The Globalization of R&D and Innovation, Part 1

Opening Statement By Chairman Bart Gordon

I want to welcome everyone to this afternoon’s hearing on the offshoring of research and development and innovation.

I also welcome our distinguished witnesses – all are leading experts on the impacts of globalization. We look forward to hearing your thoughts on the impacts of offshoring science, engineering, and innovation jobs and work.

The Science & Technology Committee has been working hard to address one of the country’s most pressing issues, U.S. competitiveness. We began addressing this issue in the 109th Congress, and are eager to continue our legislative and oversight work.

As is widely recognized, our competitiveness and high standard of living is derived largely from our technological superiority. But almost on a daily basis we read announcements that more high-tech jobs are being offshored to developing countries.

For example, Accenture’s CEO announced that it will have more employees in India than the U.S. by this August. And IBM is projected to have 100,000 workers in India by 2010, more than one-quarter of its worldwide workforce.

At the same time, firms are investing in R&D facilities in low-wage, developing countries. Companies like General Electric, Eli Lilly, Google, and Microsoft are expanding R&D centers in India and China. These centers are working on cutting edge research and new product development, rivaling their U.S. centers. A recent University of Texas study recently found that of the 57 major announcements of locations of global telecom R&D facilities in the past year, more than 60 percent were located in Asia, versus a meager nine percent located in the U.S.

But this seems to be only the tip of the iceberg. One of our witnesses, Dr. Alan Blinder, has estimated that more than one in four American jobs are vulnerable to offshoring. Even more striking is his finding that most American science and engineering jobs are vulnerable to offshoring.

We’re already seeing how offshoring is adversely affecting student choices to pursue science and technology careers. According to the Computing Research Association, enrollment in undergraduate computer science programs has dropped an astonishing 40 percent over the past four years.

Are we offshoring our future?

I want to make clear that I’m not casting blame or making accusations. Companies are simply responding to an increasingly globalized marketplace and high-tech workforce. What we want to do is make certain that companies find that U.S. engineers, scientists, and students are the best in the world. That is the Committee’s goal. We want to make sure that we enact the policies that keep us from offshoring our future.

Unless the United States maintains its edge in innovation, which is founded on a well-trained creative workforce, the best jobs may soon be found overseas. If current trends continue, for the first time in our nation’s history our children may grow up with a lower standard of living than their parents.

Providing high-quality jobs for hard-working Americans must be our first priority. Indeed, it should be the central goal of any policy in Congress to advance U.S. competitiveness.

There is no single cause for the concerns being raised, and there is no single policy prescription available to address them. But looking the other way and hoping for the best -- not to mention suppressing government studies -- is irresponsible. The stakes are simply too high to adopt a “don’t worry be happy” approach.

In the last Congress and in the first hundred days of this Congress, we've already done a lot of work to address this set of issues. We fought hard to get that offshoring report released from the Commerce Department, and we've passed a number of legislative initiatives based on the recommendations of experts from the National Academies. But this should be viewed only as a necessary start. There is much more work to be done.

Today’s hearing is the first in a series of fact-finding explorations of the implications of offshoring on U.S. competitiveness. We will listen to all sides, soliciting the best expertise and advice, so that we can develop the policies that will lead to a strong economic future for our country.

Witnesses

Panel

2 - Dr. Martin Baily
Senior Fellow Peter G. Peterson Institute for International Economics Peter G. Peterson Institute for International Economics
Download the Witness Testimony

1 - Dr. Alan Blinder
Director, Center for Economic Policy Studies Princeton University Princeton University
Download the Witness Testimony

3 - Dr. Ralph Gomory
President Alfred P. Sloan Foundation Alfred P. Sloan Foundation
Download the Witness Testimony

4 - Dr. Thomas J. Duesterberg
President and Chief Executive Officer Manufacturers Alliance/MAPI Manufacturers Alliance/MAPI
Download the Witness Testimony