The Government Role in Civilian Technology Building a New Alliance (1992) / Chapter Skim
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1 THE ENVIRONMENT FOR THE TECHNOLOGY DEVELOPMENT
1 THE ENVIRONMENT FOR THE TECHNOLOGY DEVELOPMENT
Pages 4-47
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From page 4... ...
A skilled, motivated, and mobile work force and management; a strong research, development, and technology base; and progress in incremental advances in product and process technologies are also important. The ability of the public and private sectors to invest in R&D and physical capital, including infrastructure, is a fundamental part of economic advance, as well.)
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Had labor productivity growth maintained its pre-1965 average annual rate, by 1985 the total U.S. output would have been 45 percent higher than it actually was.
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technological performance. A brief description of the technology creation, commercialization, and adoption process follow this discussion.
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1960-1973 1973-1979 1979-1990 Total factor productivitys United States 1.6 -0.4 0.3 Japan 5.9 1.4 2.0 Germany 2.7 1.8 0.8 United Kingdom 2.3 0.6 1.6 OECD Europe 3.3 1.4 1.3 OECD 2.8 0.5 0.9 Labor productivitys United States 2.2 0.0 0.7 Japan 8.6 2.9 3.0 Germany 4.6 3.1 1.6 United Kingdom 3.6 1.6 2.1 OECD Europe 5.0 2.7 2.0 OECD 4.1 1.4 1.5 aTotal factor productivity is equal to a weighted average of the growth in labor and capital productivity. The sample-period averages for capital and labor shares are used as weights.
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From page 9... ...
productivity growth from 1947 to 1985 in the United States, with a 30 percent contribution to overall growth in 1979 to 1985.7 Declines in the rate of capital formation in the United States, therefore, may have contributed to the recent productivity slowdown. An examination of the 1970s, however, does not show lower rates of gross investment in physical capital in the United States relative to previous periods.
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From page 10... ...
Many Western European economies have fared less well in absorbing their baby-boom generations and women into their domestic work forces, which has contributed to the relatively high and sustained unemployment rates in Western European economies since the mid-1970s. In the United States, rapid expansion of the work force during the 1970s and 1980s made it far more difficult to maintain historic levels of labor productivity growth.
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Therefore, the slowdown in industrial R&D expenditure growth in the U.S. economy during the early 1970s may well have had an impact on labor productivity growth rates into the 1980s.
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Technology Creation The creation and realization of economic benefits associated with new technology involve a number of phases that interact with one another and frequently extend over a lengthy period of time. The initial phase, the creation of new technology, is often referred to as "invention," and typically involves fundamental scientific and engineering research that demonstrates a basic concept or proves the feasibility of a specific solution to a problem.
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From page 13... ...
Moreover, the time lag between invention and innovation may be quite long, and much of the "science" that underpins contemporary technological innovation may in fact be based on research performed decades earlier. Nevertheless, the invention and innovation phases of the creation of a new technology are not strictly sequential, but often interact with one another.
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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.
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The costs in many cases depend on domestic interest rates and other factors affecting the cost of capital, the state of development of technical standards, and the level of worker skills. Because the adoption of most new technologies is the outcome of investment decisions, rates of gross domestic capital formation affect the rate at which the domestic capital stock is "turned over" and new equipment replaces older machinery.
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involved in research to interact with those responsible for technology commercialization. When these interactions do not take place, technology transfer is impeded.
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The transfer process is especially difficult because so much of the knowledge necessary to advance the process of technology creation or adoption is not easily written down or codified in a blueprint or technical drawing.
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Among the processes of technology creation, commercialization, and adoption, the commercialization and adoption stages are the most fruitful sources of economic benefits. Realizing economic returns from scientific and engineering advances requires their incorporation into new or existing products or processes.
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It is extremely difficult to measure precisely where basic, pre-commercial, and applied R&D efforts begin and one line of scientific inquiry is terminated. Moreover, research and development, as it relates to technological innovation and technical change, does not necessary follow a linear model or evolutionary, predetermined process.
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The ability of i to capture the economic benefits of investments in this k is limited. It is difficult, therefore, for private firms to or capture the knowledge, expertise, and insight that might t&D in these areas.
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The United States continues to lead the world in the number of U.S. patents granted across a broad array of industries.
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Output in electric and electronic equipment, transportation equipment (other than motor vehicles) , instruments and related products, and chemicals and allied products rose by about 50 percent during that period.22 The United States also continues to exhibit considerable strength in exports of manufactured and high-technology goods.23 By 1988, the United States retained a 20 percent share of world exports of technology-inten
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From page 23... ...
technological performance, we find that the United States continues to exhibit considerable strength in a wide range of industrial sectors, as evidenced in part by an analysis of the data on both industrial output and exports. There is no systematic erosion of the nation's advantages in global markets or its ability to produce and market high-technology goods and services.
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Gross National Product3,115.24,024.429.2 Domestic industries3,073.03,996.330.5 (Gross Domestic Product) Manufacturing694.7927.533.5 Durable goods423.3583.237.8 Lumber and wood products19.325.733.2 Furniture and fixtures11.112.310.8 Stone, clay, and glass23.324.96.9 products Primary metal industries52.837.9-22.2 Fabricated metal products53.463.218.4 Machinery, except electrical80.9170.5110.8 Electrical and electronic56.288.156.8 equipment Motor vehicles and58.151.7-11.0 equipment Other transportation34.960.974.5 equipment Instruments and related20.331.555.2 products Miscellaneous manufacturing13.016.123.8 .
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From page 29... ...
firms adopt these technologies early in the production cycle, they encounter greater difficulties, relative to some foreign firms, in exploiting the potential of new process technologies to improve productivity and product quality.26 Especially in manufacturing process technologies, the limited data available suggest that U.S. firms lag behind some foreign competitors in the rate of adoption and the intensity of utilization of such technologies as computer-integrated manufacturing, numerically controlled machine tools, and robotics.27 This fact is especially true for small and medium-sized firms.
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performance in technology commercialization over the long term. To a significant degree, the postwar advantages of the United States in the research and technology creation processes have been supported (indeed, some would say that they were created)
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3. Minimal assistance for industrial technology adoption: With the significant exception of agriculture, the large federal investment in military and civilian research and technology development provides virtually no support for the adoption of new technologies.
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The globalization of formerly national technical enterprises, dispersion of corporate R&D and manufacturing facilities, rising costs of R&D efforts, and shortened time horizons for the introduction of new products and processes all create special challenges for U.S. firms.
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The rising technological competence of foreign firms is one reason the rate of technology diffusion across international boundaries has increased. Some foreign firms are better able to absorb technology from multiple sources, and transnational corporations continue to establish R&D and manufacturing facilities around the world.
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Moreover, military-funded R&D and defense procurement are becoming less important sources of civilian technology. The celebrated examples of semiconductors, computers, jet engines, and airframes in the 1950s and 1960s, technologies in which military R&D and procurement yielded important civilian applications, have few contemporary counterparts.
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Scientific and technological knowledge move more quickly in the international economy because foreign firms have improved their capabilities to absorb R&D and technology. They are also better able to apply advanced scientific or technological knowledge to the manufacturing process.
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the United States continues to exhibit considerable strength in technology output, based on this indicator. Japan, in contrast, continues to be a net importer of technology.
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THE ENVIRONMENT FOR TECHNOLOGY DEVELOPMENT TABLE 1-7 U.S. Receipts and Payments of Royalties and Fees Associated with Unaffiliated Foreign Residents, 1972-1988 (millions of dollars)
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117. petitive capabilities of foreign firms is by no means a negative development.
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Many of these policies lie outside the group of instruments typically associated with science and technology policy. For example, capital requirements of technology creation, commercialization, and adoption are such that the domestic economic environment for capital formation is an important influence on technological performance.
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public policy and private investment decisions appear to be handicapping its technological performance is investment in the skills of the work force. This is true for both those entering the labor force and workers currently employed (or displaced)
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This is particularly true when considering the economic environment for technology development in the United States. As we have seen, investment in physical capital and civilian research and development are important components of strong productivity growth rates.
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in technology is being challenged more strongly than ever before in the postwar period. The United States can strengthen technology commercialization, at a stage prior to that at which private firms invest in commercialization activities, through federal action to facilitate pre-commercial R&D.
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From page 43... ...
Machine Tool Industry and Its Foreign Competitors," MIT Commission on Industrial Productivity WorkingF,apers, vol. II (Cambridge, Mass.: MIT Press, 1989)
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From page 44... ...
See Zvi Griliches, "Patents: Recent Trends and Puzzles," in Brookings Papers on Economic Activity, Microeconomics, eds. Martin Neil Baily and Clifford Winston (Washington, D.C.: The Brookings Institution, 1989)
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From page 45... ...
Machine Tool Industry and Its Foreign Competitors," MIT Commission on Industrial Productivity Working Papers, vol. II (Cambridge, Mass.: MIT Press, 1989)
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From page 46... ...
U.S. firms were on the forefront of this trend and accounted for a large part of total R&D spending of foreign firms in OECD countries.
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labor force, efforts to improve U.S. workers' skills cannot focus exclusively on primary and secondary education.
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