Mastering a New Role Shaping Technology Policy for National Economic Performance (1993) / Chapter Skim
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The Changing Demands on National Technology Policy and Strategy
The Changing Demands on National Technology Policy and Strategy
Pages 28-60
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From page 28... ...
This geopolitical shift comes at a time when civilian technological advance, driven by global economic competition, is pacing technological advance in many fields critical to the national defense.! These three changes are simultaneously creating a new set of challenges for U.S.
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From page 29... ...
technology enterprise discussed in Chapter 1. RISING TECHNICAL INTENSITY AND THE REVOLUTION IN PRODUCTION SYSTEMS Global competition and rising technical competence worldwide are changing the intensity, pace, and character of technological innovation in nascent, developing, and mature industries in important ways.
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From page 30... ...
For example, the marriage of electronic and mechanical technologies, or "mechatronics," has led to the creation of such products as numerically controlled machine tools and industrial robots. Optoelectronics, the fusion of electronics and optics technologies, has yielded major commercial products, including optical fiber communication systems.
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From page 31... ...
Governments worldwide are defining more industrial technology as "generic," or "precompetitive," and therefore a legitimate target for private-sector consortia and public-sector support.5 To strengthen their domestic generic technology base and help resident companies capture the benefits of that base, many governments are helping to cultivate linkages and collaboration across the diverse spectrum of domestic R&D institutions corporations, universities, national laboratories, and private research laboratories. At the same time, the nature of global technology-intensive competition demands that a nation's technology enterprise become more effective at tracking and acquiring new technology from outside national borders.
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From page 32... ...
Much of the change is a result of greater appreciation of the demonstrated efficiencies of modern Japanese production methods, sometimes gathered under the rubric of "lean production" and "flexible manufacturing." In contrast with traditional mass production, lean production refers to a constellation of new organizational relationships both inside and outside the firm, to a new way of viewing workers, customers, and suppliers, and to a different understanding of how technologies change and improve (Hill, 1991; Kline, 1991; Womack et al., 19901. The goal of lean production in comparison with mass production is to use less labor, materials, plant, equipment, and time at all levels in the firm to produce a greater variety of highquality products, while continuously accommodating rapid changes in product design and performance.7 Table 2.1 sets out the most salient differences between the new "lean" or "flexibly decentralized" model of industrial production and the more traditional model of "mass" or"robust" production.
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From page 33... ...
. Production Decentralized, with carefully managed division of responsibility among R&D and engineering groups; simultaneous product and process development where possible; greater reliance on suppliers and contract rat engineering ~lrms.
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From page 34... ...
Short training sessions as needed for core work force, sometimes motivational, sometimes intended to improve quality control practices or smooth the way for new technology. Broader skills sought for both blue- and gray-collar workers.
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From page 35... ...
Beyond these gains, a greatly increased flexibility of product manufacture allows rapid response to new orders (Helm and Compton, 1992; Hill, 1991; Lee, 1992~. Indeed, well-executed, lean production of products with a high piece count has enabled manufacturers to cut production costs by up to SO percent while simultaneously yielding much higher product quality than older production processes.
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From page 36... ...
At the same time, absenteeism at the NUMMI plant fell to a steady 3 to 4 percent, down from levels of 20 to 25 percent under the old GM-Fremont management, and the number of worker grievances filed under NUMMI management dropped to a fraction of those filed during the GM-Fremont era. By the end of 1991, over 90 percent of NUMMI employees described themselves as "satisfied" or"very satisfied" (Adler, 1993~.8 Although the NUMMI experience demonstrates that the improvement of worker welfare and the other productivity and quality objectives of lean production can be mutually reinforcing, it should be noted that "lean" approaches that neglect the human component of production systems can have the opposite effect.
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From page 37... ...
firm peaked just before and after the new model's release and were much more numerous overall.~° See Figure 2.1. Finally, there is broad evidence that the principles of lean production and concurrent engineering have the potential for widespread application in the production and delivery of services such as accounting, banking, retail sales, package delivery, health care, insurance, and telecommunication services.
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From page 38... ...
industrial performance in this regard is particularly troubling, given that Japanese manufacturers continue to advance the competitive standard by investing considerably more than their U.S. counterparts in advanced manufacturing technologies and automation (see Table 2.21.~3 Moreover, the rapid spread of lean production practices and advanced manufacturing technology through multinational companies to production facili
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From page 39... ...
39 Ad ~ o ~ 'e of ~c - ~ .
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From page 40... ...
Accompanying the gradual but steady equalization in basic national technical competence has been an unprecedented trend toward internationalization of production and associated technological activities through the expansion of international trade, investment, and cross-border corporate alliances. Capital, technology, industrial management systems, people, products, and services cross the borders of industrialized countries at unprecedented rates as part of everyday commerce.
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From page 41... ...
Comparisons of national trends in R&D investment, R&D work force expansion, patenting, and the publication of the results of scientific and technological research show that other industrialized nations are closing the gap with the United States in the capacity to produce and absorb new scientific and technological knowledge. In total dollars invested in research and development, both defense and nondefense-related, the United States remains without rivals (see Figure 2.29.
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From page 42... ...
, the more relevant measure of an economy's technical strength is its ratio of nondefense, or civilian, R&D investment to GNP. International comparisons of civilian R&D intensity document a large and widening gap between the United States and some of its major industrial competitors (see Figure 2.3~.~6 This ratio has remained fairly constant for the United States Japan .
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From page 43... ...
In contrast, over the same period, Germany, Sweden, and Japan have increased the civilian R&D intensity of their economies significantly. As of 1990 the United States invested 1.9 percent of its GNP in nondefense R&D, while Germany, Sweden, and Japan invested 2.7, 2.6, and 3.0 percent of their respective GNPs on nondefense R&D.~7 Similarly international comparisons of R&D scientists and engineers as a share of the total work force of industrialized nations show that the distinctiveness of the U.S.
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From page 44... ...
The internationalization of technology development and diffusion is following upon a profound deepening of international economic interdependence during the past 15-20 years, as evidenced by the growth of world trade, a virtual explosion of foreign direct investment, and the associated proliferation of international technical and logistical networks of firms. Nevertheless, the
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From page 45... ...
During the 1980s, trade in manufactured goods as a percentage of total manufacturing output of the 25 leading industrialized nations grew from 20 to 35 percent. Over the same period, trade in high-tech manufactures grew from 19 to 27 percent of these countries' total high-tech production.
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From page 46... ...
. World GDP World Domestic Investment I' ' ' W;; ~ ~ ~ , ~ O 1 975 1977 1979 1981 1983 1985 1987 1989 1991 FIGURE 2.6 Growth in world trade, output, domestic investment, and foreign direct investment: 1975-1991.
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From page 47... ...
companies, and nearly a quarter of the growth was absorbed by the United States. During the past decade, foreign direct investment has assumed an increasingly important role in all major industrialized economies, again, with the notable exception of Japan.
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From page 48... ...
Nevertheless, no other major industrialized nation experienced growth in its dependence on foreign direct investment during the 1980s as rapid as that of the United States. Between 1980 and 1991, foreign direct investment in the United States expanded nearly fivefold.24 By 1990 foreign-owned companies controlled more than $1.5 trillion in assets in the United States and employed roughly 4.7 million Americans.
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From page 49... ...
The depth of interdependence experienced by the major industrialized nations varies considerably from the highly "internationalized" economies and national technology enterprises of Western Europe, to the historically more autonomous yet rapidly internationalizing U.S. economy and technology enterprise, to the relatively autonomous and more slowly internationalizing Japanese economy and technology enterprise.
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From page 50... ...
One measure of the growing importance of these global networks is the rapid growth in volume of intermediate inputs for final production obtained from international rather than domestic sources (see Figure 2.7~.28 A recent study of sourcing patterns for manufactured intermediate inputs in six industrialized countries from the early 1970s to the mid-1980s has shown that the direct import of these inputs from abroad increased more rapidly than domestic sourcing in all of the countries surveyed. As a result, by the mid1980s, foreign sourced manufactured inputs were 50 percent of domestically sourced inputs in Canada and between 30 and 40 percent of domestically sourced inputs in France, Germany, and the United Kingdom.
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From page 51... ...
Collectively the internationalization of R&D, the growth of global technical and logistical networks, and the rapid expansion of world high-technology trade define a powerful and pervasive trend toward internationalization of technology development and diffusion. While the current extent of internationalization is greater in certain industries and certain countries than in others, and should not be overstated, the trend is well established and gathering momentum.29 In many sectors new technological knowledge is becoming a global commodity, rapidly accessible to any organization with sufficient incentive and technical sophistication to absorb it.
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From page 52... ...
Throughout the 1950s and 1960s U.S. military strength and the nation's economic and commercial technological muscle were, for the most part, mutually reinforcing; public-sector investments in defenserelated technologies complemented private-sector investment in commercial technological preeminence.
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From page 53... ...
This is because civilian technological advance-driven by global economic competition- is now pacing technological advance in many fields critical to the national defense, especially in respect to materials, components, and subsystems. In the 1950s and 1960s, when the relative national investment in space and defense R&D was much larger than it is at present, many buildingblock technologies (solid-state electronics, computer technology, aeronautics and jet propulsion, and nuclear power)
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From page 54... ...
the importance of defense-specific technologies has declined while the dependence of defense technology generally on technologies developed first in the commercial sphere is rising.35 As a result, the nation's traditional approaches to defense procurement and defense research and development need to be reexamined the old strategies seem unlikely to yield the same national security benefits as they did in the past. The increasing dependence of U.S.
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From page 55... ...
adopt new organizational structures that rely less on managerial hierarchy and functional compartmentalization and focus instead on improved intrafirm communication and coordination, teamwork, employee empowerment, and continuous skill building at all personnel levels. It also places a premium on public policies that support the creation and development of local or regional clusters of particular complementary skills, human resources, and technical infrastructure.
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From page 56... ...
And the shifting balance of technological power and deepening technological interdependence expose a parochialism in U.S. private and public technology strategies and policies that could easily undermine the nation's ability to harness global technology and markets.
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From page 57... ...
Among other things Berggren et al. suggest that the heavy focus on the productivity consequences of workplace organization has led lean production advocates to overlook the fact that Japanese transplants have invested heavily in new process technology and that many of them are world leaders in automation.
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24. In 1990 total foreign direct investment inflows into the United States fell dramatically from $72 billion in 1989 to $26 billion, the smallest amount since 1985.
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28. Much of the growth in the volume of international sourcing follows from growth of foreign direct investment and concomitant growth of intrafirm trade (Wyckoff, 1992)
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From page 60... ...
Despite its diminished contribution to the global commercial technology base, the U.S. national security mission continues to lay claim to roughly 26 percent of all U.S.
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