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EXECUTIVE OFFICE OF THE PRESIDENT
PRESIDENT'S COMMITTEE OF ADVISORS ON SCIENCE AND TECHNOLOGY
WASHINGTON, D.C. 20500

June 18, 1996



President William J. Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20500

Dear Mr. President:

The appropriate role of the Federal government for investing in science and technology has beenwidely discussed and debated in Congress and the media. While there is general agreement onthe government's role in the funding of science, there are many differing viewpoints on theappropriate government role in funding advanced technology. However, there is a consensusthat leadership in advanced technology matters for our Nation's economic security.

Your Committee of Advisors on Science and Technology (PCAST) offers the enclosed Principles on theU.S. Government's Investment Role in Technology for your consideration. These PCAST Principles provide a framework and criteria for those areas wherethe Federal government has a clear role to play in advanced technology. We intend that theseprinciples be helpful in forging a bipartisan consensus and thereby in supporting governmentactions.

We would be pleased to discuss these with you. In the meantime, please let me know if we canbe of further assistance.


PCAST PRINCIPLES
ON
THE U.S. GOVERNMENT'S INVESTMENT ROLE IN TECHNOLOGY

Leadership in advanced technology matters. In the United States, technological innovations anda high level of advanced development create new industries and sustain existing ones. Technology intensive industries provide a wide range of professional, technical, andmanufacturing jobs, increase economic productivity, and strengthen our competitiveness. Asnever before, the U.S. is embedded in a global economy. Our U.S.-based companies mustcompete with companies of other nations for world markets. A strong position in advancedtechnology is a key element of our competitiveness.

The Federal government affects the levels of advanced technology investment in certain areasboth by creating incentives for private firms to invest and by supporting advanced technology inkey areas where private participation is inadequate. There are also other government policiesthat affect advanced development indirectly. Protection of intellectual property and access tomarkets overseas are two examples where the outcome affects U.S. firms' ability and willingnessto invest in R&D.

There will always be areas where public benefits of R&D substantially exceed the returns thatcan be realized by private investment alone. Federal investment is essential in these areas. ThePresident's Committee of Advisors on Science and Technology provides the following criteriafor government investment in technology:

  1. Technology that achieves well-defined public goals such as national security, protection ofthe environment, new energy sources, better health and education for all Americans, and trainingof the workforce.

  2. Areas of national importance where the marketplace alone cannot justify a sufficient level oftechnology investment by private industry:*

    1. Where the benefits are too widely spread for any one company to recover its investment at aprofit;
    2. Where the cost or risk is too great for any individual company to bear alone;
    3. Where the potential benefits are too far in the future to pass the threshold of privateinvestment criteria.

  3. Efforts that ensure our nation benefits from our investments and leadership in basic research. The Federal government can facilitate the transfer to industry of the benefits from basic scienceinvestments by encouraging partnerships and by promoting the exchange of people and ideasbetween industry, academia, and government.

* Examples from the past, which fit in one or more of the categories of criterion II,include aeronautics research, the Global Positioning System (GPS), the Internet, satellitedevelopment, agricultural research on disease or pest-resistant food crops, and the developmentof vaccines for diseases such as Hepatitis-B.


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