neur responsible for successful commercialization or improvement. These profits in turn are distributed to shareholders. In many instances they are reflected as well in above-average wages and salaries in the firm or industry responsible for successful innovations. Some portion of the U.S. economy's ability to pay high wages, relative to other nations during the postwar era, clearly reflects the successful commercialization of a stream of new products and processes by U.S. firms. If U.S. ability to successfully and rapidly commercialize new technologies declines, this source of competitive advantage and above-average wages and salaries will also decline.

Product innovations and improvements are extremely difficult to measure with conventional economic statistics. Their benefits often are not captured by conventional measures of productivity growth. Recent efforts by the Bureau of Economic Analysis of the Department of Commerce to adjust the data on the computer industry to reflect improvements in product quality (adjustments with important implications for measured productivity growth) have proved difficult and controversial. Such measurement problems are widespread in manufacturing. They are even more serious in the nonmanufacturing sector. This is true, in particular, because large numbers of new products that advanced information technologies have made possible go largely unmeasured in national income and productivity data. In both the manufacturing and the nonmanufacturing sectors, therefore, the productivity and output statistics often do not take into account the results of product innovation and improvement. Nevertheless, it is clear that the magnitude of the productivity slowdown is a problem for the United States.


A second channel through which the economic benefits of new technologies are realized is their adoption by other firms within an economy. Firms that rapidly and effectively incorporate new process and product technologies into the production of goods and services often improve productivity and competitive advantage in ways that (at least in principle) are captured by conventional measures of labor productivity. The adoption of new technologies is a costly and often knowledge-intensive process. It involves investments in worker training, new capital equipment and plants, information collection, and product and process debugging. Indeed, many of the skills and capabilities necessary to be an effective innovator or creator of technology are also indispensable for the successful adoption of new technologies. The adoption of a computer-integrated work cell, or work station, for example, requires extensive customized software and the removal of special defects at the installation site. In addition, the technology undergoes modification and improvement during the adoption process, as the

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