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i Technology and Global Industry Companies and Nations in the World Economy Bruce R. Guile and Harvey Brooks Editors NATIONAL ACADEMY PRESS Washington, D.C. 1987
ii National Academy Press 2101 Constitution Avenue, NW Washington, DC 20418 The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sci- ences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The president of the National Academy of Engineering is responsible for the decision to pub- lish an NAE manuscript through the National Academy Press. In reviewing publications that include papers signed by individuals, the president considers the competence, accuracy, objectivity, and bal- ance of the work as a whole. In reaching his decision, the president is advised by such reviewers as he deems necessary on any aspect of the material treated in the papers. Publication of signed work signifies that it is judged a competent and useful contribution wor- thy of public consideration, but it does not imply endorsement of conclusions or recommendations by the NAE. The interpretations and conclusions in such publications are those of the authors and do not purport to represent the views of the council, officers, or staff of the National Academy of Engineering. Funds for the National Academy of Engineering's Symposium Series on Technology and Social Priorities are provided by the Andrew W. Mellon Foundation, Carnegie Corporation of New York, and the Academy's Technological Leadership Program. The views expressed in this volume are those of the authors and are not presented as the views of the Mellon Foundation, Carnegie Cor- poration, or the National Academy of Engineering. Library of Congress Cataloging-in-Publication Data Technology and global industry. (Series on technology and social priorities) At head of title: National Academy of Engineering. âMost of the material in this book was presented at a National Academy of Engineering sympo- sium titled âWorld Technologies and National Sovereignty' held on February 13 and 14, 1986ââ Pref. Includes index. 1. Technological innovationsâEconomic aspectâCongresses. 2. Technology and stateâ Con- gresses. I. Guile, Bruce R. II. Brooks, Harvey. III. National Academy of Engineering. IV. Series. HC79.T4T438 1987 338'.06 87-7765 ISBN 0-309-03736-0 Copyright © 1987 by the National Academy of Sciences No part of this book may be reproduced by any mechanical, photographic, or electronic process, or in the form of a phonographic recording, nor may it be stored in a retrieval system, transmitted, or otherwise copied for public or private use, without written permission from the publisher, except for the purposes of official use by the United States government. Printed in the United States of America First Printing, June 1987 Second Printing, August 1989 Third Printing, December 1990 Fourth Printing, July 1991 Fifth Printing, June 1992 Sixth Printing, March 1993
PREFACE AND ACKNOWLEDGMENTS iii Preface and Acknowledgments Many of the strains in today's world lie in the conflict between a global economy that is more and more integrated and a political environment in which national sovereignty is still the dominant motivation. Production and delivery of goods and services is increasingly transnational and will become more so as communications and transportation capabilities increase and their costs continue to decline relative to other costs. Additionally, many new technologies require global markets to recover R&D and initial production costs. Nations are, however, still reluctant to depend on other nations for key manufacturing inputs. The concept of key technologies that each nation feels it must master inside its own boundaries in order to retain its political independence remains a driving force in international economic relations. Additionally, increasing international economic activity has brought the technological activities of corporations and governments into closer relationships than ever before. National independence is becoming more and more problematic in an interdependent world. A wide variety of economic, social, and industrial issues are brought forward by the confluence of new technologies, the high-level international interdependence, and the diverse concerns and activities of nations trading in world markets. Modem communications and transportation permit wide dispersal and decentralization of design and production, whereas certain production processes seem to require collocation. How are these two opposing influences reconciled, and how do they vary by industry? What technology policiesâby government or by industryâallow the creation
PREFACE AND ACKNOWLEDGMENTS iv of comparative advantage? Does the ability of a nation to handle the adverse social impacts of increased trading in currently nontraded goods lie in the integrity of its social programs or in its skill in international negotiation? This volume addresses these questions and a variety of similar ones. The principal focus of this volume is on technologies deployed primarily by private firms for commercial purposesâtechnologies that are altering the structure of the world economy and the location of various types of productive activityâand on the conflicts that arise among national states as a consequence of these shifts. Although the overview and eight chapters in the volume cover a broad range of issues, it is important to mention two issues at the confluence of technology and sovereignty that are not dealt with in this volume. First, there is little explicit treatment of technologies that are inherently global in character, technologies such as satellite communications, remote sensing from space, international commercial air travel, and world oil trade with supertankers. Second, there is no discussion of national security concerns with trade or technology transfer between nations. It is our hope that the focus allowed by not dealing with these two aspects of the global economy yields advantages greater than the disadvantage of not including these obviously important issues. Most of the material in this book was presented at a National Academy of Engineering symposium rifled "World Technologies and National Sovereignty" held on February 13 and 14, 1986. On behalf of the Academy, I would like to thank the advisory committee (listed on page 257) that designed the symposium, and the individuals who participated. I would like to offer special thanks to Robert A. Frosch, John Harris, Cyril Tunis, Jesse H. Ausubel, Ronald S. Paul, Marie-Therese Flaherty, Helen B. Junz, and Pierre R. Aigrain. With regard to the preparation of the manuscript for publication, special thanks are due to H. Dale Langford, the NAE's editor, and to Marjorie D. Pomeroy, administrative assistant in the NAE Program Office. H. GUYFORD STEVER FOREIGN SECRETARY NATIONAL ACADEMY OF ENGINEERING
CONTENTS v Contents Overview 1 Harvey Brooks and Bruce R. Guile Innovation and Industrial Evolution in Manufacturing Industries 16 James M. Utterback Revitalizing the Manufacture and Design of Mature Global Products 49 Alvin P. Lehnerd Capturing Value from Technological Innovation: Integration, Strate- 65 gic Partnering, and Licensing Decisions David J. Teece International Industries: Fragmentation Versus Globalization 96 Yves Doz The Impacts of Technology in the Services Sector 119 James Brian Quinn Coping with Technological Change: U.S. Problems and Prospects 160 Raymond Vernon Does Technology Policy Matter? 191 Henry Ergas
CONTENTS vi National and Corporate Technology Strategies in an Interdependent 246 World Economy Lewis M. Branscomb Symposium Advisory Committee 257 Contributors 259 Index 261
vii Technology and Global Industry
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