Technology and Employment Innovation and Growth in the U.S. Economy (1987) / Chapter Skim
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2: The Sources and Rate of Technological Change in the U. S. Economy
2: The Sources and Rate of Technological Change in the U. S. Economy
Pages 24-50
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From page 24... ...
The distinction between process and product innovation often is hazy. New products, such as the transistor, frequently require significant process innovations before they can be produced economically.
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From page 25... ...
Product innovations may serve entirely new markets; consequently, their effects are notoriously unpredictable. (Chapter 4 explores the uncertainty surrounding predictions of the employment consequences of process innovations.)
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From page 26... ...
In the case of the transistor, the innovation stage of its development required fundamental research, just as its application to new uses during the diffusion stage has required investments in applications engineering and fundamental research. Influences on Invention, Innovation, and Diffusion Despite the close links among them, the invention, innovation, and diffusion stages of a technology appear to respond to different influences that are not always easy to distinguish.
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From page 27... ...
After installing equipment for computer-integrated production of lawn and garden tractors, Deere and Company realized substantial savings by redesigning its products to allow a single component design to be used in eight different tractors.2 Other firms have redesigned their products for easier automated assembly; a recent IBM desktop printer has been so simplified for automated assembly that it can be manually assembled in minutes. "'Development" alone, which is the portion of innovation incorporating most of the activities of production engineering and tooling, typically accounted for more than 65 percent of privately financed U.S.
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From page 28... ...
In many cases, once a new technology has been adopted, the resulting improvements in the quality of a firm's manufactures and its productivity come as much from the reorganization of production and other activities required by the adoption as they do from the technologies themselves. For example, management personnel interviewed by panel members and staff in the course of this study argued that the organizational changes necessary to adopt computer-aided manufacturing processes yielded savings as great as those realized from this new production technology itself (the IBM printer described previously is one example)
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From page 29... ...
By contrast, GM's factory in Hamtramck, Michigan, which uses advanced factory automation technologies, operates at roughly 50 percent of its planned capacity and has experienced serious quality problems (Nag, 1986; Womack, in press)
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From page 30... ...
To reduce the influence of such fluctuations, multifactor productivity growth typically is measured across business cycles. An alternative productivity measure that does not account for improvements in the productivity of capital inputs is labor productivity growth, measured as growth in output per hour.
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From page 31... ...
for productivity measurement, did not incorporate adjustments for improvements in product quality. In 1985 BEA developed a computer price index that adjusted computers for quality; the new index resulted in dramatic declines in the estimated costs of such equipment after 1972, and it also will affect measured productivity growth for this period (Cole et al., 1986; Slater, 19861.
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From page 32... ...
economy, which have generated increased concern over the employment impacts of technological change, may reflect shifts in the geographic location of innovative activity. For much of the 1950s and 1960s, the United States commanded a considerable technological lead over European industrial nations and Japan.
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From page 33... ...
Industrially Funded Research and Development in the United States A large share (3~50 percent during the postwar period) of the total U.S.
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From page 34... ...
In 1984, the last year for which comparable data are available, the GNP shares for industry-financed R&D were 1.3, 1.S, and 1.7 percent, respectively, in the United States, West Germany, and Japan. For the GNP share of privately financed U.S.
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From page 35... ...
, industry devotes a small share of its R&D investment to basic research. The share of total industrial R&D accounted for by development has fluctuated between 65 and 74 percent since 1960; the basic research share of this investment has declined from 7.6 percent in 1960 to 5 percent in 1985, an estimate that represents a slight recovery from the low point of 4.1 percent reached in 1980 (National Science Foundation, 1986b, Appendix Tables 5, 7, and 91.
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From page 36... ...
. it is striking that the United States admits to such a small fraction of its R&D effort as being applicable explicitly to industrial development....
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From page 37... ...
concluded that few of the patented inventions to which government contractors are granted title by the military are exploited commercially. The increasing divergence among military technological and procurement needs and civilian technologies in most areas suggests that future commercial spillovers of military R&D are likely to be modest, with the possible exceptions of defense-related R&D in artificial intelligence and computer science.
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From page 38... ...
Such differences in national science and technology policies may contribute to the more rapid diffusion of advanced manufacturing technologies in other nations (see the next section for a comparison of rates of utilization of advanced manufacturing technologies in different countries)
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From page 39... ...
nomic devastation of 1914-1945. In fact, some of the technologies that are of interest in this report, including telecommunications and digital information transmission, have contributed to higher rates of international technology transfer.
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From page 40... ...
Sustained support for the generation of new knowledge remains critically important in the current world economic environment. What is now of equal importance, however, is the ability of a firm to move rapidly from invention to commercial application and the ability of a national economy to adopt new technologies quickly, thus narrowing the gap between current and "best" practices.
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From page 41... ...
Finally, the age and other characteristics of the existing capital stock in potential adopter firms affect the attractiveness of investing in a new technology. Factors Affecting the Diffusion of Technology Theoretical and empirical studies of technology diffusion suggest that two broad factors influence the rate of diffusion of technologies: (1)
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From page 42... ...
commercial air transportation prior to 1978 supported rapid diffusion of new commercial aircraft among the passenger airlines by encouraging competition based on service quality rather than on price (Jordan, 1970; Mowery, 19851; in another case, more stringent regulation since 1962 appears to have slowed the introduction and
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From page 43... ...
U.S. industry's use of advanced manufacturing technologies, including robotics and computer numerically controlled machine tools, seems to be increasing at a rate comparable to the rates of diffusion of earlier process innovations such as mainframe computers.
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From page 44... ...
industry appear to be lagging behind those of many industrial competitors, notably Japan, Sweden, and West Germany (Flamm, 1986; Mowery, 1986; Technology Management Center, 19851. Jaikumar (1986)
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From page 45... ...
The substantial costs of the applications engineering necessary for adoption are likely to be particularly onerous for smaller firms, which may have few or no specialized technical personnel on their payrolls. A related impediment contributing to higher adoption costs stems from the fact that higher-level skills are often required for successful adoption in the early stages of the introduction of new technologies.
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From page 46... ...
Moreover, these retraining costs may place heavy burdens on small firms. Sweden and Japan have been leaders in the adoption of computer-based manufacturing technologies and robotics, and both have labor market institutions and practices that may support higher levels of investment in training for their blue-collar work forces (see Chapter 71.
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From page 47... ...
Many of the essential areas in which these process technologies yield significant cost savings are not incorporated in conventional investment analyses because of conceptual flaws in these analytic frameworks. For example, reductions in inventory or work in progress have been singled out by several researchers as important dimensions of resource savings that are ignored by accounting systems developed for the evaluation of discrete investment decisions (see Ettlie, 1985, 1986; Kaplan, 1986; Technology Management Center, 19851.
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From page 48... ...
Computer-Aided Manufacturing Technologies The incorporation of computer- and microelectronics-based technologies within manufacturing has transformed the work environment in some industries and firms while simultaneously contributing to public concern over job displacement. These technologies include robotics, computer-aided design and manufacturing, and microelectronics-based, machine-controlled technologies such as computer numerically controlled machine tools.
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From page 49... ...
defines biotechnologies as technologies that use living organisms to modify plants or animals and develop microorganisms for specific purposes.~° Biotechnology arguably is the least advanced of the four clusters, reflecting its recent development and the impediments to its rapid diffusion. The sectors in which these technologies initially will be introduced the pharmaceutical and chemical industries, agriculture, and environmental protection do not employ large numbers of people, leading us to conclude that the near-term aggregate employment impacts of biotechnologies will be modest and will primarily influence shifts within professional and technical occupations.
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From page 50... ...
and world markets, job displacement from the slow adoption by U.S. firms of these productivity-increasing manufacturing technologies is likely to be more serious than any displacement resulting from rapid adoption; the recent surge in import penetration of many U.S.
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