The Pursuit of Knowledge: Speeches and Papers of Richard C. Atkinson

Opportunities for Chinese and American Universitiesin the Knowledge-Based Economy

86 Opportunities for Chinese and American Universities in the Knowledge-Based Economy October 1999 ItisagreatpleasuretobebackinChina.Ifirstcameherein1978as director of the National Science Foundation [NSF] to explore the possibility of an exchange of students, scholars, and scientists between our two countries. The Chinese government had expressed an interest in such an exchange; the White House was taken by surprise but quickly agreed to talks, with one proviso—that such an exchange would require a formal “memorandum of understanding ” signed by the two governments. What has been called the Nixon-Kissinger ping-pong diplomacy occurred earlier, but it had not led to a normalization of relations. The Chinese initially insisted on an informal arrangement for an exchange but eventually agreed to a government-to-government program. I wish I had time today to give you an account of our negotiations. Suffice it to say that each side had a great deal to learn from the other. I Chinese and American Universities / 87 signed the exchange memorandum for the United States; it was the first document ever cosigned by the two governments. Soon thereafter, our exchange program became part of a more comprehensive agreement on science and technology that Chairman Deng and President Carter signed on the chairman’s historic visit to the United States in January 1979. Today, as we celebrate the twentieth anniversary of that agreement, it is gratifying to see the growing interest that scientists and government officials in China have shown in the contributions of basic research to their country’s overall development. This science policy seminar is a fitting tribute to the crucial role that scientific ties established two decades ago have come to play in the relationship between our two nations. I believe that building a strong foundation of basic research will ensure China’s future economic competitiveness. This approach has been used with success in the United States for over fifty years. How this focus on basic research evolved, and the role that research universities play in spurring American economic growth, are the principal themes of this lecture. I will conclude with some thoughts about the challenges Chinese universities face in today’s knowledge-based economy. The term knowledge-based economy—sometimes called the “new economy”—refers to a set of industries whose main products or services use information to decrease costs and create new opportunities for growth. Generally speaking, the industries of the new economy tend to produce jobs more rapidly and with higher salaries, increase productivity growth faster, and provide greater profits for employers than the “old” economy. These high-technology industries rely on a constant infusion of new knowledge to stay competitive, and the principal source of such knowledge is basic research. The California economy provides a striking example. Its recovery from the economic recession of the early 1990s depended on knowledge-driven businesses and jobs that didn’t exist fifteen or twenty years ago—biotechnology , telecommunications, and multimedia, for example. The evidence regarding the relationship between research and development (R&D) and economic growth in the United States is overwhelming. As recently as the early 1970s, there was no substantial economic analysis of the relationship between investments in R&D and economic development. When I served as director of the National Science Foundation in the 1970s, we were well aware of the lack of such economic data in making the case to the Congress for federal support of research . And we realized that most of our arguments about how R&D affected economic growth were based on little more than anecdotal evidence. Accordingly, we initiated a special research program at NSF focused on just that issue—the relationship between investments in R&D and the growth of the American economy. In the intervening twenty-five years, a substantial body of research has led to a development in economics called “new growth theory.” The influence of this work can be seen in a 1995 report of President Clinton’s Council of Economic Advisers , which notes that 50 percent of the growth in the American economy in the last forty years has been due to investments in research and development. The private sector is a major source of R&D, but federally funded research at universities also plays a key role. The report points out that when federal investments in university research increase, there is—with an appropriate time lag—a corresponding increase in private-sector investments. 88 / The Research University Chinese and American Universities / 89 There is now...