Full Committee Hearing - The Globalization of R&D and Innovation

2318 Rayburn House Office Building Washington, DC 20515 | Jun 12, 2007 1:00pm to 3:00pm

Witnesses

Dr. Alan S. Blinder is professor of economics at Princeton University and director of Princeton’s

Center for Economic Policy Studies. He served as Vice Chairman of the Board of Governors of the

Federal Reserve System from June 1994 until January 1996.

Dr. Ralph E. Gomory is president of the Alfred P. Sloan Foundation. He was Director of Research at

IBM Corporation from 1970 to 1986.

Dr. Martin N. Baily is senior fellow at the Peterson Institute for International Economics and senior

adviser to McKinsey Global Institute. He was chair of the President’s Council of Economic Advisers

from 1999 to 2001.

Dr. Thomas J. Duesterberg is the President and CEO of the Manufacturers Alliance/MAPI.

 

Press Release

OFFSHORING OF HIGH TECH AMERICAN JOBS AN ONGOING PROBLEM, COMMITTEE TOLD

WASHINGTON D.C., June 12, 2007 – Today, the Committee on Science and Technology heard from a diverse panel of experts on economic globalization and why American high tech jobs are being offshored to other countries.

Stressing the need for improved science, technology, engineering and mathematics (STEM) education, Ranking Member Ralph Hall (R-TX) noted, “Once upon a time it was thought that only low-skilled jobs were in danger of being offshored. However, it seems that highly educated people in good paying jobs are now just as threatened.

“In this global economy our children will be competing head to head with Chinese and Indian students, but they aren’t taking the necessary classes or making their education work for them. When our children graduate from high school they have taken consistently fewer classes in math and science than their contemporaries across the globe.”

Witnesses at today’s hearing discussed the need to increase the quality of STEM education in the U.S. While developing countries like China and India are producing increased numbers of PhDs and engineers, the U.S. has seen a relative decline in the last decade.

One witness, Dr. Thomas Duesterberg, President and Chief Executive Officer of Manufacturers Alliance/MAPI, said, “To put our own house in order, we need to ratchet up investment in the sciences and engineering disciplines so crucial to innovation and to attracting the domestic students to these fields.

“Our research shows a clear link of university research with innovation,” he continued. “The experience of the massive investment in sciences in the 1960s, when nearly 1 percent of GDP was devoted to federally funded, non-defense, scientific research, which led to many of the technological breakthroughs at the core of American manufacturing success in the 1980s and 1990s, should also guide our thinking.”

To help achieve this end, Dr. Martin N. Baily, senior fellow at the Peterson Institute for International Economics and senior adviser to McKinsey Global Institute, suggested that “Congress could add to the size of the workforce by providing more graduate scholarships in science and technology subjects that are available to US citizens and permanent residents.”

While today’s witnesses disagreed on the best ways to provide incentives to keep high-tech jobs in the U.S., they all recognized offshoring as a problem. One common cause they discussed was the fact that technology has effectively decreased barriers to entry for many service-based industries.

“Advances in electronic communications have decreased or obliterated the advantages of physical proximity in a wide variety of service jobs, where the work can now be performed abroad and the work products delivered to the US by telephone or computer networks,” said Dr. Alan Blinder, Professor of Economics at Princeton University.

“While still in its infancy, electronic offshoring has already begun to move well beyond traditional low-end jobs, such as call center operators, to highly-skilled jobs such as computer programmers, scientists and engineers, accountants, security analysts, and some aspects of legal work—to name just a few.”

Also testifying at today’s hearing was Dr. Ralph E. Gomory, president of the Alfred P. Sloan Foundation.