America faces fresh challenges to technology innovation leadership
For the past seven decades, the United States has led the world in technological innovation and development. This long period of strength arose from critical federal investments in education and infrastructure, an unmatched talent pipeline, and the opportunities created by the opening of new markets and the global expansion of trade.
Today, however, the United States faces a convergence of forces that threaten its technological leadership as well as its economic and national security. While policymakers talk about the importance of innovation, the rhetoric does not translate fast enough and at sufficient scale into changes that matter. Washington must undertake a comprehensive and urgent response to this challenge over the next five years.
Three forces are coming together to endanger American technological leadership. First, the pace of innovation globally has accelerated, and is more transformative and disruptive to industries, economies, and societies. Second, many advanced technologies necessary for national security are developed in the private sector by companies that design and build them in complex supply chains across the world. Third, China constitutes a different type of challenger that is able to mobilize economic capacities that rival the United States.
The Trump administration has brought much needed attention to innovation issues and has rightfully identified the threats that the failure of Beijing to protect intellectual property and market manipulating industrial policies pose. The Treasury Department has tightened the review process for Chinese investment in critical technologies. The Justice Department has announced a “China Initiative” to fight cyber industrial espionage. The Commerce Department has strengthened the controls on the export of sensitive technologies, adding, for example, the Chinese supercomputer company Sugon to a list banning them from buying American technology.
Yet slowing China down is not as effective as outpacing, outinnovating, and outcompeting China. While the Trump administration has boosted the budgets of several technology related organizations within the Pentagon, such as the Defense Advanced Research Projects Agency, its efforts to accelerate innovation in critical frontier technologies, such as artificial intelligence and quantum information sciences, are so far too incremental and narrow in scale and scope.
As our new report from the Council on Foreign Relations outlines, a more robust strategy would involve restoring federal funding for research and development to its higher historical average by increasing funding from 0.7 percent to 1.1 percent of gross domestic product, making additional strategic investments in American universities for up to $20 billion a year for five years, and announcing moonshot programs for innovation in artificial intelligence and 5G, robotics, data science, advanced battery storage, advanced semiconductors, genomics and synthetic biology, and quantum information systems.
The United States also needs to ensure access to talent, both domestic and foreign. The White House, Congress, and academia should develop a 21st century National Defense Education Act, with the goal of expanding the pipeline of talent working in science, technology, engineering, and mathematics. In addition, the United States needs to make it easier for foreign graduates of American universities in scientific and technical fields to remain and work in the country.
Action at home is not enough. China already graduates almost three times the number of undergrads with science, technology, engineering, and mathematics degrees than the United States, and assuming current rates will pass the United States to become the largest funder of research and development in the world after 2030. But one of the great strengths of the American innovation system is that it is a central node in a transnational network for turning ideas into new products. The United States does not necessarily have to outspend China dollar for dollar.
It has a slew of alliances upon which it can call. Friends, allies, and trading partners bring scale and are a competitive American advantage in a globalized system of innovation. The United States should be working with Europe, Japan, and other major trading partners to develop common standards for emerging technologies and to encourage investments and partnerships with firms in emerging technology ecosystems.
The United States has a long history of innovation, entrepreneurship, and openness. However, faced with a new wave of disruptive technological innovation, the country now needs a vision for technological leadership and an agenda for realizing it. Failure will lead to a future in which rivals strengthen their militaries and threaten American security interests, and new innovation centers replace the United States as the source of original ideas and inspiration for the world.
William McRaven and James Manyika serve as chairmen and Adam Segal serves as the project director of the Independent Task Force on Innovation and National Security sponsored by the Council on Foreign Relations.