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MIT President Warns Economic Growth is Threatened by Cuts

CAMBRIDGE, Mass.--A strong partnership between government, academia and industry has provided "dramatic benefits" to the society and the economy--as in the case of biotechnology--but is in danger of being undermined by reduced federal support for research and the downgrading of industrial research and development, Charles M. Vest, president of the Massachusetts Institute of Technology, said Monday

"Investments in science are going by the wayside," Dr. Vest told a meeting of the Greater Boston Chamber of Commerce. "The US cannot afford to lose its (technological) edge and our region most of all cannot afford to have this happen."

Dr. Vest said, "At least 50 percent of all economic growth in this country since World War II has been due to technological innovation," he said, the "lion's share" of it coming from research universities.

The two great threats to this innovation system, he said, are "the downward direction of federal research budgets, and the disappearance of 'mid-range' research" carried out by industry.

The federal government, he said, plans to reduce its support of civilian research and development by 30-35 percent over the next six years--a "dramatic contrast" to the policy under which the federal government has joined forces with universities to invest in research and education.

"What worries me especially," Dr. Vest said, "is that today, just as the US in on a course to disinvest in civilian R&D, Japan is increasing its investment and is on a path to nearly double it by the end of the century."

Every rapidly developing nation in the world is banking on technology to move it into competitiveness on the world stage, he said. "The US cannot afford to lose its edge and our region most of all cannot afford to have this happen."

"The support of research has traditionally been bipartisan," he noted. "We now need continued bipartisan political action. We also need concerted effort by our colleagues in business and industry, to shore up our national investment in these areas."

The second threat, he said, stems from the economic pressures that industries have been facing over the last several years.

"In response to intense global competition," Dr. Vest said, "our large corporations have completely transformed their research and development activities to concentrate on short-range matters--incremental improvements of products, reducing product development cycles, improving quality and productivity."

"These actions have been essential and effective in the near term," he added. "But they are resulting in the disappearance of the mid-range research that builds a common knowledge base of developing technologies, and which is the source of much of America's innovation."

To counteract the loss of industrial R & D, Dr. Vest said, "We need to establish a strong new innovation system for these times, as we did in the past."

One way is for universities to establish new partnerships with industry. One example, which is just beginning to pay dividends, he said, is MIT's Leaders for Manufacturing Program. He added:

"This is a program in which a group of American industries have joined with MIT to build research and educational programs that are providing new approaches to the practice of manufacturing while preparing students who have both the technical and managerial expertise to lead tomorrow's manufacturing industries. Inventing more such partnerships will allow us to capture the benefits of new ideas on the horizon. Many emerging areas of research hold real promise for significant economic and social benefit. Examples are the brain and cognitive sciences, information technology, environmental technology, and biotechnology.

"In the brain and cognitive sciences, for example, we can look forward to the day when advances in these fields will offer respite and even cures for mental illnesses, in much the same way that research in molecular biology has led to dramatic progress in the fight against a host of physical diseases. Such advances will provide the real path to reducing the social and economic costs of health care.

"Fulfilling these promises requires support of the research that takes place in our universities, to be sure, but it also requires the participation of industry in transferring the research results from the laboratory to the economy. Long term success also requires active involvement and appropriate support for industry and academia from out state government. In sum, new partnerships in new fields hold the key to our economic vitality."

Dr. Vest said that biotechnology offers a good example of an "extraordinary" economic return on the nation's investment in education and research.

A recently completed study at MIT of the biotechnology industry and the contribution of just one university, MIT, to that industry, he said, showed that the federal government invests about $43 million annually for biological research at MIT--funding that supports 138 different research projects and provides significant support for graduate students working on these projects.

Out of this support, Dr. Vest said, has come creation of new knowledge; the education of scientists, engineers and managers; and a magnet for companies that has created in Massachusetts the nation's second largest concentration of biotech companies.

Over 100 biotechnology patents at MIT alone have been licensed to US companies in the past 10 years--licenses that induced investment of more than $630 million.

The creation or licensing of some 45 MIT-related biotechnology companies with a market value of $22 billion has generated 10,000 new jobs and $3 billion in new annual revenues, about 24% of the revenues from the entire U.S. biotech industry.

MIT-related companies--companies founded by MIT professors or graduates, or those that have major products based on technology developed at MIT--in 1994 developed nine of the top 10 FDA-approved biotech drugs that stop heart attacks, treat cancer and are lifesavers for cystic fibrosis and diabetes patients.

But the system that has produced all this, and similar advances, is in danger of being "broken," Dr. Vest warned.

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