Problems and Challenges

Australia has much to gain from further globalization: access to international technology, faster growth, improved competitiveness, and better use of scientific and engineering manpower. Her relative position in the region, however, is less certain. Rigidities in wage structure, labor organization, and both private and public administration may slow industrialization relative to that in neighboring nations.

Of most immediate practical importance—not necessarily in the context of innovation—is Australia’s higher wage structure. Manufacturers in Australia, like those elsewhere, have transferred some of their production steps overseas in the interest of competitiveness of the overall process and harmonization of the international markets.

Australia, too, faces the worldwide problem of maintaining an adequate level of protection as a buffer against social upheaval, without, however, unduly slowing the growth of international trade. It is unlikely that in the near future most areas of manufacture will be internationally competitive, as mining and agriculture are now. The economy may therefore be able to bear a modest level of cross-subsidization in the form of residual tariffs for the labor-intensive industries to prevent permanent widespread unemployment. Similar dilemmas will be faced by other countries, including the United States, which are major producers of raw materials.

Other challenges include:

  • The manufacturing industry needs to improve its international competitiveness and export performance, at least in some areas, to gain the advantage of scale.

  • The private sector must increase its support of R&D as a means to achieve this goal.

  • The public sector needs to increase its orientation to economic needs, particularly in the manufacturing sector.

  • Local companies and subsidiaries need to step up cooperation in R&D with multinational companies.

The major driving force of globalization of industries is the multinational company. As the scientific potential of smaller and developing countries has become more important, their inclusion in the global process of technology creation has increased in importance. Their inclusion contributes already, but could contribute much more to maximizing creative potential worldwide. A practical and commercially acceptable approach is close interaction between technology donors and recipients in R&D. The underlying concept is plausible. Research is not a zero-sum game; both parties must gain. Know-how is tradable, and improved personal communication is making know-



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