved in U.S. export

administration, as well as analysts of U.S. and Soviet strategic decision

making. Initial responses to these questionnnaires can then be used to

quantify expertise into operational national security, political, and

economic utility statements for the model. This Delphi technique has

several advantages in the process of pooling estimates of experts with

distinct organizational interdisciplinary backgrounds and ideological

dispositions.

Anonymi ty of respondents is secured by a formal means of communication

TwrTtten questionnaires or on-line computer consoles) and responses are

not matched with respondents. Concealed identity of participants avoids

psychological pressures of face-to-face discussion. Discussion is re- placed by exchanging information through a central management group

which feeds back the results from intitial questionnaires to participating experts who can then revise estimates. This iterative process

and controlled feedback tends towards convergence. Although unanimity

on estimates of decision utilities is unlikely, a statistical index

(usually median) can be used as an indication of the group estimate.

Proper use of Delphi for forecasting the utility functions in U.S. com- puter export decisions will require the selection of experts representing different schools of thought on the issues involved in export

administration. Interviews indicate this will not be difficult to do,

given the controversial character of international technology transfer

in general

Research in Delphi suggests that this technique has been particularly

useful for projecting technological and social events as well as value

judgments. This suggests that Delphi may be particularly suitable to

the problem of identifying utilities for a decision model of U.S. com- puter export administration. Several interviewees indicated a willingness to participate in both scenario writing and deriving utility functions from Delphi questionnaires.

8
PART III - UTILIZATION OF MODEL

Following a review of previous modeling of international U.S. technology

transfer, the uses of a U.S. computer export decision model will be noted

1 . Previous Modeling Effort

Interviews and research provided some indications of previous efforts to

apply decision theory technique to the policy problems of U.S. computer

export administration. Two interviewees made reference to a model of

U.S. computer technology transfer designed by a private contractor(s

)

for the President's Council on International Economic Policy (CIEP).

One interviewee mentioned a computer decision model related to the international transfer of high technology which had been designed for the

Department of Defense.

Accessibility, development status, or names of analyst (s) involved in

either of these projects was not ascertained. The information sources expressed clear reservations as to the value of either project. It is

difficult to determine, however, if these negative attitudes reflected

1) essential doubts about the utility of decision models in policy analysis generally, 2) experience with clumsy first attempts to address a difficult task, or 3) doubts as to the usefulness of modeling policy

problems involving the mixed priorities and uncertainties of high technology export.

In 1975, an extensive comparative study of U.S. and Soviet computer needs

and capabilities was completed by Rand Corporation for the U.S. Air Force

As one part of this study, E.W. Paxson addressed "relationships between

computer technology and strategic capabilities and present(ed) a game

theoretic model for quantifying these relationships in a form that could

contribute to policy decision-making."^^

The model designed by Paxson is based upon many of the assumptions which

are currently employed in the administration of U.S. export policy. For

example, Paxson 's definition of "strategic advantage" appears to assume

that "resource-freeing" gains equal gains in military capability. The

model also assumes that technological gaps translate into gains in military performance levels. These assumptions cannot stand the scrutiny of

empirical evidence.

Several of the U.S. Government officials noted a recent assignment of

the White House Office of Science and Technology to coordinate a largescale interagency study of international technology transfer. It was indicated that this study will involved over twenty different government

groups^ coordinated by the Office of Science and Technology in the White

House.''

It is concluded that the proposed project to design a decision model of

U.S, export administration has by no means been made superfluous by previous analyses of the problem. In view of the current administration's

interest in further analyses of U.S. international technology transfer to

9
be coordinated through OST, the enterprise would seem an especially

appropriate task at this time.

2. Recommended Model Use

Decision models of stategic policy making and administration cannot and

should not be the grounding for choice in export administration. The

uncertainties confronting decision-makers in specific cases are beyond

resolution by known techniques of policy analysis. Interviewed Government officials and academics were, without exception, agreed as to the

limits of decision modeling.

However, interviews and research revealed several problems with U.S.

computer export policy and administration which might be clarified if

not resolved by means of a decision model. A particularly troublesome

characteristic of U.S. export administration is the numerous political

dispositions, technical commitments, and agency allegiances involved.

As previously indicated, analytic models, particularly when they are designed by the analysts and technical experts participating in the pro- cesses of administration, provide a common perspective and a basis of

communication which may overcome knowledge and organizational biases.

In the case of export administration, a decision model can serve to

expedite the process simply by providing a shared basis for understanding

the problem, and quantifying relationships between goals, available options, constraints and uncertainties.

The interviews and research gave indication of technical, political, and

economic developments that may significantly impact U.S. export policy

and administration in ways which are not now clearly understood. What is

the effectiveness of existing safeguard techniques? Can more effective

safeguards be developed and applied to larger U.S. computer systems?

Is the COCOM arrangement for control of strategic exports eroding? How

fast and with what results? What is the competitive status of U.S.

computer production relative to COCOM members? What is the potential

market for U.S. computers given relaxation of East-West trade embargos?

The development of new safeguard technology, COCOM controls and U.S.

computer production advantage will certainly affect U.S. export policy

and administration, and the structuring of these factors into a decision

model would at least be the start of an investigation as to how they

might impact the present process.

Finally, analytical models are useful for clarifying and anticipating

the costs and benefits of decision making in complex situations involving numerous uncertainties and non-quantifiable judgments. The administration of U.S. export policy clearly falls into that class of problems.

As indicated in Part I, the national security risks of U.S. computer

exports need redefining. Currently, export controls lists are based

upon simplistic criteria which may not be appropriate, given shifts in

the strategic, political and economic environment of international technology transfer. We need to know more about the relationships between

1C,
technological lead, strategic advantage and military capability to fully

appreciate the national security risks involved in U.S. computer export.

We need to explore further the political and economic consequences of

present U.S. export policy and administration in order to identify effective responses to 1) the erosion of COCOM effectiveness, 2) a diminishing U.S. competitive advantage in computer production and declining

estimates of computer demand in comnunist nations.

A computer export administration model designed by export policy administrators and technical experts in conjunction with specialists from aca- demic and research institutions could contribute significantly to a redefinition of our measures of national security, political and economic objectives. This refinement of priorities is essential for adjusting to current conditions and anticipating future U.S. export policy

options

.

PART IV - SCHEDULE FOR MODEL DESIGN

Design of the proposed model should be accomplished in six steps --

1) Scenario prospectus, 2) Scenario Writing, 3) Questionnaires design,

4) Selection of Delphi experts, 5) Administration of questionnaires, and

6) Derivation of utility functions. Each step is briefly described,

including personnel and time allocations for each sequence.

Stage One: Scenario Prospectus

The scenario prospectus will provide a set of instructions or guidelines

to scenario writers. The prospectus will include an exposition of the

initial decision tree model of licensing U.S. computer exports to the

Soviet Union. It will also include explicit instructions to scenario

writers to consider the implications of improved safeguard technology,

diminished effectiveness of embargoes on international technology transfers, declining U.S. computer production competi tive edge and potential

variations in the Soviet and "Bloc" nations computer market. Scenario

writers should also be provided with data concerning U.S. state-of-theart in computer science, international trade trends in information technology, as well as projected computer applications in the Soviet Union

and "Bloc" nations.

Preparation of the scenario prospectus could be made by an academic

analyst in consultation with government officials familiar with current

U.S. export policy administration as well as trends in high technology

export. An appropriate prospectus could be completed in a month.

Stage Two: Scenario Writing

Utilizing the parameters of the scenario prospectus, three scenarios

should be prepared, and would provide an adequate basis for generating

the initial questionnaires required for implementing a Delphi process.

The scenarios would generally involved projecting responses to the

alternative decisions and events outlined in the initial decision tree

model

.

11
The scenarios should be prepared by academic or research institute-based

analysts familiar with the general patterns of U.S. - Soviet decision

processes and strategic goals. Three scenarios could be completed within

eight weeks.

Stage Three: Questionnaire Design

The questionnaires to be administered to experts in export policy and

administration will consist of a series of preferences rankings extrapolated from the scenarios. Construction of an appropriate questionnaire

can be executed by the same party(s) responsible for the scenario prospectus and could be prepared in consultation with government officials

involved in U.S. computer export administration within eight weeks.

Stage Four: Selection of Delphi Experts

Selection of the experts to respond to the initial and revised questionnaires should reflect the variety of organizational, technical, and

political dispositions now involved in the U.S. computer export administration process. Respondents should include expertise from government

agencies, academic and research institutions, and representatives from

affected industries. Organization of a list of expert respondents to

the questionnaire should be completed within one month.

Stage Five: Administration of Questionnaires

The administration of questionnaires is a critical stage in a successful

application of Delphi technique as it entails revision of initial res- ponses through a controlled feedback process in order to finally derive

the statistical group response. Ordinarily, at least three rounds of

revised responses are sufficient for obtaining a mean position reflecting

the consensus of expertise.

The administration of questionnaires and subsequent rounds of estimate

revision can be executed by the designer(s) of the scenario prospectus

and questionnaires. Completion of this stage and specifications of the

group statistical responses should be completed within twelve weeks.

Stage Six: Derivation of Utility Functions

The statistical group responses derived from the iterative feedback

estimate responses to the questionnaires are translated into utility

functions for the decision model of U.S. computer export administration.

This task can be completed by the individual (s) responsible for constructing the questionnaires and monitoring the revision of estimates. Completed specification of the model's utilities should be completed within

four weeks of final revised responses to the questionnaires.

12
SUMMARY

OF

DESIGN

SCHEDULE

Stage Six;

Derivation

of

utility

functions

Four

Weeks Same

as

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+-> o •!- d) 03

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•rO (U (U h- C_) Q_ Q£

13
NOTES

1. See Interview Personnel, Appendix I and Interview Schedule, Appendix II.

2. These are authors of a series of Rand Reports on International Technology Exchange with Conmunist Countries. The reports were done

during 1973 - 74 and were sponsored by the Advanced Research Projects

Agency and the Council on International Economic Policy. Also con- sulted were general studies of the effects of technology on international politics and public policy, including Victor Basiuk's

Technology, World Politics and American Policy , Columbia University

Press, New York, 1977, and Haas, Williams and Babai , Scientists and

World Order , University of California Press, Berkeley, 1977.

3. This model, proposed by Paul Roth of the NBS Institute of Computer

Sciences and Technology, was presented at an interagency computer

safeguards committee meeting by Dr. Joseph Harrison in a draft paper,

"A Decision Theory Approach to Evaluating Computer Safeguards."*

4. John Diebold, "Business, Government and Science: The Need for a Fresh Look," Foreign Affairs , 1975, pp. 555-572.

5. Robert E. Klitgaard, "National Security and Export Controls," Rand

Corporation, Report No. R-1432-1ARPA/CIEP.

6. Robert E. Klitgaard, "Export Controls: A Summary for U.S. Policy,"

unpublished manuscript, March, 1974, p.3.

7. Interview with Mr. Gus Weiss, August, 1977, Old Executive Office

Building.

8. Robert E. Klitgaard, "Export Controls: A Summary for U.S. Policy,"

op.cit . , p . 5

9. Ibid , p. 6

10. Ibid , p. 14.

11. Nathan Leites, "The New Economic Togetherness: American & Soviet

Reactions," Rand Corporation, Report No. R-1369-ARPA, 1974.

12. John P. Stein, "Estimating the Market for Computers in the Soviet

Union and Eastern Europe," Rand Corporation, Report No. R-1406-CIEP/

ARPA, 1975.

* A standard reference for decision modeling is Luce and Raffa, Games

and Decisions , John Wiley and Sons, New York, N.Y., 1957

14
13. Interview with Adam Ulam, September 1977, Harvard University.

14. The discussion on Methodology draws extensively from E.S.Quade,

Analysis for Public Decisions , Chapter 12, American Elsevier Publishing Co., New York, 197S.

15. Quade, Ibid .

16. E. W. Paxson, "Computers and Strategic Advantage: III. Games, Computer Technology and A Strategic Power Ration," Rand Corporation,

Report No. R-1644-1-PR, 1975.

17. Interview with Gus Weiss, August 1977, Old Executive Office Building,

also interviews with R. Piekarz, NSF, and William Root, DOS.

15
APPENDIX I

List of Interviewed Personnel

A. U.S. Government

Name Agency

1. Michael Boretsky, PhD DOC

2. James Colbert DOS

3. Ronald Finkler, PhD IDA

4. Oles Lomacky, PhD DOD

5. Maurice Mountain, PhD DOD

6. Rolf Piekarz, PhD NSF

7. Arthur Reichenbach DOS

8. William Root DOS

9. Gus Weiss CIEP

B. Academic

Name Discipline University

1. Abram Bergson, PhD

2. Joseph Berliner, PhD

3. Robert Campbell, PhD

4. Marshall Goldman, PhD

5. Erik Hoffman, PhD

6. Robert Klitgaard, PhD

7. Adam Ulam, PhD

Economics

Economics

Economics

Economics

Soviet

Politics

Econometrics

& Decision

Analysis

Soviet

History & Government

Harvard, Russian Research Ctr.

Brandeis, Russian Research Ctr.

Univ. of Indiana

Wellesley, Russian Research Ctr

SUNY, Albany

Harvard, Kennedy School, RAND

Harvard, Dept, of Government,

Russian Research Ctr.

16
APPENDIX II

Interview Schedule

A. Do we know enough about Soviet strategic priorities and decision

processes to project potential responses to U.S. decisions related

to the export of U.S. technology, particularly information technology?

1. If yes, what are the Soviet strategic, economic, scientific,

and political priorities at stake in their effort to procure

information technology? Can these priorities be compared or ranked ?

2. If not, what are the major gaps in our knowledge and to what

extent is analysis likely to overcome them in the immediate

future?

B. In addition to those now in the basic model, what policy options

and constraints should be incorporated in a model of U.S. information technology export to the Soviet Union?

C. What are your suggestions/recommendations for how to utilize

substantive expertise in operationalizing and comparing potential

Soviet responses to U.S. export administration decisions?

D. Would a statistical decision model with linear utility functions

derived from expertise in strategic preferences and decision

processes be useful in the administration of U.S. technology

export? If so, how? If not, why not? Illustrations?

E. Are you familiar with other attempts to apply statistical decision

theory to the administration of U.S. exports of high technology?

F. Can you name others in government, industry, universities or policy

research organizations whose knowledge and experience in the area

of high technology transfer might be useful in determining the

feasibility of this project?

17
NBS-1 14A (REV. 7-73)

U.S. DEPT. OF COMM. BIBLIOGRAPHIC DATA

SHEET

1. PUBLICATION OR RKPORT NO. NBSIR 78-1435

2. Gov’t Accession

No.

3. Recipient’s Accession No.

4. TITLE AND SUBTITLE

A DECISION MODEL FOR U.S. COMPUTER

EXPORT ADMINISTRATION

A PRELIMINARY INVESTIGATION

5. Publication Date February, 1978

6. Performing Organization Code

7. AUTHOR(S)

Dr. Patrick L. Eagan

8. Performing Orean. Report No. NBSIR 7ff-l«5

9. PERFORMING ORGANIZATION NAME AND ADDRESS

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE

WASHINGTON, D.C. 20234

10. Project/Task/Worlc Unit No.

11. Contract/Grant No. 710888

12. Sponsoring Organization Name and Complete Address (Street, City, State, ZIP)

"Same as No.

9"

13. Type of Report & Period Covered Final

NBSIR 78-1435

14. Sponsoring Agency Code

15. SUPPLEMENTARY NOTES

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

bibliography or literature survey, mention it here.)

This is a preliminary report on the feasibility of designing a statistical decision

model of U.S. computer export administration.

The study is based upon interviews with U.S. government officials involved in export

administration and with academic analysts of U.S. and Soviet decision-making. Publishec

materials related to East-West trade in high technology were also consulted.

The report addresses three general questions:

1) Is a statistical decision model of U.S. computer export administration feasible?

2) What method (s) will be required in developing a model?

3) How can the model assist those responsible for U.S. computer export administration?

Interviews and research materials indicate that a decision model of U.S. computer export

is feasible. The major difficulty in designing such a model arises from the lack of

commensurable indicators of the national security. Political and economic priorities

are at stake in computer export administration. Without comparable measures of these

priorities, operational utility statements for a decision model must be derived from

estimates and informed value judgments of persons having substantive expertise in the

strategic, political, and economic ramifications of U.S high technology exports

17. KEY WORDS (six to twelve entries; alphabetical order; capitalize only the first letter of the first key word unless a proper name; separated by semicolons)

Computer export model; computer model; decision model; export administration;

export model; model; Soviet Union; U.S.S.R.

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