A recent article in The Economist ("Out of the dusty labs," March 1, 2007) says
Companies tinker with today's products rather than pay researchers to think big thoughts.The article suggests that companies are reducing their attention to basic research, closing the gap between "research" and "development". The article also notes that it was companies that held monopoly power in the past -- IBM, AT&T -- that could afford the kind of research that wins Nobel Prizes. I suspect that there is truth in these observations.
The examples used in the article, however, come from the computer industry. The first computers were made more than a half century ago, and the industry has matured greatly in the intervening years. I suspect that, as a result of that maturity, the relative payoffs for searches for breakthroughs versus for marginal improvements of existing products have changed. Marginal improvements in products fighting for huge markets are lower risk and better for the current bottom line than the search for fundamental changes that will only produce future revenues (if the firm is lucky). Still, I think it is important that people keep working on quantum computers, since if they succeed in developing that technology it may be transformational.
But biotechnology, I think, is still in an earlier, less mature phase of its development. The balance between fundamental research and product development is different than for computer technologies. In comparison with computers, a larger portion of biotech research is fundamental and done in universities and less biotech product development is done in corporations.
I suspect that neurobiology and cognitive research will produce transformational technology in the not too distant future. Better, more scientifically-based educational techniques may transform schooling and learning. We may find the reasons for autism and Attention Deficit Hyperactivity Disorder, allowing corporations to profit from protection and prevention of those and other problems related to brain functions. An aging population will pay for new technologies to prevent dementia and reduce the loss of mental ability with age. But, at this point for this research area, the balance must be, I would think, far more toward public and foundation funding of fundamental research than commercial funding of product development.
2. "High Technology" and Trade Statistics
It has been noted that international trade in high technology, that was dominated a couple of decades ago by the US, Japan and Europe, is increasingly dominated by China and emerging Asian economies. I suggest, however, that because the definition of "high technology" embodied in trade statistics lags, the statistics don't adequately measure trade in the "cutting-edge" technologies. Thus, the PC which was cutting-edge technology thirty or thirty-five years ago, has been commoditized. The assembly of PCs is now an industrial manufacturing process suited for industrial economies, while the building of computers in the 1950's was really "high technology" of that time. So too, the transfer of software production functions (of different types) to Ireland and India reflects in part a maturation and commodification of parts of the software industry. Look to trade in supercomputers, which are continually at the cutting edge of technological possibilities for a better measure of relative technological capacity.
International trade statistics are intended to allow comparisons over time as well as among exporting nations. The definition of what is a high technology product is based on industrial categories that must therefore remain unchanged for decades. As an industry matures and moves toward mass production of commodities, its activities tend to shift geographically to countries that have comparative advantage in the industrial production of commodities. That shift, however, may easily be confounded with a shift in the comparative advantage in what is truly "high" or "cutting-edge" technological capacity.
Knowledge-economy nations will continue to invest in fundamental research, and will continue to commercialize technological breakthroughs, creating new industries and new products. To remain successful, they will have to continue the process of replacing the maturing industries that they lose to industrial and industrializing nations with new sources of employment and economic growth.
Don't let trade statistics based on lagging definitions of what constitutes "high technology" distract attention from the real issues in maintaining competitiveness of a knowledge economy.
3. National Technology Transforms with Time
Economic development depends on increasing productivity, which involves producing more efficiently. That means, in part, that new technologies must must be introduced to improve productivity of labor and capital. (Of course, nations can also improve productivity by better organizing production and distribution.) Moreover, economic development results in changes in patterns of factor costs; the appropriate technology for a labor intensive economy is generally not the most appropriate for a more capital intensive technology.
"Natural" resources also depend on technology. Obviously, as the technology for inventorying mineral, forest, ocean, land and other resources improves, the available natural resource base changes. So too, as technology for exploiting and managing such resources improves, materials which once were not commercially viable become commercializable resources.
Globalization means that the international (and intra-national) patterns of comparative advantage matter more and more for all countries. The more rapid the rate of technological innovation, the more rapid the rate of change in comparative advantage, the more rapid must be the rate of technological innovation. Since, indeed, globalization is driven in part by technological improvements in communications and transportation, there seems to be an feedback loop to make change faster and faster.
"Invention" is often confounded with "innovation". Innovations in one society may be standard practice in another. As a general rule, it seems to me, invention will be more important in a knowledge economy than in an industrial or pre-industrial economy. In the latter, innovation will depend more on adaptation and deepening of technology and on technology transfer.
The vast majority of technological innovations everywhere must be based on existing technology transferred into the enterprise or community. Thus the United States, a large nation with a knowledge economy, produces only a third of the world's scientific papers. With five percent of the world's population, it does not and can not produce the majority of the world's inventions. Expanding the example, if one takes any of the 50 states in the union it must obviously produce only a small part of the worlds inventions.
Thus all national innovation systems must focus on the capabilities of their enterprises to identify, obtain, adapt, adopt and improve existing technologies. While invention is probably important in all societies, I would suggest that innovation in any society is based primarily on imitation.
Still, obviously, economies differ in their abilities to develop and utilize cutting edge technologies -- typically those technologies most nearly related to and most dependent on scientific knowledge. As countries develop economically and technologically over time, their innovation strategies can focus more on high technology inventions. While Rwanda may and should seek to strengthen its innovation system, it probably should not expect to develop a high-tech economy any time soon. Similarly, while Finland or Massachusetts may seek to improve their farming technologies, their comparative advantage will probably continue to lie in their highly educated people and in their economies' abilities to invent and to rapidly commercialize inventions.
Conclusion
Those who do not think of technology in terms of time -- of processes that take place over decades -- are likely to make serious errors. Technologies mature, and what is right at the early stage of development of a technological system is not necessarily right at a later stage. Patterns of comparative advantage change over time in our globalizing economies, and again, what is right at one time is not necessarily right later. Nations develop, and the right technological policy at one stage of development is not necessarily right at the next.
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