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Attention to increasing our R&D expenditures is especially appropriate now. The history of total national R&D expenditures for the USA, the USSR, West Germany, and Japan reveals that support for R&D in the United States, expressed as a percentage of gross national product, has been declining for the past several years.

We at McDonnell Douglas believe that the total funds invested in R&D, science, and applications have a direct and important bearing on the progress of our economy, employment, and the security of our country. If the historical relationship between technological leadership and expenditures for research and development is accurate, and we believe it is- it will be difficult to maintain the technological position that the United States currently enjoys. The diminishing trend in our R&D expenditures is particularly ominous in view of the trade imbalance created by our oil imports and the fact that advanced technology forms the backbone of our exports.

We therefore recommend:

A reversal in the trend of total R&D expenditures. In bringing about this reversal, the contribution of private industry could be substantially increased through favorable tax consideration of corporate spending for research and development.

Emphasis in the selection of future space programs on the ability to contribute to

the advancement and application of technology.
Government dollars form a large percentage of the nation's total R&D expenditures.
Industry plays an important role in carrying out government-sponsored R&D. In addition,
it initiates and supports a large amount of R&D work on a private basis.

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The role of private industry in R&D is not limited to conducting specific programs. Industry contributes in many additional ways:

In cooperation with the governmental, academic, and industrial segments of our scientific and technical community, industry helps to define national space objectives. The testimony of industrial representatives at hearings such as this demonstrates this contribution. The industrial teams will continue to work with NASA and other government agencies to define and develop our space capabilities.

Given a reasonable probability of a profitable return on investment, industry can and does provide capital funding for important R&D space projects. With respect to future'space programs, the initial investment must be made by the government, We believe that the government must define long-range goals and provide "seed" money in research areas that exhibit high potential in terms of feasibility and utility.

Private industry can and does utilize space-program "fallout" that has potential for new commercial products and services. McDonnell Douglas has sponsored a number of commercial applications that I shall discuss in this presentation.

Industry helps to promote public support for the utilization and exploration of space.

The implementation of NASA-selected space programs remains a major responsibility of the aerospace industry. The substantial pool of management, engineering, test, and manufacturing capability that now exists represents a valuable national asset. Private industry facilitates international cooperation in space through cooperative research and development with foreign firms.

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PRIVATE INDUSTRY PLAYS AN

IMPORTANT ROLE

■Helps to Define National Space Objectives

■Provides Support for Critical R&D Programs

■Develops Commercial Applications

■Promotes Benefits of Space Programs

■Implements Space Programs Defined by NASA

■Facilitates International Cooperation

The technology developed for the U.S. space program has been applied to numerous products and services that affect our daily lives. We have greatly improved worldwide communications through satellites. Weather forecasting using satellites has saved both lives and money (the latter estimated at $5 billion yearly in the USA and $15 billion for the entire world). The use of LANDSAT and other satellites has produced vast increases in knowledge concerning oil and minerals, water and marine resources, erosion patterns, crop diseases, and land usage.

Major space-program advances in computer technology have resulted in applications ranging from large, sophisticated computer complexes to small pocket-size calculators. Medical advances through space "spin-off" include new instruments, mobile units and automated medical-care systems. Breakthroughs in electronic equipment have been made possible by the new microelectronic circuitry developed for the space program.

New materials and processing techniques that have been developed from space technology
include insulation, paints, fasteners, solar cells, turbines, integrated circuits, batteries,
recreational equipment, construction materials, manufacturing processes,

and

many others. Projection of man into space has required the development of sophisticated lifesupport equipment which, in turn, has resulted in new and better respiratory equipment, lightweight fire-fighting equipment, biological isolation garments, and life-support instrumentation. New knowledge of the universe has produced insights related to earthsun interactions and planetary comparative analysis, and has had an enormous psychological and philosophical impact on human aspirations, interdependency, and ecology.

The space program has contributed much to peaceful international relationships. Many space programs based on cooperation between the USA and other industrial nations are under way, and opportunities for further progress are many and growing.

The exploration of space is thus one of the most potential-filled endeavors in history.
Extensive evidence of this potential is offered by commercial applications of space-
program developments.

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