International Competition in Advanced Technology Decisions for America (1983) / Chapter Skim
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2. National Policies Affecting Advanced Technology Capacity and Competition
2. National Policies Affecting Advanced Technology Capacity and Competition
Pages 28-38
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From page 28... ...
However, as other governments coordinate -- and provide increasing support to -- their advanced technology industries, American firms find themselves competing internationally with government aided firms or groups of firms.
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From page 29... ...
Japan has followed this strategy with remarkable success. Japanese leaders recognize, however, that an economically and technologically advanced country must develop a strong domestic research base in order to excell at making world class technological advances.
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From page 30... ...
Another view, occasionally argued in the United States but practiced primarily in other countries, suggests that the diffuse benefits, or "spillovers," of technological development warrant federal targeted support to particular technologies. It is argued that such support leads to commercially successful products -- indeed, that favorable technological spillovers are likely even if the targeted products or processes are unsuccessful.
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From page 31... ...
Support can take a number of forms, including direct subsidies, low-interest loans for production facilities, and governmental absorption of potential losses. Governmental actions affecting production costs also include regulatory policies -- factory environmental standards, worker safety procedures, or production standards.
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From page 32... ...
For example, national procurement policies limit trade in telecommunication products between the large European countries, even though the advantages of large-scale production and the costs of duplicative research and development may justify specialization and free trade. 2 Nontariff barriers may be institutional and attitudinal factors, such as national loyalties inclining nations to support domestic industries, which effectively prevent import of foreign goods.
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From page 33... ...
In many cases, firms investing in countries seek local participation, perhaps at a majority level, to avoid this ~second-class" treatment. There are several other ways in which governments' restrictions on foreign investments may be to the disadvantage of firms attempting import: · firms may be unable to invest in necessary complements to advanced technology exports, such as local parts and service facilities; · "offset" requirements or "local content" laws may force firms to produce products in-country (occasionally at low volume and high unit cost)
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From page 34... ...
Thus, the United States should negotiate in international forums t~ Or the openness ot world markets to innovative entrepreneurs wherever they may be based and to eliminate those national actions practiced by other countries that distort the free Such a policy is required, both to preserve the U.S. position as a major source of innovation and to ease growing tensions among the industrialized allies, tensions that threaten not only international economic and political management, but also mutually beneficial cooperation in science and technology.
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From page 35... ...
products from fair competition with local products in local markets. · Government intervention to force purchase of products, especially advanced technology capital goods, from domestic suppliers despite competitive price and/or performance of foreign products.
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From page 36... ...
· Practices that stimulate innovation by relaxing various domestic rules in the exporting country may nevertheless have some positive spill-over effects. They might be best matched by adopting similar modifications of domestic ground rules for the competing industries in the importing country.
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From page 37... ...
These criteria place value on maintaining open markets, thus rewarding innovators, and making innovative products available globally. We believe that the United States must continue to negotiate in international forums to maintain international systems that foster healthy, mutual competition in advanced technology.
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From page 38... ...
Such criteria would probably define the limits of acceptable practice even when a theoretical argument might conclude that the causative practice resulted in a total mutual benefit that exceeded the injury to one of the parties. Certainly in the case of subsidies to advanced technology industries, the machinery of GATT should be available, although the standards of proof of injury may be harder to apply in the case of advanced technology than for other goods.
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