dependence of the latter on the former for such things as the supply of components and manufacturing technologies has increased.
It is natural that governments are concerned about whether their nation's vital industries can compete with the industries of other nations. Further, should such problems exist, governments may try to resolve them by taking measures such as reallocating R&D resources, improving the infrastructure, modifying regulatory settings or tax systems, and creating trade incentives. Technology assessment is, therefore, an important policy tool.
The essential question at hand is to what extent technology assessment can respond to the concerns presented above. Unfortunately, there are several problems associated with technology assessment that often cause it to be misinterpreted.
First, technology is not necessarily the dominant factor deciding an industry's competitiveness. Too often, people tend to focus on the performance of a product when the technological level is assessed. However, performance is only one of the elements that influence the competitiveness of the product. Price, design, and services at the time of and after the sale of the product are also important factors in competitiveness, although they are not necessarily directly associated with technological sophistication. For components, compatibility is another important factor that determines competitiveness. In the world of personal computers and video recorders, the availability of a variety of commercial software has also been important for success (e.g., in the predominance of VHS over beta). Easy-to-understand operation manuals or textbooks (and available training courses) increase the competitiveness of the products such as word processors and machine tools. Moreover, fluctuation in the exchange rate can easily offset efforts to cut costs or to increase productivity by the accumulation of incremental technological improvements.
Naturally, it is difficult to assess the future technological competence of a product by evaluating the current technological potential or research and development.
Second, how should we define a nation's technological capacity? Increasingly, independent enterprises have globalized their production and research activities, making their substantive nationality obscure. Therefore, the competitiveness of a nation is not automatically equal to that of its domestically owned enterprises. In addition, it has become impossible for an enterprise to depend solely upon original technology. Firms develop products or processes by taking advantage of self-developed technology as well as licensed and purchased technology from other domestic and foreign sources.