Category Archives: World Leadership

How America Lost the Cold War

History is better analyzed after all the witnesses are dead, but this can lead to a gap in more recent events.  Young people today don’t remember the late 20th Century, and they didn’t study this history in school, since it hadn’t yet found its way into their curricula.  They don’t have any interest in listening to old-timers either, but this blog medium allows anyone to vent, whether they have an audience or not.  For what is worth, here is an outline of the major events that shaped my life from 1938 to 2011.  This perspective does provide a rather contrarian take on the present, as the title indicates.

I vaguely recall some incidents from World War II that dominated my parents lives for so long.  When I was five, I could still get into our village’s movie free, and walked there alone in those more innocent times.  I do vividly remember the US propaganda films that portrayed the war in lurid color.  I took a personal interest, because, like most of my playmates, my dad was away from home, fighting in that war.  We even saw German POWs picking cotton in our remote Texas countryside; I remember hearing that they were very happy to be out of the war. We helped our cause by buying 25 cent stamps at the post office to stick into a booklet, which could eventually buy a $25 war bond.  Some kinds of food, like sugar, were rationed, and I still won’t drink cokes with artificial sweeteners.

When Dad came home, we had only a brief respite before the Cold War came to dominate our lives for decades.  Most people think we won that war when the Berlin Wall came down in 1989, and the USSR collapsed.  Some even credit Ronald Reagan for almost single handedly winning the war, but I have a different recollection.  Our enemies in that war included not just the Soviet Union, but also almost equally, the People’s Republic of China.  We never actually fought the Soviets, but we fought the Chinese to a bloody draw in Korea.  I remember this quite well, because my dad left us again, to go fight the North Koreans and Chinese Communists.  And we never defeated them; quite the contrary.

After cooperating for years, the Soviets and ChiComs had a falling out in the 1960s, mainly because they shared a long and disputed border.  The Cold War then devolved largely into a three-way confrontation including the US and these two, who had no love for each other.  When the USSR disintegrated, the Chinese were able to turn their attention to us.  Of course, the main story here is that Deng Xaiopeng simply observed how his neighbors were getting rich by manufacturing for export, and said, “Me, too.”  By simply abandoning Mao’s stupid policies, he unleashed the vast energies of the Chinese people, who had prospered everywhere, except in China itself.

Well, from this witness’ perspective, the Chinese are now winning a Cold War that never really ended.  If I may say so, I think this is an important insight.  At the moment, this is being fought in the economic sector, but I believe the PRC is much more of a national security threat to the US than the USSR ever was.

News About US High-Tech Trade: Good, Not So Good, and Really Bad

High-technology trade is one bottom line indicator of the performance of a national S&T establishment, or “innovation ecosystem.”  The OECD has been gathering this data for many years for five kinds of products: pharmaceuticals, aerospace, electronics, computers, and instruments.  While OECD doesn’t tabulate totals, it’s easy to sum these up for overall indicators of imports, exports and trade balance in high-tech products.  Econobabble claims that international trade is always a win-win situation for all nations, but the latest direction of these indicators shows that all is not so rosy for the US and EU.

Individual companies measure sales, profits, and market share to monitor the health of their enterprise.  Nations can do something similar by monitoring imports, exports, and trade balance.  The high-technology product sector is particularly valuable as a measure of the success of a nation’s overall R&D investments.  After all, about the only way one can get any financial return whatsoever on their investments in research is to manufacture the resulting innovations, and sell them in domestic and foreign markets.

First the good news: imports of these products are growing rapidly in the US, EU, and PRC providing a cornucopia of snazzy new products like iGadgets for everyone to enjoy: Figure 1.  Figures Here  There is just that little dip in 2009, presumably because of a slowdown due to the Great Recession.  All these graphs are in current dollars.  

The Obama Administration has a goal of doubling exports, and Figure 2 shows that high-tech products are contributing mightily.  The not so good news is  that while US exports of these products are growing rapidly, China’s, and even Europe’s, are growing much more rapidly.

The really bad news is in Figure 3.  US and Japanese market share in this sector has dropped like a rock as they moved their manufacturing off-shore.  Also, like the market share of a company, the trade balance of a country (Figure 4) is an overall measure of its business strength in relation to its competitors.   Until the 1990s the US was a high-tech powerhouse; a trade surplus in this sector helped balance losses in sectors like automobiles.  Then China started manufacturing high-tech products in quantity and selling them at prices no one could compete with.  (Try finding a PC made anywhere else at Best Buy.)  Unfortunately this indicator is also a measure of the overall ROI on research investments.   Heretical thought: could it be that our herculean efforts to innovate our way out of our economic problems and build up our STEM workforce may actually be counterproductive, if our competitors reap ALL the benefits of making and selling the resulting products?!

 R. D. Shelton

Innovation in the State of the Union Address

For decades the US innovation community has been trying to get the attention of the White House and Congress for this issue, which has been way down on the list of Washington priorities.  This grassroots lobbying effort has been greatly handicapped by not having the money to buy access that some other lobbies have.  Still, some modest success was gained with the NIH doubling initiative, the American Competitiveness Initiative, and the America COMPETES Act.  Except for the NIH money and a small portion of the ARRA stimulus bill, this has been mostly talk and not much action.  At last we’ve got the attention of the White House, and maybe the Congress.  When a State of the Union address from the President to the Congress is focused almost entirely on this issue, we’ve got the best lobbyist in town on our side. 

WTEC has played a very small role in this movement though its pointing with alarm abroad.  With this new attention at the highest levels, we are positioned to do a lot more.  This President reaffirmed President Truman’s 1950 goal in the address,  “Maintaining our leadership in research and technology is crucial to America’s success.”  Logically, if one has a goal, it is necessary to measure progress toward that goal.  Measuring world leadership of S&T is our middle name: World Technology Evaluation Center, Inc.  And we have a 20-year record of doing more of this than anyone else by the on-site, peer review method that some believe is the most accurate method.

I think we are ideally positioned to take advantage of this new priority that our issue has in Washington.  As the country as a whole focuses on competing in innovation worldwide, WTEC and WTIP should focus on redoubling our efforts to do our part to help.  And as in the case of the country as a whole, we have a very tangible motivation for this: our prosperity depends on it.

Eurekas! Answers to the European and American Paradoxes

Counts of scientific papers in the world’s leading journals are an important indicator of national S&T leadership.  For years I have been puzzled by the long term decline of America’s share of world papers, despite its huge and increasing investments in R&D–more than the next four or five countries put together.  I call this the American Paradox.  In 2006 I showed that after 1998 the decline was mainly due to China taking share away from the US, because of its more rapidly increasing R&D investments.  I built a model that accounted for this, and, with Patricia Foland, used it in 2009 to forecast that China will soon overtake the US and EU to lead the world in scientific publications, because of its rapidly growing investments.

I was still puzzled, though, about earlier events in this race for scientific paper leadership.  The EU passed the US in the mid-1990s to lead the world by sharply increasing its efficiency in papers per R&D dollar invested.  This was before China became a significant player.  I noticed that the EU and US had the same efficiency in 1990, but the two curves diverged rapidly in the 1990s with the EU rising much, and the US decreasing a bit.  By 1998 the EU was 60% more efficient than either the US or PRC.

In spring 2010 I finally analyzed this phenomenon by checking which components of efficiency account for the overall pattern.    The results are shown at  This paper was for a European audience, so it highlights changes there.  I am more concerned by loss of American leadership of S&T. 

Like a good mystery story, the answer is simple and logical once you see it.  Now if everyone will gather in the parlor… The US lost world leadership in scientific paper production in the 1990s because of its well-known shift from government funding of R&D to industrial funding.  In the early 90s these were about equal.  By the end of the 1990s they had shifted to 1/3 – 2/3.  In the Lpaper I did a multiple linear regression of the 1999 data from the 39 OECD countries, which showed that government R&D funding is vastly more effective at producing papers than industrial funding.  (Actually the industrial component is not even statistically significant.  This data is dominated by the US, so this is somewhat of a circular argument.  I need to remove the US as an outlier, and re do this calculation with some lags.)  It is no surprise that industrial funding tends to produce other outputs like patents and products, rather than research papers.  In 2006 I did a regression with similar results and also showed that industrial funding is much more effective in producing patents than government funding, which was not even statistically significant–pretty much the opposite result as for papers.

What’s new is the connection of that great disparity in effectiveness in paper production with the huge shift in the US toward industrial funding in the 1990s, leading to an actual decline in US paper production in some years (not just share), even as the Science Citation Index database increased about 3% per year.  The Lpaper has some charts that show an almost perfect match in the time series of government funding of R&D and of paper production, now obvious because of that close correlation from the regression.  This is the smoking gun that solves that mystery.

This shift also occured in the EU, but much less so, giving Europe an advantage.  These shifts toward industrial funding were not because businessmen had an epiphany about the benefits of R&D, but rather because of slowing of annual rises in government investment after the Cold War ended.  When the USSR collapsed in 1991, much of the motivation for government funding of R&D was suddenly removed.  There was talk in Congress and parliaments about the Peace Dividend, of beating swords into plowshares.  Annual increases in government R&D were reduced, which led to the industrial sector emerging as the main funder of R&D.  

The US also focuses its R&D investment on components that are less effective in producing papers. For example, it still spends more than 50% of its government R&D on military research; the EU less than 10%.  More importantly, despite lower overall GERD, the EU spends more on university research than the US; regression shows that this “HERD” component is five times as effective in producing papers than the “BERD” component in business that the US emphasizes.

So what?  Europeans have long worried about something they call the European Paradox–why don’t they reap the economic benefits of their leadership in papers?  I didn’t set out to explain that, but this analysis does so.  It is simply caused by their priorities on investments in basic research that results in papers, instead of investments that tend to produce outputs with more immediate economic benefits like patents. 

Americans tend to do the opposite.  And this analysis also explains the American Paradox as the opposite side of the same coin.  Americans focus on investments in activities that produce patents and other outputs instead of papers, resulting in that long decline in paper share despite huge and rapidly increasing overall investments.

Who knows which national S&T strategy produces the greatest good for the greatest number of its citizens?  But we do now know what is going on.  QED

R. D. Shelton

NSF Director Warns Congress That the US is Losing Its Lead in S&T

Here is a clip from the FYI newsletter coverage of the hearing on the NSF budget before the House Appropriations subcommittee this week.

“Wolf [ranking minority member from N. Va.] started his round of questioning by asking for Bement’s reaction to several worrisome trends appearing on page 14 of a summary digest of “Science and Engineering Indicators 2010″ comparing the United States to China and other Asian countries. Bement responded that the world is in a period of rapid change in which U.S. S&T leadership is being challenged by other nations. He described how other countries, “as a matter of national will” are rapidly and successfully increasing their S&T spending. “That’s what keeps me awake at night” he told Wolf. Bement spoke about the importance of international scientific cooperation, saying “this is the way of the world.” When asked to look ahead twenty years, Bement predicted that the U.S. will need to more effectively collaborate to compete. Otherwise, he warned, American researchers will get blind-sided, resulting in the United States being a follower instead of a leader.”

This is becoming a drumbeat of concern.  Whether anyone can do much about this problem is another matter.   I agree with Dr. Bement that more cooperation with other nations can help (see previous post).  WTEC can also help by gathering information on the details of this issue abroad.

R. D. Shelton

Remedies for US Loss of S&T Leadership

Baring a paradigm shift in the PRC, the US will soon trail China in S&T.  There really is not much the US can do to stop this trend.  In theory it could match the PRC’s annual increases in R&D investment, but it’s not politically feasible here where S&T is a marginal issue, not even on the list of most leaders’ priorities.

So what is to be done to mitigate this failure of U.S. S&T policy?  I’m no expert, but don’t know anyone else who is contemplating this almost certain future.  For whatever it is worth…

1. Strengthen alliances. The US has good allies in Europe, Japan, Canada, Australia, and elsewhere.  While China will soon pass the US, it cannot pass the combined resources of the US and its allies in the foreseeable future.  Diplomacy can strengthen these alliances and not just in S&T.  However, it is not so certain that these allies will be so resolute.  Japan, in particular, must face the reality that its neighbor is now the 400 lb. gorilla, not the US.  In S&T allied governments can create incentives for its high tech industry to form joint ventures in the face of Chinese competititon.  Scientists could encouraged to collaborate with allies.  While not now an ally, India could be cultivated.  As the world’s largest democracy it has much in common with the West, including a suspicion of Chinese intentions.

2. Promote English. One of the West’s greatest advantages is that English is the lingua franca of science.  Imagine how difficult it would be to compete if the world’s best science was reported in Chinese or some other language that takes a lifetime to learn.  The French have long had international programs that promote their language, which could be emulated.

3. Keep international graduates here. American universities are still a magnet for grad students.  Most pix of US research groups look like a UN caucus, but with few US delegates.  It is just crazy to force these grads to leave the US.  More would stay with a bit of encouragement, and the assurance that they are welcome.

4. Demand reform of the exchange rate.  The engine that drives PRC progress is an artificial exchange rate that makes it impossible for others to compete, brings in vast amounts of dollars and euros, which then pay for huge R&D investments and investments in science education–and advanced weapons systems.

There are others, but note that none of these are very expensive.  They just require some understanding of the problem by national leaders and the will to do something about them.

R. D. Shelton

NSB Warns that Globalization is a Threat the US Science Leadership

The National Science Board was apparently so alarmed by the findings in the latest SEI2010 that it has released a companion report calling for remedial action–Globalization of Science and Engineering Research.    The last paragraph of the letter of transmittal from Chair Steven Beering says, “We urge Federal attention and action to sustain U.S. world leadership in S&E in response to growing S&E capacity around the world.  Our nation’s future prosperity and security depend on a strong and unwavering Federal committment to this goal.”

One of three major recommendations calls for OSTP to engage all Federal research agencies to: (a) develop means to assess or continue to assess the quality of their agency’s supported research against international activities, and (b) to identify and as appropriate make adjustments necessary to ensure that their agency’s research is world-leading.”

NSF/ENG is already doing a good deal of this through the WTEC program, and other international activities.  I wonder if the NSB knows.

Of course, I have been saying much the same thing for years in this blog and elsewhere.  It’s gratifying to have others come to the same realization.

R. D. Shelton

Chinese Academy of Science Publishes WTEC Paper

In July I presented a paper in Rio that predicted that the Chinese would soon pass the US and EU to lead the world in S&T: The Race for World Leadership for Science and Technology: Status and Forecasts, by R. D. Shelton and P. Foland.  This paper got little notice at the Rio conference and later in the US, but in China, people are paying more attention.  At their request, it was translated into Chinese by their Academy of Sciences and published in their journal, Science Focus in February, 2010.  All the versions of the paper are posted at

R. D. Shelton

Yet More Alarms from Manufacturing Technology News

I got a free copy of the Feb. 12 issue via email from the editor, Richard McCormack.  I haven’t been subscribing to this newsletter,  since I was too cheap to spring for the $495 per year.  This issue convinces me that I have to subscribe, since it covers “Innovation, Globalization, and Industrial Competitiveness,”  much the same scope as this blog.  For example, some of the articles this time were:

1. US Becomes a Bit Player in Global Semiconductor Industry. 

2. Obama Puts International Comparison Program on Chopping Block

3. NIST’s Chief Economist: US Needs a New Direction

4. US Government Finds Thousands of Fake Parts in DOD Supply Chains

5. First Time Ever: [DOD] QDR Addresses Decline of US Industrial Base

All of these articles document decline of American S&T.  For example the first one reports the shocking statistic that in 2009 the US started construction of one (1) semiconductor fabrication (fab) plant in 2009.  The PRC started six (6), Taiwan five (5), then next was the EU, Korea, Japan, and the US, all with one (1) each.  Further, China considers Taiwan to also be its turf, and they are already de facto one and the same in the IT sector.   Thus Greater China started more than twice as many fabs as the rest of the world put together–and eleven times that of the US alone, which invented this business, of course.

R. D. Shelton

DARPA’s Worldwide Mission

From the DARPA website: 

 “DARPA’s original mission, inspired by the Soviet Union beating the United States into space with Sputnik, was to prevent technological surprise. This mission has evolved over time. Today, DARPA’s mission is to prevent technological surprise for us and to create technological surprise for our adversaries.

DARPA’s main tactic for executing its strategy is to constantly search worldwide for revolutionary high-payoff ideas and then sponsor projects bridging the gap between fundamental discoveries and the provision of new military capabilities.”

R. D. Shelton