Is technological innovation the main source of all economic development and change? How might differing research and development systems influence the performance of major nations?
Technological innovation has come to be regarded as a central factor upon which success is contingent (Dodgson and Bessant, 1996: 3; Schumpeter, 1943: 83). Not only has it been considered a promise for generating competitive advantage but it has also been prescribed as a remedy for a broad range of managerial problems such as intense competition, globalised marketplace and technology fusion (Eris & Saatcioglu, 2004). Since the middle of the 20th century many theorists have explored the issue ...view middle of the document...
This is usually measured in terms of gross national product (GDP). In contrast, the term economic development encompasses all the above elements; however it also involves qualitative measurements of improvement in the quality of life (Malecki, 1997). This can be measured by looking at the changes in terms of “health, affluence, freedom and environmental sustainability” (Malecki, 1997:13). In this report, the concepts of economic growth and development will be used interchangeably.
Different R&D systems
The origins of the U.S. R&D system dates back to the nineteenth century where innovations in “transportation, communication and production technologies” (Nelson, 1993:31) enabled the formation of large scale manufacturing plants that together were labelled as the “American system of manufacturers” (Rosenberg 1972 in Nelson, 1993:) Among this system of manufacturers was Ford Motor Company that through the innovation of assembly-line mass production aided the growth of the U.S. economy (Nelson, 1993). Interestingly, the advancements that were made in the U.S. economy were not dependent on formal scientific research as the production operations at the time relied on mechanical skills.
Further, the pre-war system was characterised by the establishment of in-house laboratories in large manufacturing factories that employed scientists and research staff leading to a greater need to educate and retain highly skilled professionals (Nelson, 1993).
The post-war U.S. R&D system is characterised by the significance of three sectors: industry, universities and federal government. In terms of industry, the emergence of small firms during the post-war period was influential in the development of “microelectronics, biotechnology, robotics and computer hardware and software” (Nelson, 1993:29). Consequently, this led to the U.S. becoming the leader in a several high technology markets (Nelson, 1993).
In addition, an increase in federal funding, during the post-war era, in support of university research, has led to the transformation of several U.S. universities into becoming some of the best in the world in terms of scientific research, highlighting the importance the higher education system as a contributor to the U.S. competitive advantage (Nelson, 1993).
Moreover, the U.S. antitrust statues, have aided the development of industrial research and the huge investment in military R&D, which was the largest part of total R&D expenditure throughout most of the post-war period, has also contributed to several industrial innovations (Nelson, 1993).
Unfortunately, throughout the past decades the U.S. has lost its standing as a leading nation in terms of R&D and has not been able to compete with other nations in terms of output since prior to 1973 (Nelson, 1993).
Britain was regarded as the leader in technological innovation throughout much of the nineteenth century. However, as the Second Industrial Revolution came...