Immigration, International Collaboration, and Innovation: Science and Technology Policy in the Global Economy

Abstract

Globalization of scientific and technological knowledge has reduced the US share of world scientific activity, increased the foreign-born proportion of scientists and engineers in US universities and in the US labor market, and led to greater US scientific collaborations with other countries. China’s massive investments in university education and research and development (R&D) have, in particular, made it a special partner for the United States in scientific work. These developments have substantial implications for US science and technology policy. This paper suggests that aligning immigration policies more closely to the influx of international students, granting fellowships to students working on turning scientific and technological advances into commercial innovations, and requiring firms with R&D tax credits or other government R&D funding develop “impact plans” to use their new knowledge to produce innovative products or processes in the United States could help the country adjust to the changing global world of science and technology.Globalization of knowledge, knowledge creation, and innovation has widened the framework for assessing the economic effects of science and technology (S&T) policies. As an advanced country at the frontier of knowledge, the United States relies on investments in science and technology to improve economic performance and maintain comparative advantage in the high-tech industries that employ highly educated workers. Expansion of tertiary education, increases in research and development spending, and the manufacturing and assembly of high-tech products in low-income countries as well as in other advanced countries challenges the US position at the knowledge frontier.1 This makes S&T policies more important in determining economic outcomes than in earlier post–World War II decades when the United States naturally dominated the production and application of knowledge to the economy.This paper analyzes the globalization of science and engineering and knowledge production in the twenty-first century and its implications for US science and technology policies.Section I documents the spread of advanced knowledge and knowledge creation around the world in terms of its impact on the US share of the world’s science and engineering activity. It stresses that the rapid catch-up in knowledge-creating activities and production in low-wage developing countries, most notably China, constitutes a major challenge for the United States. The catch-up undermines the “North-South” model of trade that posited that advanced countries inevitably have comparative advantage in the production of high value-added innovations.2Section II shows that the catch-up has “globalized” science and engineering within the United States by increasing the foreign-born share of science and engineering graduate students and postdocs in US universities and the foreign-born share of the US’s science and engineering workforce, and by spurring international collaborations in knowledge production and innovation, thereby speeding knowledge creation and the spread of new knowledge worldwide.Section III examines possible changes in US policies regarding international students, postdoctoral workers and science and engineering (S&E) immigrants, and regarding the link between technology-based innovations and production. It argues that globalization of knowledge makes S&T policies the “industrial policy” of the twenty-first century, with implications for economic performance broadly. To maximize the benefits of the globalization of knowledge requires the United States to balance investments that expand the stock of global knowledge and policies that localize a share of the gains in the domestic economy.