Summary of Panel Discussion
Presentations by Paul Krugman and Paolo Guerrieri (based on the papers in this volume) provide interpretations of high-technology trade statistics over the past 20 years. They document a decline in U.S. preeminence during a period when the value of high-technology exports grew rapidly from $30 billion to almost $300 billion, with Japan as the primary beneficiary.
As Krugman noted in his summary of the discussions that followed the session, the picture one sees looks different at different ranges of the zoom lens. Close up, the lens reveals a shifting comparative advantage at the industry level. In this picture, the declining position of the United States in science-based industries like electronics comes into view (see Guerrieri, in this volume, Figure 2). At the next step out on the zoom lens, one sees that the biggest shift has occurred in the growth of Japan's strength in specialized supplier industries (mechanical engineering, machine tools) and the simultaneous decline of the United States and Germany (see Guerrieri, Table 2). Finally, at the widest field of vision the lens reveals a global perspective in which a variety of factors (cost of capital, quality of management and labor) in addition to a nation's scientific and technological capabilities influence international high-technology trade.
These different vantage points, different ranges of the zoom lens, underscore the contrasting perspectives in the U.S. policy debate over the volume and composition of the nation's high-technology trade as revealed in trade statistics, and raise global questions. Robert Lawrence directed his com-
The Panel on Technology and International Trade Competition was chaired by Paul Krugman. Other panelists are Paolo Guerrieri, Robert Lawrence, and Fumitake Yoshida.
ments to the issue of what the United States should do in the face of a decline in U.S. preeminence in high technology trade. A laissez-faire approach, he argued, is no longer viable in a context where the United States is one (perhaps first) among equals. He pointed to innovation policy as one among a number of areas that deserve policy attention. We can no longer afford to take commercial technology development for granted: tax credits and other measures to promote R&D spending, particularly collaboration in precompetitive research, should be considered. Krugman suggested that the U.S. government could provide direct financial support to high-technology industries when it is necessary to buy time for renewal.
Fumitake Yoshida brought another perspective to the discussion by arguing that the reason why imports make up a relatively small percentage of trade in Japan's high-technology markets (Krugman, Table 12) is the significant sales in Japan by foreign-owned firms. Drawing on Japanese government statistics, Yoshida pointed out that sales by U.S.-owned manufacturing firms in Japan amounted $71.9 billion in 1988, while sales by Japanese-owned manufacturing firms in the United States were valued at $19.9 billion. Foreign-owned firms in Japan imported almost the same amount of high-technology goods in 1988 as did foreign-owned firms operating in the United States, according to Yoshida.1 It will be important to watch how these trends develop in the years ahead.
The audience raised a number of questions about the positive effects of networks and linkages among firms, particularly in Japan. In the Japanese case, linkages among second- and third-tier suppliers and primary producers appear particularly effective. In Italy, strong linkages between producers of consumer goods and investment goods help to explain why the country has retained market share despite gloomy predictions. Paolo Guerrieri called for more studies, at both the micro and macro levels, of industrial linkages and their effects.
Robert Lawrence commented that in the area of trade policy, the United States can no longer tolerate the use of infant industry policies by mature economies. The United States should increase penalties for price-discriminatory dumping. Yoshida cautioned against linking technology and trade policies; he called for attention to production, marketing, and human resources, as well as the macro environment. Comments from the audience, however, highlighted concerns about the perceived negative impacts of foreign industrial targeting practices on the United States.
Competition policy was another area identified for attention. Lawrence cautioned against relaxing antitrust policies. He suggested that ''mutual recognition'' sometimes works better than harmonization of policies when economic structures are so different in different countries. Ted Moran suggested that we look at foreign investment through an antitrust prism. Answering his own question of whether foreign investment "hurts," he suggested that
the answer is yes only if the number of suppliers is concentrated. Fumio Kodama argued for a more sophisticated understanding of the Japanese concept of keiretsu, and vertical integration in general. Differences across industries are great, and in some ways General Motors is more integrated than Toyota, he said. Another speaker noted that vertically integrated firms are not necessarily the optimal organizational mode for technological development and overall competitiveness. Harkening back to the discussion of linkages, Daniel Roos suggested that a "loose confederation" of companies that work together (such as the Toyota group of assemblers and suppliers) is a very rich model for building competitiveness.
A number of speakers implicitly agreed with Yoshida's call for attention to macroeconomic factors. Peter Sharfman, Robert Gavin, and Margaret Sharp all pointed in different ways to the importance of capital for technological innovation. Sharp suggested that a genuinely level playing field would involve the formation of a single world financial market with a single interest rate structure but doubted how feasible this was.
Robert Lawrence commented that corporate governance mechanisms in the United States give undue weight to transactional rather than long-term investors and suggested that we may need to change the incentive structure to address this problem. With regard to the benefits and risks of turning to Japanese investment, speakers from Europe commented on a lack of consensus there on this subject. Some countries are actively promoting Japanese investment in the automobile industry, while others doubt that it will ultimately improve the European R&D base.
The panel discussions provided a foundation for the rest of the symposium by examining in some detail the historical changes in high-technology competition. Sharpening understanding of "where we are today and how we got here" led the panelists to questions addressed more fully by the panels that followed: How can we explain what many see as the disappearance of U.S. preeminence in high-technology trade? What should we do about it?
NOTES
|
fication (e.g., certain activities classified as "manufacturing" by one government might be classified as "nonmanufacturing" by the other). The data base from which Yoshida's figure on sales in Japan by U.S. manufacturing affiliates is drawn apparently includes all U.S. manufacturing affiliates. Yoshida's $71.9 billion figure, according to Graham, thus exaggerates the true extent of sales of Japanese affiliates of U.S. firms because of the inclusion of sales of minority-owned operations, which as noted above, are substantially greater than those of majority-owned operations. Yoshida's $19.9 billion figure is significantly lower than either of the Commerce Department's estimates for U.S. manufacturing sales of Japanese affiliates, these estimates being based on two different methods of data aggregation. According to Graham, the larger of the two Commerce Department estimates is accepted by most analysts as the one that most accurately depicts such sales. |