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Multinational corporations (MNCs) have increasingly located research and development (R&D) in developing countries like China and India since the 1990s. On the one hand, governments in developing countries are eager to attract R&D to their local economies; on the other hand, developed countries are concerned about losing their competitive advantages due to R&D offshoring. At the same time, intellectual property (IP) protection is a growing concern considering the weak IP institutions that developing countries typically have.

Presenting both survey findings in Beijing and several case studies on individual MNC R&D labs, Dr. Quan examines MNC R&D labs' activities in China and puts forward a 'hierarchical modular R&D structure' as means of IP protection in weak IPR regime countries.

Quan has extensive research experience in the areas of technology & innovation management, international business, strategy, entrepreneurship, and regional economic development. Besides her recent publications on the Chinese software industry and on Chinese and Indian immigrant professionals in Silicon Valley (with Saxenian), she also has a number of publications in Chinese academic core journals such as "China Industrial Economy." Quan holds a PhD from the University of California at Berkeley, an M. Econ. degree and a B.S. degree both from Beijing University, China.

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On October 18, 2005, SPRIE presented the next seminar in its 2005-2006 series on "Greater China and the Globalization of R&D" with speaker Dr. Doug Fuller, current SPRIE Fellow. Dr. Fuller, speaking on "From California Dreaming to Silicon Success: The Rise of China's Semiconductor Industry," presented both industry-wide data and case studies of individual firms to explain how the politics of finance in China shape which Chinese chip firms become fast learners able to compete in world markets and which ones remain technological laggards.

Over the last several decades, there has been a strenuous debate about policies for economic development between the Washington Consensus promoted by the major international financial institutions and the revisionist political economists . Followers of the former view advocate free and unfettered markets buttressed by institutions to protect property rights. The revisionists argue that development involves social and political processes not adequately captured by the narrow prescriptive focus of the Washington Consensus.

In confronting globalization, there is also a new split among the revisionists themselves. Whereas the Washington Consensus welcomes globalization as a boon to developing countries through expanding the scope of market forces, the revisionists divide over the prospects for developing countries under globalization. The optimists, such as Ernst and Saxenian, see transnational networks as providing opportunities for developing countries to continue to learn the skills and competencies necessary to further their progress. The pessimists of the revisionist camp, such as Stiglitz and Strange, see globalization eroding the capabilities of the state or state-societal alliances necessary for development.

Using the case of technological upgrading (one aspect of economic development) in China's information technology (IT) industry, I demonstrate that opportunities for development exist under globalization. These paths to development are not simply the result of picking the right international networks to join nor are they due to the continued efficacy of state action. They also do not arise from well-developed market institutions within China. China's development success in spite of low levels of state industrial policymaking capacity and very incomplete market institutions tells us that other developing countries similarly unequipped can develop even in this globalized world.

In China's IT industry, two local institutional variables, firm operational strategies and state-firm relations, have interacted with the technology flows present in global networks to create opportunities for certain types of firms to upgrade. A firm's operational strategy (OS) determines its motivation to upgrade in China as opposed to doing so elsewhere. The relationship of firms to the state determines their sources of finance i.e. whether or not they can access functioning financial institutions.

The relationship of firms to the state determines their sources of finance and these sources of finance in turn impact their ability to upgrade. Sources of finance that provide credit with hard budget constraints give firms incentives to upgrade. Firms have hard budget constraints when they do not receive free help in covering their own financial obligations. With hard budget constraints forcing firms to meet their financial obligations, firms have to remain competitive to survive. For technology firms, a critical part of their competitiveness is their technology so they have every incentive to improve their technologies to keep pace with competitors. Finance that provides credit with soft budget constraints deprives firms of the incentives and even the capabilities to upgrade. Firms have soft budget constraints when they do not have to pay for some or all of their financial obligations themselves. These firms can rationally expect to survive even if not competitive because others are willing to bail them out. A third possibility is no source of finance. Firms without financing will not be able to invest in technological development.

 

There are four types of firms in China: the favored domestic firms, the neglected domestic firms, the hybrid foreign-invested enterprises (FIEs) and the regular FIEs. Financing and motivation have varied across firm categories. Due to different state-firm relations, FIEs rely on foreign finance and domestic firms do not. Hybrid FIEs differ from regular FIEs because the hybrids have a China-based operational strategy. This operational strategy (OS) is a mix of interests and ideational factors that causes these firms to perceive China either as the vital center of their operations (the China-based OS) or as just another location among many (the non-China-based OS). Thus, variation in firm-state relations (finance) and operational strategy (motivation) determine the variation in technological upgrading.

This thesis finds that the two types of FIEs are more likely to contribute to upgrading in China than the two types of domestic firms. Among the FIEs, the hybrid FIEs are more likely to contribute than the regular FIEs though the discrepancy is not as large as it is between the FIEs and domestic firms.

The hybrids are the most successful upgraders because they have both disciplined finance (i.e. credit with relatively hard budget constraints) from foreign financial institutions and the motivation to upgrade in China due to their China-based OS. The unsuccessful domestic upgraders lack finance (neglected domestic firms) or financial discipline (the favored domestic firms) due to their particular relationships to the state. The regular FIEs have the capabilities to upgrade due to their financial discipline and access to transnational technology networks, but undertake less upgrading in China than the hybrids because they lack the China-based operational strategy.

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For years policymakers in China have advocated creating "Silicon Valleys" in China, but only recently has China's semiconductor industry taken off. Rather than the state leading the way, economic globalization has created the large flow of capital and knowledge to the developing world that has spurred China's technological development in recent years.

However, not all firms in China benefit equally from these inflows of financial and human capital. Presenting both industry-wide data and case studies of individual firms, Dr. Fuller will explain how the politics of finance in China shape which Chinese chip firms become fast learners able to compete in world markets and which ones remain technological laggards.

Douglas Fuller has spent over ten years researching technological development in East Asia. Most recently, he completed a doctorate at MIT in political economy. The topic of his thesis was technological development in China's IT industry. For this and previous research, he has interviewed IT firms in Malaysia, Japan, Korea, Taiwan, the People's Republic of China and the US. He has published articles in Industry and Innovation and other peer-reviewed journals.

Part of SPRIE's Greater China and the Globalization of R&D seminar series.

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Dr. Liu first offered his view on the current state of the software industry's development and in particular software outsourcing to China. Software prices and margins continue to drop. Coupled with this reality is Liu's view that "only 10-15% of software development is truly innovative and therefore suitable to be developed in Silicon Valley". As software development platforms and communication technologies, especially the Internet, become ubiquitous and affordable, distributed software development is becoming the rule.

China's challenges and advantages in software outsourcing

Compared to India, the leader in software outsourcing, China has its own distinct challenges. Chinese software companies have almost no U.S. customers for a number of reasons: language barriers, different working styles, customers' concern for software piracy, and the lack of experienced programmers and technical managers in China. Yet, China also has its advantages. Not only does it have a rapidly expanding domestic software market, but it also has a large pool of fresh engineering talent. "The key, therefore," asserted Dr. Liu, "lies in someone creating the right environment to train and build a local team to be able to develop and deliver world-class software products."

Augmentum's software development goals

This is what Augmentum has set out to accomplish. "...[W]e want to build a world-class, distributed development team for software product development... like the ODM model in the PC world..." declared Dr. Liu. Based on this vision, Augmentum's strategy hinges on its insistence to develop software for top US customers, such as Motorola, Business Objects, and PalmSource--and to rely primarily on local Chinese engineers. Explained Liu: "We want to make sure that the center of most of the people of that team is going to be in China, even though the locomotive, the teachers, is in the U.S., because that's where the leadership is in the software product development world."

Drawing on decades of experience developing top software teams at IBM and other companies, Dr. Liu detailed his company's efforts to attract the brightest local engineers and train them to be even better. He explained, "Culture and team is the true differentiation of Augmentum.... The real...challenge is to build the right culture with the right core team." The company insists on having no expatriates in their China operations but promoting close interaction between experienced mentors in the U.S. and the young teams in China, sometimes using some creative approaches for recruitment and training. For example, Augmentum puts all of its new hires under "a stress test" after hiring and proactively maintains an "upfront churn of at least 30%" in the first three-month period." Their end goal: "a world-class software development team that can bridge the East and the West but still has a cost structure comparable to local companies."

Liu's focus for the future

Despite experienced leadership, ties to leading U.S. companies, and strong young software teams, Augmentum faces real challenges. Liu acknowledged skeptics who question the ability to build a world-class team through working on the "crumbs of companies" of "projects they don't want to work on themselves." Nevertheless, he is confident in the trajectory of Augmentum's future growth, as the company is expecting to double its employees every year for the coming few years. In addition, Dr. Liu's vision includes a landscape beyond Augmentum. "I have a very simple focus. I want to train a lot of world-class software developers in China to serve the world. Many of them will not be working for Augmentum. It is fine...I want to bring my experience to there to make it happen. And the best vehicle to do that at this moment and time, the wave [that] I want to jump on is outsourcing, because it is growing the fastest."

Biography of Leonard Liu

Leonard Liu has spent 30 years in the systems industry, with a track record of developing innovative computing technologies into successful businesses. Most recently, he served as president of ASE Group, a leading provider of IC test and packaging services, having held roles as Chairman and CEO of Walker Interactive Systems, COO of Cadence Design Systems, and President of Acer Group. He was an early champion of outsourcing to India and China at Cadence and Walker. Dr. Liu began his career at IBM where he was responsible for the creation and implementation of SQL and the management of CICS, SNA and AIX, eventually overseeing the worldwide Database and Language lines-of-business. He received his undergraduate degree from Taiwan University and his Ph.D. from Princeton University.

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Focus on Innovation and Entrepreneurship in Greater China

SPRIE is a multidisciplinary research program at Stanford University that focuses on innovation and entrepreneurship in leading high technology regions in the United States and Asia. SPRIE has an active community of scholars at Stanford as well as research affiliates in the United States, Mainland China, Taiwan, Japan, Korea, Singapore, and India. During 2005-2006, SPRIE is expanding a new initiative on the rise of leading high technology regions in Greater China and their impact on the global knowledge economy. Specific research topics include globalization of R&D, executive leadership, university-industry linkages, venture capital industry development and leading high technology clusters in Greater China. In addition, industries of ongoing research at SPRIE include semiconductors, computers, telecommunications, and software.

SPRIE Graduate Research Fellows: Research Assistantships & Support for International Field Research

As part of its new initiative on innovation and entrepreneurship in Greater China, SPRIE will select outstanding Stanford students as SPRIE Graduate Research Scholars. SPRIE Graduate Research Scholars will work with SPRIE faculty and senior researchers at Stanford for two (or more) academic quarters in 2005-2006 to gather and analyze data, conduct interviews in Silicon Valley, contribute to publications, and advance progress on the overall project agenda. During summer 2006, they will conduct SPRIE field research through interviews or surveys with business and government leaders in Beijing, Shanghai, or Hsinchu. As part of SPRIE's international research team, they will have the opportunity to interact closely with project leaders and visiting scholars at Stanford as well as partners in Asia, such as the Ministry of Science and Technology, Tsinghua University, or Zhongguancun Science Park in Mainland China or the Industrial Technology Research Institute (ITRI) in Taiwan. They will also participate in SPRIE's public and invitation-only seminars and workshops with academic, business, and government leaders. The financial award will include RA support at 15-20 hours/week (or equivalent) plus summer stipend to cover travel, living expenses, and research.

How To Apply (limited to current Stanford graduate students)

Successful candidates will have demonstrated a track record of superior analytical ability, strong oral and written communication skills (including full fluency in English and Chinese), knowledge of high technology and entrepreneurship, high motivation, and willingness to be part of a dynamic international research team.

Applicants should submit:

  1. A brief statement (not to exceed two single-spaced pages), which describes the candidate's interests and skills,
  2. a curriculum vitae
  3. contact information for 2 references, preferably recent professors, advisors, or employers

Send applications to:

SPRIE
Encina Hall - East 301
Stanford University 94305-6055

or by email to George Krompacky. Questions? Please contact George Krompacky, Program Coordinator, by email or call 650.725.1885

Deadline for receipt of all materials: December 30, 2005

Applicants will be notified of decisions in January 2006

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The Stanford Project on Regions of Innovation and Entrepreneurship (SPRIE) is a multidisciplinary research program of the Shorenstein Asia-Pacific Research Center at Stanford University that focuses on innovation and entrepreneurship in leading high technology regions in the United States and Asia. SPRIE has an active community of scholars at Stanford as well as research affiliates in the United States, China, Taiwan, Japan, Korea, Singapore, and India.

Fellowship Program

As part of its initiative on Greater China, SPRIE will select two outstanding post-docs or young scholars as SPRIE Fellows at Stanford for the academic year 2006-2007 for research and writing on Greater China and its role in the global knowledge economy. The primary focus of the program is the intersection of innovation and entrepreneurship and underlying contemporary political, economic, technological and/or business factors in Greater China (including Taiwan, Mainland China, Singapore). Topics of particular interest include, but are not limited to, globalization of R&D, executive leadership, university-industry linkages, venture capital industry development and leading high technology clusters in Greater China. In addition, industries of ongoing research at SPRIE include semiconductors, computers, telecommunications, and software.

SPRIE Fellows at Stanford will be expected to be in residence for at least three academic quarters, beginning the fall quarter of 2006. Fellows take part in Center activities, including research forums, seminars and workshops throughout the academic year, and are required to present their research findings in SPRIE seminars. They will also participate as members of SPRIE's team in its public and invitation-only seminars and workshops with academic, business and government leaders. Fellows will also participate in the publication programs of SPRIE and Shorenstein Asia-Pacific Research Center. The Fellowship carries a stipend of $40,000.

How to Apply

Applicants should submit:

1) A statement of purpose not to exceed five single-spaced pages which describes the research and writing to be undertaken during the fellowship period, as well as the projected products(s) that will be published;

2) a curriculum vitae (with research ability in Chinese preferred); and

3) 2 letters of recommendation from faculty advisors or other scholars. All applicants must have Ph.D. degrees conferred by August 30, 2006.

Address all applications to:

Stanford Project on Regions of Innovation and Entrepreneurship,

Shorenstein Asia-Pacific Research Center,

Encina Hall - East 301,

Stanford University

Stanford, CA 94305-6055

Questions? Please contact George Krompacky, Program Coordinator

Deadline for receipt of all materials: January 13, 2006

Applicants will be notified of decisions in March 2006

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George Krompacky received a BA in English literature from Rutgers University; an MA from Cornell University in East Asian studies; and an MA in East Asian languages and literatures from Yale University, where his PhD work centered on Chinese fiction and drama of the Ming dynasty. He has taught Chinese language at Yale University and Hamilton College.

Krompacky joined the Walter H. Shorenstein Asia-Pacific Research Center in 2005 and served as program coordinator of the Stanford Program on Regions of Innovation and Entrepreneurship until January 2011. Prior to coming to Stanford University he was associate director of international education and fellowships and the Light Fellowship coordinator at Yale University from 1999 to 2002.

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China has a large and growing elderly population, but to be old in China-particularly in the countryside-is to be vulnerable. In the country's rural areas there are few clinics and hospitals, and health insurance is virtually nonexistent. Compared with elderly Chinese living in urban areas, those in rural areas have a shorter life expectancy and a poorer quality of life.

Further, little academic research has focused on the health needs and health status of China's elderly. It is with the goal of addressing this deficit that Pengqian Fang, a trainee with CHP/PCOR's China-U.S. Health and Aging Research Fellowship, recently returned to China from Stanford. Fang is seeking to document the health disparities between China's rural and urban elderly population, and to use his findings to propose healthcare assistance programs for the elderly in rural areas of China.

Fang spent a year at Stanford studying health-services research concepts and methods and developing his research project.

In the project, which Fang refined with guidance from CHP/PCOR faculty, Fang will conduct a detailed survey of the health status, health needs, and healthcare utilization of elderly people in rural and urban areas of China, through in-home interviews in three Chinese provinces with different geographic and socioeconomic characteristics: Guizhou (in southwest China), Hubei (in central China), and Guangdong (in the southeast).

He will conduct the project in collaboration with the health departments of the

three provinces, and with support from Tongji Medical College in Wuhan, where he

is director and associate professor of healthcare management.

Fang's study will be among the first of its kind in China. Such research is needed, Fang explained, because China's elderly population (of whom 70 percent reside in rural areas) is growing steadily, and in the coming years its members will require medical services at increasing rates. According to the country's 2000 census, China has 132 million people over age 65, making up more than 10 percent of the population; the over-80 population, which numbers 10 million people, is increasing by 5.4 percent a year; and about 20 percent of all elderly people in the world live in China.

The elderly in China's rural areas face particular challenges in getting high-quality, affordable healthcare services, Fang explained. There are few clinics and hospitals in rural areas, and there is no government-sponsored health coverage for the elderly (like the United States' Medicare program) anywhere in China. All of these factors put China's rural elderly in a vulnerable position, especially those with disabilities or serious illnesses.

"This research will show the disparities that exist, and it will encourage a dialogue about policies to help rural elderly people in China," Fang said.

Fang plans to conduct his survey in the first half of 2005, analyze the data in the summer and fall, and return to Stanford in November 2005 to present the results. In each of the three provinces studied, the research team will recruit 500 households and will conduct interviews with all individuals age 65 and over who reside there, for an estimated final sample of 2,500 people.

The respondents will be asked for a variety of information, including their income and education, insurance status, health status, daily activities, social activity, mental health, utilization of healthcare services, and accessibility and affordability of medical care. The researchers will also interview community healthcare workers-including physicians, nurses, and administrative staff-to seek information on the health needs of the elderly and the barriers they and their healthcare providers face.

The China-U.S. Health and Aging Research Fellowship, administered jointly by

CHP/PCOR and the China Health Economics Institute (Beijing), aims to improve

healthcare quality and efficiency in China through an exchange program in which

selected Chinese health services researchers come to Stanford to study for six months to a year, and then return to China to conduct an original research project. The fellowship is funded by the National Institutes of Health's Fogarty International Center.

"I have learned very much from Stanford and this program," Fang said. "The classes I attended have given me very useful ideas." He noted that since health services research is still a young field in China-about ten years old-"we learn a lot from the United States, like how to ask the research question, how to get a grant, how to design a study."

One aspect of Stanford that particularly impressed Fang was its emphasis on interdisciplinary collaboration.

"This is a very good feature-the close relationship between different fields," he said. "In my country we are more focused on one narrow field."

Fang said he is interested in establishing research collaborations between Stanford and Tongji Medical College-an idea that he and CHP/PCOR's leadership will be exploring in the coming months.

There is much to admire about the U.S. healthcare system's emphasis on innovation and technology, Fang said. Still, he said, "I don't hope for China to follow the U.S. health system," with its heavy reliance on free-market principles. For one thing, "medicine here is very costly." He cited a personal example of how he fractured his arm in a minor bicycle accident, and how his emergency room visit for the injury, along with a follow-up physician appointment, cost more than $1,000. "I was surprised it cost so much," he said.

A review of the fellowship program conducted by officials at the China Health Economics Institute last fall concluded that it has been successful and valuable. Leaders at the institute said the trainees' Stanford experience has enhanced their intellectual abilities, their knowledge of research methodology, their leadership capacity, and their ability to collaborate internationally.

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In 1920, the Irish Republican Army reportedly considered a terrifying new weapon: typhoid-contaminated milk. Reading from an IRA memo he claimed had been captured in a recent raid, Sir Hamar Greenwood described to Parliament the ease with which "fresh and virulent cultures" could be obtained and introduced into milk served to British soldiers. Although the plot would only target the military, the memo expressed concern that the disease might spread to the general population.

Although the IRA never used this weapon, the incident illustrates that poisoning a nation's milk supply with biological agents hardly ranks as a new concept. Yet just two weeks ago, the National Academy of Sciences' journal suspended publication of an article analyzing the vulnerability of the U.S. milk supply to botulinum toxin, because the Department of Health and Human Services warned that information in the article provided a "road map for terrorists."

That approach may sound reasonable, but the effort to suppress scientific information reflects a dangerously outdated attitude. Today, information relating to microbiology is widely and instantly available, from the Internet to high school textbooks to doctoral theses. Our best defense against those who would use it as a weapon is to ensure that our own scientists have better information. That means encouraging publication.

The article in question, written by Stanford University professor Lawrence Wein and graduate student Yifan Liu, describes a theoretical terrorist who obtains a few grams of botulinum toxin on the black market and pours it into an unlocked milk tank. Transferred to giant dairy silos, the toxin contaminates a much larger supply. Because even a millionth of a gram may be enough to kill an adult, hundreds of thousands of people die. (Wein summarized the article in an op-ed he wrote for the New York Times.) The scenario is frightening, and it is meant to be -- the authors want the dairy industry and its federal regulators to take defensive action.

The national academy's suspension of the article reflects an increasing concern that publication of sensitive data can provide terrorists with a how-to manual, but it also brings to the fore an increasing anxiety in the scientific community that curbing the dissemination of research may impair our ability to counter biological threats. This dilemma reached national prominence in fall 2001, when 9/11 and the anthrax mailings drew attention to another controversial article. This one came from a team of Australian scientists.

Approximately every four years, Australia suffers a mouse infestation. In 1998, scientists in Canberra began examining the feasibility of using a highly contagious disease, mousepox, to alter the rodents' ability to reproduce. Their experiments yielded surprising results. Researchers working with mice naturally resistant to the disease found that combining a gene from the rodent's immune system (interleukin-4) with the pox virus and inserting the pathogen into the animals killed them -- all of them. Plus 60 percent of the mice not naturally resistant who had been vaccinated against mousepox.

In February 2001 the American SocietyforMicrobiologists' (ASM) Journal of Virology reported the findings. Alarm ensued. The mousepox virus is closely related to smallpox -- one of the most dangerous pathogens known to humans. And the rudimentary nature of the experiment demonstrated how even basic, inexpensive microbiology can yield devastating results.

When the anthrax attacks burst into the news seven months later, the mousepox case became a lightning rod for deep-seated fears about biological weapons. The Economist reported rumors about the White House pressuring American microbiology journals to restrict publication of similar pieces. Samuel Kaplan, chair of the ASM publications board, convened a meeting of the editors in chief of the ASM's nine primary journals and two review journals. Hoping to head off government censorship, the organization -- while affirming its earlier decision -- ordered its peer reviewers to take national security and the society's code of ethics into account.

Not only publications came under pressure, but research itself. In spring 2002 the newly formed Department of Homeland Security developed an information-security policy to prevent certain foreign nationals from gaining access to a range of experimental data. New federal regulations required that particular universities and laboratories submit to unannounced inspections, register their supplies and obtain security clearances. Legislation required that all genetic engineering experiments be cleared by the government.

On the mousepox front, however, important developments were transpiring. Because the Australian research had entered the public domain, scientists around the world began working on the problem. In November 2003, St. Louis University announced an effective medical defense against a pathogen similar to -- but even more deadly than -- the one created in Australia. This result would undoubtedly not have been achieved, or at least not as quickly, without the attention drawn by the ASM article.

The dissemination of nuclear technology presents an obvious comparison. The 1946 Atomic Energy Act classifies nuclear information "from birth." Strong arguments can be made in favor of such restrictions: The science involved in the construction of the bomb was complex and its application primarily limited to weapons. A short-term monopoly was possible. Secrecy bought the United States time to establish an international nonproliferation regime. And little public good would have been achieved by making the information widely available.

Biological information and the issues surrounding it are different. It is not possible to establish even a limited monopoly over microbiology. The field is too fundamental to the improvement of global public health, and too central to the development of important industries such as pharmaceuticals and plastics, to be isolated. Moreover, the list of diseases that pose a threat ranges from high-end bugs, like smallpox, to common viruses, such as influenza. Where does one draw the line for national security?

Experience suggests that the government errs on the side of caution. In 1951, the Invention Secrecy Act gave the government the authority to suppress any design it deemed detrimental to national defense. Certain areas of research-- atomic energy and cryptography -- consistently fell within its purview. But the state also placed secrecy orders on aspects of cold fusion, space technology, radar missile systems, citizens band radio voice scramblers, optical engineering and vacuum technology. Such caution, in the microbiology realm, may yield devastating results. It is not in the national interest to stunt research into biological threats.

In fact, the more likely menace comes from naturally occurring diseases. In 1918 a natural outbreak of the flu infected one-fifth of the world's population and 25 percent of the United States'. Within two years it killed more than 650,000 Americans, resulting in a 10-year drop in average lifespan. Despite constant research into emerging strains, the American Lung Association estimates that the flu and related complications kill 36,000 Americans each year. Another 5,000 die annually from food-borne pathogens -- an extraordinarily large number of which have no known cure. The science involved in responding to these diseases is incremental, meaning that small steps taken by individual laboratories around the world need to be shared for larger progress to be made.

The idea that scientific freedom strengthens national security is not new. In the early 1980s, a joint Panel on Scientific Communication and National Security concluded security by secrecywasuntenable. Its report called instead for security by accomplishment -- ensuring strength through advancing research. Ironically, one of the three major institutions participating was the National Academy of Sciences -- the body that suspended publication of the milk article earlier this month.

The government has a vested interest in creating a public conversation about ways in which our society is vulnerable to attack. Citizens are entitled to know when their milk, their water, their bridges, their hospitals lack security precautions. If discussion of these issues is censored, the state and private industry come under less pressure to alter behavior; indeed, powerful private interests may actively lobby against having to install expensive protections. And failure to act may be deadly.

Terrorists will obtain knowledge. Our best option is to blunt their efforts to exploit it. That means developing, producing and stockpiling effective vaccines. It means funding research into biosensors -- devices that detect the presence of toxic substances in the environment -- and creating more effective reporting requirements for early identification of disease outbreaks. And it means strengthening our public health system.

For better or worse, the cat is out of the bag -- something brought home to me last weekend when I visited the Tech Museum of Innovation in San Jose. One hands-on exhibit allowed children to transfer genetic material from one species to another. I watched a 4-year-old girl take a red test tube whose contents included a gene that makes certain jellyfish glow green. Using a pipette, she transferred the material to a blue test tube containing bacteria. She cooled the solution, then heated it, allowing the gene to enter the bacteria. Following instructions on a touch-screen computer, she transferred the contents to a petri dish, wrote her name on the bottom, and placed the dish in an incubator. The next day, she could log on to a Web site to view her experiment, and see her bacteria glowing a genetically modified green.

In other words, the pre-kindergartener (with a great deal of help from the museum) had conducted an experiment that echoed the Australian mousepox study. Obviously, this is not something the child could do in her basement. But just as obviously, the state of public knowledge is long past anyone's ability to censor it.

Allowing potentially harmful information to enter the public domain flies in the face of our traditional way of thinking about national security threats. But we have entered a new world. Keeping scientists from sharing information damages our ability to respond to terrorism and to natural disease, which is more likely and just as devastating. Our best hope to head off both threats may well be to stay one step ahead.

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