Class 4 –The Competitiveness Challenge in Advanced Technologies and Services

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The major rationale for federal R&D support has become its role in promoting U.S. competitiveness. Students will obtain from this class a summary of the current competitiveness debate in the U.S., in both manufacturing and services sectors.

Class Four will first review the nature of the competitiveness debate of the 80's and early 90's, which focused on the manufacturing sector, particularly on process efficiency and quality. The role of manufacturing in the U.S. economy will be discussed, including its declining share of that economy. The nature of the international competition in manufacturing and the strategies of other international competitors, both in the 80's and now, including in advanced manufacturing sectors, will be reviewed. Approaches in Japan, Korea, and China will be explored. The "disruptive technologies" approach to innovation will be discussed, as well as corresponding possible approaches for manufacturing process technology productivity breakthroughs.

The second half of the class will turn toward the services sector, noting the dominant role of services in the U.S. economy, including the emerging importance of software services, and review the emerging international competition in services. The debate on whether the economy is facing a major competitive challenge to advanced technology-based services and to innovation capacity, through offshore outsourcing, will be examined. The lack of objective data-gathering in this area by federal data collection agencies will be cited. The importance of the growing international competition in software development, and India's growing role as a competitor in information technology-based services will also be noted.

Lecture Notes

Lecture 4, part I (PDF)

Lecture 4, part II (PDF)

Readings

Required Reading

Samuelson, Paul A. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization." Journal of Economic Perspectives 18, no. 3 (2004): 135-137 and 144-145.

Other Readings for Class Discussions

Hughes, Kent. Building the Next American Century: The Past and Future of American Economic Competitiveness. Baltimore, MD: Johns Hopkins University Press, 2004, pp. 68-111 and 152-199.

Berger, Suzanne. How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy. New York, NY: Crown Business, 2005, pp. 251-277. ISBN: 9780385513593. [Preview with Google Books]

Fong, Glenn R. "Follower at the Frontier: International Competition and Japanese Industrial Policy." International Studies Quarterly 42, no. 2 (1998): 339-366.

Kim, Linsu. Imitation to Innovation; The Dynamics of Korea's Technological Learning. Boston, MA: Harvard Business School Press, 1997, pp. 192-213 and 234-243. [Preview with Google Books]

Raduchel, William J. "The Economics of Software." In Measuring and Sustaining the New Economy, Software, Growth, and the Future of the U.S Economy: Report of a Symposium. Washington, DC: National Academies Press, 2006, pp. 36-46.