Linking Trade and Technology Policies An International Comparison of the Policies of Industrialized Nations (1992) / Chapter Skim
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3. TECHNOLOGICAL AND INTERNATIONAL COMPETITION: A HISTORICAL PERSPECTIVE
3. TECHNOLOGICAL AND INTERNATIONAL COMPETITION: A HISTORICAL PERSPECTIVE
Pages 13-28
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From page 13... ...
A hightechnology industry may be defined conceptually as one in which knowledge is a prime source of competitive advantage for firms, and in which firms invest large resources in knowledge creation. Operationally, hightechnology industries are usually defined by above-average spending on research and development, above-average employment of scientists and engineers, or both.
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From page 14... ...
Thus, the social return to resources placed in those sectors exceeds the private return; and to the extent that international competition leads a country to shift resources away from high technology, such competition can reduce that country's welfare.
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From page 15... ...
External Economies within Sectors It is a familiar observation although not an observation popular among traditional theorists of international trade that local, regional, and perhaps national advantages in particular industries are not necessarily the result of underlying differences in primary resources. Instead, advantage is often created through a process of positive feedback.
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From page 16... ...
Ideas spread best when there is a pool of highly skilled people able to appreciate them; and the process of technology diffusion often takes place between firms and their suppliers or customers rather than directly between rivals. Conversely, the skill of the labor force comes partly from knowledge that spreads informally rather than from formal training; and the strength of input suppliers rests in part on their access to the latest knowledge.
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From page 17... ...
The relationship between a domestic industry and a domestic supplier base is also far from gone, in spite of global communications and low transport cost. There are intangible costs to transactions at a distance; in some ways the move to modern management systems based on just-in-time inventory and production has increased the premium placed on proximity, so that in the electronics industry in particular there has been a discernible trend for firms to move production back from low-wage offshore sites to home locations close to suppliers and customers.
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From page 18... ...
To take only the most obvious example, international trade in financial services is dominated by New York and London; there is no question that the dominant role of these centers is the result of self-reinforcing advantages rather than basic resources. One can, however, argue plausibly that the knowledge intensity of high-technology industries probably makes external economies more important there than in the average industry.
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From page 19... ...
The reason is that during the past decade a volatile international macroeconomic and financial environment threw up so much dust that it is difficult to detect any underlying trends. For example, from 1980 to 1986 U.S.
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From page 20... ...
During the 1980s, the traditional U.S. surplus in high technology disappeared, while the deficit in other manufactures ballooned; then both balances began to recover a recovery that has without doubt continued beyond the dates covered in this table.
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From page 21... ...
At the trade deficit's peak it was more than 14 percent of manufacturing value added; by 1990 it had again fallen to about 9 percent. Only part of that 9 percent represents manufacturing value added shifted abroad, since some of the cost of imports and exports consists of inputs that the manufacturing sector purchases from other sectors.
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From page 22... ...
manufacturing in general continues to be able to sell both in the domestic and the international market; the soaring trade deficits of the 1980s were an aberration due to a strong dollar, and the subsequent several years have been marked by a widespread export revival across a broad spectrum of industries. The terms of competition, however, have gradually changed.
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From page 23... ...
relative decline has slowed or even reversed, thanks to a remarkable burst of productivity improvement TABLE 8 Revealed Comparative Advantage in High-Technology Industries (Share of world hightech manufacturing exports/share of total world manufacturing exports)
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From page 24... ...
In general one may identify two main kinds of explanation for the relative decline of the United States and rise of Japan. One explanation stresses aggregate inputs, especially capital and highly educated labor.
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From page 25... ...
The United States has consistently had somewhat lower savings rates than other advanced countries, while Japan has saved more; during the 1980s the U.S. rate plunged to only 3.6 percent of GNP, less than half the average of nations in the Organization for Economic Cooperation and Development, while Japan saved 17.8 percent of GNP.
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From page 26... ...
The first is that the special emphasis many observers place on international competition in high-technology industries makes considerable sense.
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From page 27... ...
Aggregate factors such as the cost of capital and the supply of highly educated labor have moved in a direction that helps explain the trends in high-technology competition, but the circumstantial evidence is also consistent with stories that emphasize market access and government action. This overview, then, leaves the most crucial issues how does policy affect the relationship between technology and trade, and what should be done differently open for further discussion.
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