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Emerging Technology Report #43: February 6, 2003

Deficit Plagued U.S. Still Supporting Nanotechnology

- Comment -

Global Emerging Technology Institute

The U.S. economy continues to suffer through the continued prolonged lull in economic activity, as companies are relatively pessimistic about turning in better earnings this year leading to a halt in planned capital spending. This is especially the case for technology companies, as they still do not see a significant recovery in IT demand. The U.S. budget deficit has increased and state budgets are largely a disaster with shortfalls as far as the eye can see. Stimulus packages, as has been the case in Japan, are actively being implemented through directives from Washington. The majority of states are seeking "creative" ways to finance gaping shortfalls in their budget. Add the above with the serious political risk of what looks to be an inevitable invasion of Iraq and more tension with a posturing North Korea, it may not be a good time to bet on young and unproven technologies.

Regardless of the economic and political concerns, the federal government and a number of states still are very wisely supporting the funding of nanotechnology. The budget of the National Nanotechnology Initiative (NNI) will continue to grow, albeit at a slower pace for the first time since funding of the program commenced. NNI's funding will increase by nearly 9.5% next year, totaling $847 million dollars according to the White House Office of Science and Technology Policy (OSTP). The bulk of the budget will be doled out and utilized by the National Science Foundation and the Department of Defense. The priorities of NNI for 2003-4 are listed as: nanoscale manufacturing research, including metrology; nanobiological systems for medical advances and new products; nanotechnology solutions for weapons/explosives detection; education and training of workers skilled in nanotechnology; efforts to commercialize nanotechnology and to encourage the participation of industry. The Department of Energy will help establish Nanoscale Science Research Centers at national laboratories in New York, Tennessee, Illinois, New Mexico and California, with construction to begin this year. These institutes, like a growing number of state-supported "centers of excellence" where large technology companies are making major investments in small tech R&D projects, will also develop education centers to properly train top graduate and postdoctoral associates.

Nanotech promises more than revolutionary science and new and/or enhanced technologies for commercial markets, it also is expected to provide high political and social drama as well. The ETC Group of Canada recently published a tirade against nanotech in a piece entitled "The Big Down." It is very difficult to predict and determine the potential social problems of nanotech, and certainly way to early to attempt to do so. Such a medieval mindset will not stop the progress of development in nanotech-related research, since a good portion of funding and work will be done outside of the U.S. and places like Canada, and will not be restricted by the whims of special interest groups. The potential benefits to society are too great to stop such work. Fortunately, people are not yet frightened of the hypotheticals discussed in The Big Down and depicted in such new novels as Michael Crichton's "Prey", where tiny out-of-control nanotech machines run rampant and attack their makers. Recently, the book was spotted at the local retailer selling at a 30% discount not too shortly after it was released into the market. Perhaps the movie will be better, but probably not more convincing.

The obvious need to curtail budgets in the wake of the weak economy and political risk present in the Middle East and Asia should not stop the government from continuing to support high-value added R&D activity at the federal and state level. This support greatly reduces the risk in the future for the private sector to continue supporting both public-private and strictly private efforts at developing innovative new technology.

It is essential that continued public sector funding and support is forthcoming in order to boost nanotech beyond its current role as a relatively little understood, under-developed enabling technology. The robustness of the field, with applications spanning a broad range of key industries, has garnered bi-partisan support on the federal and state level. Companies are increasingly boosting their nano and small tech related portions of R&D budgets and the investment community is carefully culling the market for investment opportunities.

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