Viewpoint: Companies, not governments, should lead global tech collaboration

06 Feb 2023 | Viewpoint

Like it or not, democratic countries are bound by economic reality to work together rather than put up barriers to cross-border collaboration. Companies must spearhead the R&D cooperation, argues the lead for a new Fraunhofer USA initiative

Bruce Guile leads the Applied Research Consortia (ARC) Project, an initiative of Fraunhofer USA

This article is part of a series of opinions Science|Business is publishing on the EU’s strategic autonomy agenda, and its impact on global R&D. A complete report will be published and discussed at the annual Science|Business Network conference 7 February.

 

War, pandemic, climate change, economic stress and rapid innovation are roiling the lives of people around the world and disrupting relations among nations.  But in all this, one thing is clear: there is no path forward for advanced democracies that does not depend on tightening technological and economic security relationships with other democracies.  

To prosper, advanced democracies must navigate two paradoxes. First is that economic reality dictates that national sovereignty in technology requires collaboration with allies; talent and R&D capability are too globally distributed for any one nation to go it alone. The second paradox is that in liberal, free-market democracies, public authorities depend on private interests to achieve their goals. Multinational companies are the only enterprises that can credibly lead efforts to promote national tech security.

The first paradox

Economic growth and globalisation since the end of the Cold War have remade the global landscape of national and regional capabilities in every aspect of science and technology.  Public and private R&D now exceeds 2% of gross domestic product in more than 20 nations, including most of the largest and richest economies in the world.  Further, there have been rapid and remarkable changes in downstream technological capability.  Over the past 30 years, lab-to-fab capabilities, supply chains for advanced technology products, and advanced innovation capabilities have become ever more globally distributed – and, at the same time,  tightly networked.  In 2023 neither the EU nor any single democracy “goes it alone” in science, engineering, or commercial innovation.

The realpolitik of “strategic autonomy”, “technological sovereignty”, “energy independence” and similar concepts rattling around the advanced democracies is that they can only be pursued, paradoxically, through a comprehensive system of cross-border public-private alliances and partnerships.  This is as true for the EU as it is for the US, Japan, Canada, New Zealand, or other democracies inside and outside the EU.

The second paradox

Well-meaning politicians and policy makers have a duty to define and pursue the national interest in economic growth, innovation, and military security.  At the same time, liberal democracies depend on private companies – not state owned, controlled, or directed enterprises – to deliver most goods, services, and innovation to citizens, and to secure national interests in the same.  Therefore, while governments can play a useful and supportive role, the necessary tightening of both technological and market relationships among democracies needs to be led by companies, many of them multinational.

In other words, while the EU or national governments can set goals of technological autonomy and independence, the realisation of those goals depends on the actions of companies that have, especially since the end of the Cold War, treated national borders (and geopolitics) largely as an economic inconvenience.

How we got here

Multilateralism (open borders, free trade, globalisation) was the product of post-WWII US leadership. This world view continued through the Obama era, finding an almost final expression in the failed effort to create a new Pacific trade agreement, the Trans-Pacific Partnership.  The Trump years were an inflection point.  It is easy to argue that nationalistic, isolationist trends in many countries were a predictable populist kickback against almost 30 years of unbridled globalisation. But even many officials associated with Trump recognised that there were limits to nationalism.  

Former US Defense Secretary James Mattis’ 2018 resignation letter from the Trump administration — shadow boxing with the isolationist tendencies of the administration he was part of — nailed it:

"One core belief I have always held is that the strength of our nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships.

"...It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model – gaining veto authority over other nations’ economic, diplomatic, and security decisions – to promote their own interests at the expense of their neighbors, America and our allies...We must do everything possible to advance an international order that is most conducive to our security, prosperity and values, and we are strengthened in this effort by the solidarity of our alliances.”

Industry-led collaboration

Since we cannot and do not want to put the genie of scientific and economic globalisation back in the bottle, we need to find a path forward that harnesses the interests of multinational companies to address the national interests of democracies.  Given the advanced state of globalisation this requires that democracies band together to compete in a world that includes authoritarian strategic competitors and malign actors.

Companies already operate and collaborate daily across national borders.  It is a shorter step than it might seem to add a focus on geopolitical concerns and challenges shared by, and common to, liberal democracies as an additional motivation for private sector cross-border R&D collaboration.  Take, for example, the nine specific pre-competitive challenges listed below. This list was been drawn up with colleagues at Fraunhofer USA and the University of California San Diego, as part of the Applied Research Consortia (ARC) Project.  In each of these areas, there are near-term technical challenges that fall, in the main, between basic (open) research and single-company proprietary R&D. 

  1. Wireless Networks: Next generation architecture, devices, and standards for wireless networks
  2. Quantum Sensors and Communication: Cost and performance barriers to scaling the use of quantum sensors and communication
  3. Rare-Earth Minerals: Securing adequate and sustainable supply of rare-earth minerals or functional replacements
  4. Digital Infrastructure Energy Efficiency: Reducing the power requirements of digital infrastructure
  5. Industrial Decarbonisation: Decarbonising high temperature industrial processes
  6. Carbon Waste Conversion: Scale up of converting carbon waste streams into chemical feedstock and products
  7. Local Climate Change Resilience: Cost effective modeling of climate change impacts on the local built environment and landscapes
  8. Cross-Border Digital Epidemiology: Effective and timely cross-border digital epidemiology which draws on new forms of data
  9. Orbital Space Situational Awareness: Improved space situational awareness for orbital traffic coordination and space debris clean-up

Further, each of these techno-economic challenges is inherently cross-border and, therefore, can only be pursued by entities responsive to today’s geopolitics. Those geopolitics include national responses to climate change, energy dependence, a hot ground war in Eastern Europe, global cyber confrontation and conflict, and the clash of different economic systems.

What it takes

The business case for sharing the burden of pre-competitive R&D makes itself and, indeed, companies collaborate in this way daily.  While companies have the ability to define and collaboratively invest in pre-competitive R&D, a cross-border alliance or consortium of adequate scale and scope to effect major change will almost invariably depend on complementary government R&D investment.  Further, necessary progress on underlying fundamental science and talent development will depend on involvement of research universities, primarily government funded.

In recent years economic security concerns (and concepts such as strategic autonomy and technological sovereignty) have taken their place alongside national military security.  A pre-competitive consortium that is founded by companies from democratic nations can make an informed choice – based on market, ethical, or geopolitical concerns as well as restrictions from government funders – about when to be globally inclusive and when it is important to “fence out” participants from authoritarian countries.  This is possible if government agencies, from funders to regulators, provide clear and stable guidance to industry consortia.

And this is where the multinational path gets tricky.  In 2023 cross-border R&D and innovation is impeded by lack of alignment among national approaches to local content subsidies, export controls, antitrust, standards, environmental regulation, data privacy, or intellectual property.  Many of these impediments can be resolved — as the EU has shown in its Horizon Europe pre-competitive research programme, and a growing number of big collaborative projects in batteries, chips and other domains — but only if the policy professionals and politicians come to international negotiations genuinely interested in finding common ground and willing to give up forms of protectionism dressed up as sovereignty concerns.

The US is particularly problematic.  Many American politicians, policy makers, and business leaders – long accustomed to US dominance – have not awakened to the fact that America cannot lead the world in every aspect of S&T and tech-based commerce.  The US political system has no recent history of dealing with other nations as S&T equals, and American politics has many serious “us” vs. “them” fault lines.

I am hopeful that capitalist pragmatism — the strong business case for pre-competitive R&D collaboration among companies originating in democracies — can work where isolationist rhetoric fails.

Bruce Guile leads the Applied Research Consortia (ARC) Project, an initiative of Fraunhofer USA. 

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