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Measuring ATP Impact
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| Technologies
Fuel the Economy |
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Modern economies rely on the development of new technologies for economic growth and prosperity. The United States emerged as a world economic leader in the late nineteenth century due to ingenuity, breakthrough ideas, and the creative application of new knowledge. Since that time, emerging technologies have continued to support and promote America’s economic growth. But while research, invention, and the creation of knowledge define an opportunity, it takes economic incentives to translate the opportunity into economic benefits. The success of a new technology depends on an economic environment conducive to its development and commercialization.
Since our nation’s birth, the capacity to unite technological innovation and economic opportunity has enabled the nation to rebound from economic crises and achieve sustained growth. Today, America’s ongoing commitment to foster technology development will depend on an environment that promotes exploration into new ways to address existing problems and challenges.
After decades of strong growth in U.S. productivity, the oil embargo of 1973-74 led to a crisis in economic competitiveness. This crisis continued through the 1980s, with disabling energy shortages and a combination of high unemployment and double-digit inflation, or “stagflation.” The dollar strengthened from a tight money policy and high interest rates, creating a ballooning trade deficit that affected not only traditional sectors like manufacturing, but also research-intensive industries—including electronics, machine tools, and semiconductors. The ability of U.S. firms to turn invention into innovations declined in the face of more formidable competition while investment capital dried up for research and development (R & D) into early-stage, high-risk technologies. This in turn heightened concerns about America’s ability to compete economically with other world industrial powers.
Congress passed several pieces of legislation to address declining U.S. competitiveness. Through the Omnibus Trade and Competitiveness Act of 1988, Congress charged the National Institute of Standards and Technology, an agency within the U.S. Department of Commerce, with creating and overseeing the Advanced Technology Program. With this step, Congress sought to provide cost-shared funding to industry to accelerate the development and broad dissemination of enabling, high-risk technologies with the potential to boost the U.S. economy and enhance the quality of life of Americans.
In 14 years, through 43 competitions and 6,054 proposals for new technologies, ATP has made 736 awards to a total of 1,468 participants.1 Projects with ATP involvement have totaled $4.1 billion, with $2.1 billion invested by ATP and another $2 billion by the commercial sector. Figure 1 shows the distribution of ATP funding by technology area. To date, more than 900 patents have resulted from ATP projects.
Figure 1 - 736 ATP Awards by Technology Area Forty-three Competitions (1990-May 2004) |
As shown in Figure 2, the projected returns for the American people from just a small portion of ATP projects far exceed the taxpayer dollars invested. These 41 projects—just 6 percent of the ATP portfolio—have returned estimated economic benefits exceeding $17 billion—far more than the total ATP cumulative investment of $2.1 billion for 736 projects.
Figure 2 - Economic Benefits of 41 Selected ATP Projects in 10 Studies| Tissue Engineering | $10.90 B |
| Data Storage | 3.00 B |
| Flow Control Machining | 1.15 B |
| Advanced Composites | 1.00 B |
| Component Based Software | 0.80 B |
| Refrigeration | 0.45 B |
| 2mm Auto Body Consortium | 0.20 B |
| Mammography | 0.20 B |
| HDTV Technologies | 0.13 B |
| Printed Wiring Board | 0.04 B |
| Combined Net Economic Benefits—41 ATP Projects | $17.87 Billion |
According to a 2002 study of the state of early-stage, high-risk funding for technology R&D in the United States, monies for such research remain limited—just as they were upon ATP’s launch in 1990. Study co-authors Lewis M. Branscomb and Philip E. Auerswald report that the factors limiting the availability of R & D funding are several:
A further assessment of research data by Branscomb and Auerswald in 2004 examined corporate early-stage R&D investment decisions and the forces driving them. The new interview data from a sampling of 31 corporations reveal increasing pressure on these investments based on the sophistication of new technologies, the need to demonstrate financial value from the investment, and the maturity of the industry involved. In response, firms are exhibiting “a growing reliance on acquisitions, alliances, and outsourcing to obtain access to earlier stage technologies." 3
These studies reflect a critical need for a federal role in funding. “National investment into the conversion of inventions into radically new goods and services," conclude the authors of Between Invention and Innovation, “…significantly affects long-term economic growth by converting the nation’s portfolio of science and engineering knowledge into innovations generating new markets and industries." 4
What difference did ATP make in the lives of fledgling technologies? In addition to accelerating technology development, ATP’s involvement can provide a “stamp of approval” that attracts capital investment from other sources as well as opens the door to additional technical help. It can also broaden the scope of research and foster collaboration.
In measuring this counterfactual impact, all companies proposing new technologies to ATP were surveyed in 2000. Survey results indicate that without ATP support, many projects were not executed as originally proposed. As shown in Figure 3, survey data collected 18 months after the close of the 2000 competition reveal that 41 percent of nonawarded projects had no activity, and a similar number had less activity than proposed. Only 19 percent were pursuing research at or above the level of effort described in their proposals (which indicates ATP funding may not have been needed, and therefore was not awarded). 5
Figure 3 - Current Status of Nonfunded Projects (Year 2000 ATP Competition) |
Who Participates in the Program? ATP provides competitively awarded funding to companies that wish to pursue innovative technologies. In response to an announced competition, companies propose R&D projects to the program. These proposals are then evaluated for technical and economic merit through a rigorous review process that includes strict criteria for companies that wish to participate. A variety of factors are considered before ATP makes its final choices for a given year, and invests in technologies that are high risk but also may be high payoff for many industries in many applications. |
The survey also shows that ATP attracts and funds R&D projects with higher technical risk and longer time horizons than “typical” R&D efforts at applicant companies. “Technical risk” means extremely difficult technical challenges that make success uncertain.
As shown in Figure 4, ATP awardees report a greater contrast between their proposed and typical R&D projects, as compared to nonawardees. Awardees estimate that the probability of not fully achieving technical goals in the ATP-proposed project is 0.45, while only 0.31 for nonawardees. Figure 4 also shows that both ATP awardees and nonawardees report a higher level of risk for projects proposed to ATP versus their typical R&D projects. Appropriately, awardees report significantly higher technical risk levels than nonawardees. In addition, the expected time it takes to see the impact of first revenue is longer for proposed ATP projects; more than half (54%) expect revenue in four years or more, while two thirds of nonawardees expect revenue before that time frame.
Figure 4 - Technical Risk—Proposed ATP Projects and Typical Company R&D Projects |
ATP funding has enabled companies in a variety of industries to pursue promising technologies that would otherwise have been ignored, developed more slowly, or pursued on a smaller scale.
Statistics from 2003 indicate that 86 percent of project participants believed they were significantly ahead in their R & D cycle as a result of ATP funding. Of these, 25 percent believed they would not have pursued the R & D at all without the ATP award; 53 percent believed they were one to three years ahead as a result of ATP funding; 7 percent believed they were more than three years ahead. The ideas and technologies developed from these research projects have sparked prosperity through innovation and improved the lives of Americans in a variety of ways. In an economy where money invested in technology is measured in billions and even trillions of dollars, ATP’s relatively modest allocations for research ($74.9 million to 35 companies, including 4 joint ventures in the May 2004 competition) make returns to date all the more significant. Just some of ATP’s current portfolio of investments are expected to return $17.87 billion to the American people against the program’s $2.1 billion investment. Each success strengthens participating companies while also delivering such economic benefits as quality-of-life improvements, consumer savings, productivity gains, and additions to Treasury receipts through taxes. Some innovations even spur whole new industries.
Not all ATP projects succeed; if ATP is meeting its mandate of funding high-risk research, failure must be expected from a percentage of funded projects. These “failures” include projects that never get off the ground, are terminated before completion, or show no or few outputs. In practice, however, most projects achieve something, whether it is patents, papers, collaborative relationships, or products—or knowledge about how to refine the program itself.
Only 5-6 percent of all ATP projects funded over the program’s first decade were terminated after the award announcement and before completion. 6 Figure 5 reflects the 74 projects terminated by ATP, and the rationale for termination. Other poor performers are identified by ATP’s rating system of 0 to PPPP (see page 26). Using these ratings, nearly a quarter of the first 50 completed ATP projects were considered to be poor performers. Such rigorous standards help to assure that projects are progressing and helping to meet program goals — even if a few never make it out of the gate, and others don’t reach the finish line.
Figure 5. Distribution of Terminated Projects by Reason for Termination |
ATP does not take geographic location into consideration when making its project selections. Rather, ATP seeks to increase awareness across the nation of the program’s opportunities for small, medium, and large businesses as well as other types of organizations. To date, ATP has received applications from organizations based in every state, and has provided funding to participating organizations located in 40 states and the District of Columbia—as shown below.
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Positioning for Success Through contractors and sponsored workshops, ATP provides both prospective applicants and awarded companies with a variety of resources designed to enhance the likelihood of a successful project. These resources include:
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1. As of September 2003. Subcontracting organizations
are excluded but are equal in number to formal participants.
2. Lewis M. Branscomb and Philip E. Auerswald, Between Invention and Innovation: An Analysis of Funding for Early-Stage Technology Development. NIST GCR 02-841, November 2002, pp. 3-11.
3. Lewis M. Branscomb and Philip E. Auerswald, Understanding Private-Sector Decision Making for Early-Stage Technology Development: A ‘Between Invention and Innovation’ Project Report, 2004.
4. Branscomb and Auerswald, Between Invention and Innovation, p. 11.
5. Advanced Technology Program, Survey of Applicants 2000, NIST GCR 03-847, June 2003, Fact Sheet 8: What Happens to Nonfunded Projects?
6. Performance of 50 Completed ATP Projects, Status Report 2, 2001, p. 260.
7. Gerald Hane, Achieving Exports and Value-Added Partnerships with Japan: Considerations for U.S. High Tech Companies, 2004.
Return to Table of Contents or go to next section.
Date created: March
15, 2005
Last updated:
August 15, 2005
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