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The technological specialization of advanced countries; A report to the EEC on international science and technology activities
320
Book reviews
systematic treatment of the nature of technologies is largely absent from Doheny-Farina's discussion and this seems to me largely consistent with his definition of reality. I wish to stress my initial statement that the book is an important contribution to the debate on the nature of technological processes. My comments are intended more as a challenge to the rhetorical approach to go further rather than to diminish the value of its considerable insight. The book is likely to prove a very useful addition to the curriculum of technology studies courses. Alfonso H. Molina
University of Edinburgh, Edinburgh, UK SSDI 0048-7333(93)00758-L
Bengt-Ake Lundvall (Editor), National Systems of Innovation: towards a Theory of Innovation and Interactive Learning (Pinter, London, 1992) pp. 317, £45 (hardbook) ISBN 1-85567-063-1. Dr. Lundvall and his colleagues at Aalborg University in Denmark are to be congratulated for writing and publishing this collection of papers. They both reflect the research results generated by the IKE Group over the past 10 or more years, and make a major contribution to the growing literature on national systems of innovation. This literature appears to have two objectives. The first is to describe, compare and analyse the national institutions, competencies and incentive structures that generate and diffuse the technological knowledge that is essential for economic growth. The second is to develop a theory of technical change that goes beyond the wellestablished, but empirically unsatisfactory, notions that technical gets generated and applied as codified information, a n d / o r embodied in machines, a n d / o r as automatic by-product of production (i.e. 'learning by doing'). Other writers in this tradition include Freeman, Nelson and Porter, and the Aalborg authors also acknowledge the earlier work of List, Veblen and Schumpeter. Unlike many other contribu-
tions, the Aalborg book is organised along thematic rather than national lines. It has a number of theoretical chapters that compare analytical approaches from a variety of traditions, particularly neo-classical with Schumpeterian-evolutionary. Considerable emphases is given to institutions and interactions between them, with chapters on institutional learning, producer-user interactions, work organisation, industrial networks, fnancial systems, formal scientific and technological institutions, and public policy. It is also recognised that national innovation systems, although distinct, are integrated within an international economic system, so there are chapters on export specialisation and structural competitiveness, and on the role of multinational firms. The authors naturally base a good part of their empirical analysis on the Scandinavian experience. But like all good Scandinavians, they are thoroughly professional and internationally aware in their approach, with a higher proportion of references to foreign sources than is normally found in contributions from larger European countries, or (even less) from the USA. The book is therefore an invaluable reference document for those working in the field, whether analysts or policy-makers. It should also be made compulsory reading for all economists interested in the economics of technical change in general, and the 'new growth theories' in particular. For the authors show that technological knowledge is most often not generally available and codified information, but tacit knowledge accumulated through deliberate learning, that interfirm trust contributes to such learning, and that institutions and competencies are just as important as incentive structures for its development. Keith Pavitt
University of Sussex Brighton, UK SSDI 0048-7333(93)00759-M
Daniele Archibugi and Mario Pianta, The Technological Specialization of Advanced Countries; A
Book reviews Report to the E E C on International Science and Technology Activities (Kluwer, Dordrecht, Neth-
erlands, 1992) xvi + 164 pp. 0792317505.
£48.00,
ISBN
In what was originally a report to the EEC on the composition of international scientific and technological activities, Archibugi and Pianta have investigated the determinants and direction of the technological specialization of advanced countries. The purpose of the report is to describe and analyse international differences in the volume and pattern of technological activities, focusing on sectoral specialization and its relationship with international competitiveness; while discussing the way in which the sectoral strengths and weaknesses of individual countries have been changed over time. The likely direction of future development, including a commentary on technology policy, is also suggested. To investigate these issues Archibugi and Pianta assess the relationship between national systems of innovation (using science and technology (S and T) indicators) and national patterns of sectoral specialization. Economists working on 'national systems of innovation' have suggested that innovation is location- or country-specific, as each country's pattern of activity is related to its own institutional structure [5,6]. This local or national aspect of technological innovation complements the new wider view of technology, where concern is directed to the tacit element of technology, which is non-tradable (irrespective of how well markets work) and hence incorporates distinctive local elements, as it is created only through the internal learning process in each firm and country [2]. However, when aiming to define quantitative indicators to explore the characteristics of S and T, the conventional public aspects and reflections of technology, i.e. research and development (R and D) expenditure, patents and scientific publications, must be used for measurement purposes. The report is distinctive in its novel method of collecting together patent data from no less than five patent offices (the US, Japan, France, former West Germany and the European Patent Office), whereby Archibugi and Pianta are able to adjust
321
their international comparisons for the different propensity to patent in domestic and foreign markets, making the data more easily comparable and the results more reliable. The indicators used show that R and D, technical progress and its diffusion, as well as open dialogues in the sciences are increasingly becoming critical for economic prosperity and industrial competitiveness, and the key role played by firms and institutions is a crucial part of this process. During the 1980s the propensity to appropriate benefits from innovations on a global scale has been growing at a faster rate than the resources devoted to R and D, as indicated by the faster growth of patents obtained in foreign markets compared with domestic markets, international cooperation in research projects and the co-authorship of scientific papers. The report documents convergence of the absolute level of aggregate S and T activities in the advanced countries, while the relative position of countries in disaggregated fields is marked by a growing divergence and specialization. These findings suggest that each country has developed a distinct model of specialization of its own, where most countries appear at the technological frontier in certain selected fields in which they are relatively most specialized which in turn suggests a major change from the post-war US technological leadership, such that now the catching up process of the European countries and Japan does not follow and replicate the US pattern of sectoral strengths. An inverse relationship between national technological size and the degree in specialization in technology emerges, as only large countries can afford to spread their activities across most technological fields. Therefore, smaller countries like most of those in Europe concentrate their efforts in fewer sectors, and their sectors of strength differ from country to country, resulting in a very high technological heterogeneity. Given that the probabilities of adoption of a certain kind of technology are influenced by past decisions which constrain the limits of existing technological choices illustrating the path-dependent process of technical change at the national level [4], smaller countries like those of Europe
322
Book reviews
become more easily 'locked in' to a particular path of technological change as they have to specialize more than do larger nations. This cumulative and path-dependent nature of technological change potentially endangers Europe's long term competitiveness, as the report also describes the quality of each country's specialization, showing that whereas Japanese firms have their comparative advantage in sectors in which technological activity is growing fastest (pervasive technologies), the sectoral strengths of European countries (on the contrary) are often found in declining classes. However, concerning the impact of technological specialization on national performance, the analysis concludes that a faster growth of patenting activities and industrial production is associated with higher degrees of technological specialization regardless of the particular sectors in which individual countries concentrate their efforts, suggesting that for advanced countries being specialized in itself appears even more important than choosing the 'right' fields. Similar estimations have been made using bibliometric indicators to assess the extent of sectoral specialization in the sciences, but this does not appear to be as significant as technological specialization. In Europe and the US university and industrial research have been closely intertwined, but not all scientific fields can be directly applied for industrial purposes (e.g. the sizable US defence R and D has not been associated with very much technological advance). These findings certainly give policymakers something to think about. International cooperation and technology policies must be implemented and national innovation systems must be adjusted so that potential payoffs from innova-
tions become greater. Given Europe's heterogeneity (both in the specialization of activities and the level of development) the region has a greater potential to promote joint learning processes. Often scientific institutions or government policies can shape scientific efforts into fields that are more closely related to economic or technological activities. The latter may have contributed to the success of Japan [1,3].
References [1] J.A. Cantwell, 1992. Japan's industrial competitiveness and the technological capabilities of leading Japanese firms. In: Arrison, Bergsten, Graham and Harris (Editors), Japan's Growing Technological Capability: Implications for the US Economy. US National Academy Press, Washington, DC, pp. 165-188. [2] J.A. Cantwell, 1993. Transnational Corporations and Innovatory Activity. Routledge, London (in press). [3] C. Freeman, 1988. Japan: A new system of innovation. In: G. Dosi, C. Freeman, R.R. Nelson, G. Silverberg and L.L. Soete (Editors), Technical Change and Economic Theory. Pinter Publishers. [4] J.A. Cantwell, 1991. Historical trends in international patterns of technological innovation. In: J. Foreman-Peck (Editor), New Perspectives on the Late I/ictorian Economy: Essays in Quantitative Economic History 1890 - 1914. Cambridge University Press, Cambridge, pp. 37-72. [5] B.-,~. Lundvall, 1992. National Systems of Innovation; Towards a Theory of Innovation and Interactive Learning. Pinter Publishers. [6] R.R. Nelson, 1992. National innovation systems; a retrospective on a study. Industrial and Corporate Change, 1(2): 347-374. Hanne Birgitte Andersen Department of Economics University of Reading, UK SSDI 0 0 4 8 - 7 3 3 3 ( 9 3 ) 0 0 7 6 1 - H
Book reviews
systematic treatment of the nature of technologies is largely absent from Doheny-Farina's discussion and this seems to me largely consistent with his definition of reality. I wish to stress my initial statement that the book is an important contribution to the debate on the nature of technological processes. My comments are intended more as a challenge to the rhetorical approach to go further rather than to diminish the value of its considerable insight. The book is likely to prove a very useful addition to the curriculum of technology studies courses. Alfonso H. Molina
University of Edinburgh, Edinburgh, UK SSDI 0048-7333(93)00758-L
Bengt-Ake Lundvall (Editor), National Systems of Innovation: towards a Theory of Innovation and Interactive Learning (Pinter, London, 1992) pp. 317, £45 (hardbook) ISBN 1-85567-063-1. Dr. Lundvall and his colleagues at Aalborg University in Denmark are to be congratulated for writing and publishing this collection of papers. They both reflect the research results generated by the IKE Group over the past 10 or more years, and make a major contribution to the growing literature on national systems of innovation. This literature appears to have two objectives. The first is to describe, compare and analyse the national institutions, competencies and incentive structures that generate and diffuse the technological knowledge that is essential for economic growth. The second is to develop a theory of technical change that goes beyond the wellestablished, but empirically unsatisfactory, notions that technical gets generated and applied as codified information, a n d / o r embodied in machines, a n d / o r as automatic by-product of production (i.e. 'learning by doing'). Other writers in this tradition include Freeman, Nelson and Porter, and the Aalborg authors also acknowledge the earlier work of List, Veblen and Schumpeter. Unlike many other contribu-
tions, the Aalborg book is organised along thematic rather than national lines. It has a number of theoretical chapters that compare analytical approaches from a variety of traditions, particularly neo-classical with Schumpeterian-evolutionary. Considerable emphases is given to institutions and interactions between them, with chapters on institutional learning, producer-user interactions, work organisation, industrial networks, fnancial systems, formal scientific and technological institutions, and public policy. It is also recognised that national innovation systems, although distinct, are integrated within an international economic system, so there are chapters on export specialisation and structural competitiveness, and on the role of multinational firms. The authors naturally base a good part of their empirical analysis on the Scandinavian experience. But like all good Scandinavians, they are thoroughly professional and internationally aware in their approach, with a higher proportion of references to foreign sources than is normally found in contributions from larger European countries, or (even less) from the USA. The book is therefore an invaluable reference document for those working in the field, whether analysts or policy-makers. It should also be made compulsory reading for all economists interested in the economics of technical change in general, and the 'new growth theories' in particular. For the authors show that technological knowledge is most often not generally available and codified information, but tacit knowledge accumulated through deliberate learning, that interfirm trust contributes to such learning, and that institutions and competencies are just as important as incentive structures for its development. Keith Pavitt
University of Sussex Brighton, UK SSDI 0048-7333(93)00759-M
Daniele Archibugi and Mario Pianta, The Technological Specialization of Advanced Countries; A
Book reviews Report to the E E C on International Science and Technology Activities (Kluwer, Dordrecht, Neth-
erlands, 1992) xvi + 164 pp. 0792317505.
£48.00,
ISBN
In what was originally a report to the EEC on the composition of international scientific and technological activities, Archibugi and Pianta have investigated the determinants and direction of the technological specialization of advanced countries. The purpose of the report is to describe and analyse international differences in the volume and pattern of technological activities, focusing on sectoral specialization and its relationship with international competitiveness; while discussing the way in which the sectoral strengths and weaknesses of individual countries have been changed over time. The likely direction of future development, including a commentary on technology policy, is also suggested. To investigate these issues Archibugi and Pianta assess the relationship between national systems of innovation (using science and technology (S and T) indicators) and national patterns of sectoral specialization. Economists working on 'national systems of innovation' have suggested that innovation is location- or country-specific, as each country's pattern of activity is related to its own institutional structure [5,6]. This local or national aspect of technological innovation complements the new wider view of technology, where concern is directed to the tacit element of technology, which is non-tradable (irrespective of how well markets work) and hence incorporates distinctive local elements, as it is created only through the internal learning process in each firm and country [2]. However, when aiming to define quantitative indicators to explore the characteristics of S and T, the conventional public aspects and reflections of technology, i.e. research and development (R and D) expenditure, patents and scientific publications, must be used for measurement purposes. The report is distinctive in its novel method of collecting together patent data from no less than five patent offices (the US, Japan, France, former West Germany and the European Patent Office), whereby Archibugi and Pianta are able to adjust
321
their international comparisons for the different propensity to patent in domestic and foreign markets, making the data more easily comparable and the results more reliable. The indicators used show that R and D, technical progress and its diffusion, as well as open dialogues in the sciences are increasingly becoming critical for economic prosperity and industrial competitiveness, and the key role played by firms and institutions is a crucial part of this process. During the 1980s the propensity to appropriate benefits from innovations on a global scale has been growing at a faster rate than the resources devoted to R and D, as indicated by the faster growth of patents obtained in foreign markets compared with domestic markets, international cooperation in research projects and the co-authorship of scientific papers. The report documents convergence of the absolute level of aggregate S and T activities in the advanced countries, while the relative position of countries in disaggregated fields is marked by a growing divergence and specialization. These findings suggest that each country has developed a distinct model of specialization of its own, where most countries appear at the technological frontier in certain selected fields in which they are relatively most specialized which in turn suggests a major change from the post-war US technological leadership, such that now the catching up process of the European countries and Japan does not follow and replicate the US pattern of sectoral strengths. An inverse relationship between national technological size and the degree in specialization in technology emerges, as only large countries can afford to spread their activities across most technological fields. Therefore, smaller countries like most of those in Europe concentrate their efforts in fewer sectors, and their sectors of strength differ from country to country, resulting in a very high technological heterogeneity. Given that the probabilities of adoption of a certain kind of technology are influenced by past decisions which constrain the limits of existing technological choices illustrating the path-dependent process of technical change at the national level [4], smaller countries like those of Europe
322
Book reviews
become more easily 'locked in' to a particular path of technological change as they have to specialize more than do larger nations. This cumulative and path-dependent nature of technological change potentially endangers Europe's long term competitiveness, as the report also describes the quality of each country's specialization, showing that whereas Japanese firms have their comparative advantage in sectors in which technological activity is growing fastest (pervasive technologies), the sectoral strengths of European countries (on the contrary) are often found in declining classes. However, concerning the impact of technological specialization on national performance, the analysis concludes that a faster growth of patenting activities and industrial production is associated with higher degrees of technological specialization regardless of the particular sectors in which individual countries concentrate their efforts, suggesting that for advanced countries being specialized in itself appears even more important than choosing the 'right' fields. Similar estimations have been made using bibliometric indicators to assess the extent of sectoral specialization in the sciences, but this does not appear to be as significant as technological specialization. In Europe and the US university and industrial research have been closely intertwined, but not all scientific fields can be directly applied for industrial purposes (e.g. the sizable US defence R and D has not been associated with very much technological advance). These findings certainly give policymakers something to think about. International cooperation and technology policies must be implemented and national innovation systems must be adjusted so that potential payoffs from innova-
tions become greater. Given Europe's heterogeneity (both in the specialization of activities and the level of development) the region has a greater potential to promote joint learning processes. Often scientific institutions or government policies can shape scientific efforts into fields that are more closely related to economic or technological activities. The latter may have contributed to the success of Japan [1,3].
References [1] J.A. Cantwell, 1992. Japan's industrial competitiveness and the technological capabilities of leading Japanese firms. In: Arrison, Bergsten, Graham and Harris (Editors), Japan's Growing Technological Capability: Implications for the US Economy. US National Academy Press, Washington, DC, pp. 165-188. [2] J.A. Cantwell, 1993. Transnational Corporations and Innovatory Activity. Routledge, London (in press). [3] C. Freeman, 1988. Japan: A new system of innovation. In: G. Dosi, C. Freeman, R.R. Nelson, G. Silverberg and L.L. Soete (Editors), Technical Change and Economic Theory. Pinter Publishers. [4] J.A. Cantwell, 1991. Historical trends in international patterns of technological innovation. In: J. Foreman-Peck (Editor), New Perspectives on the Late I/ictorian Economy: Essays in Quantitative Economic History 1890 - 1914. Cambridge University Press, Cambridge, pp. 37-72. [5] B.-,~. Lundvall, 1992. National Systems of Innovation; Towards a Theory of Innovation and Interactive Learning. Pinter Publishers. [6] R.R. Nelson, 1992. National innovation systems; a retrospective on a study. Industrial and Corporate Change, 1(2): 347-374. Hanne Birgitte Andersen Department of Economics University of Reading, UK SSDI 0 0 4 8 - 7 3 3 3 ( 9 3 ) 0 0 7 6 1 - H