|Concern about U.S. competitiveness and jobs
has risen to the fore in recent years in the face
of technical innovation by foreign firms and the
continuing shift of jobs overseas by U.S. multinationals.
Toyota has replaced GM as the number one automaker
in the world and Samsung is a rising star in electronics.
Electronics companies such as Hewlett-Packard
and Dell have outsourced product development jobs
as well as production jobs offshore in order to
be cost competitive.
the 1960’s and 1970’s much of the concern focused
on U.S. multinational firms’ investment in offshore
production facilities. In the 1980’s and early
1990’s, there was concern about the growth of
foreign competitors in industries such as autos
and semiconductors, whose innovative performance
and high-quality products threatened the viability
of U.S. firms and industries. A more recent
wave of concern over U.S. competitive prospects
in the 21st century combines both elements.
Recognizing that the debate over the international
transfer of technological and innovative capabilities
and potential loss of U.S. competitiveness is
a long running one, the Science, Technology
and Economic Policy (STEP) Board of the National
Academies undertook a study in 2006-07 of the
changes in the structure of the innovation process
that are associated with shifting perceptions
of the competitive outlook for U.S. firms and
domestic employment, especially in professional
and engineering occupations.
In this collection, the STEP Board examined
ten industries, including: personal computers,
software, semiconductors, flat panel displays,
lighting, pharmaceuticals, biotechnology, logistics,
venture capital and financial services. Jason
Dedrick and Ken Kraemer
were invited to participate in the National
Academy Study, which has just appeared in book
form from the National Academy of Sciences Press.
They conclude that although production jobs
and some product development jobs have been
lost through offshoring, on balance offshoring
has allowed U.S. firms to lead the industry
with around 41% share of the global market and
the bulk of the higher wage jobs in innovation,
design, sales and marketing and distribution.
The following is a summary of the “Personal
Computing” industry study by Jason Dedrick and
“The personal computer (PC) industry now operates
as a global network of independent suppliers
of systems, components, peripherals and software.
Although the pace of innovation in the industry
is rapid, its character now is largely incremental
because of the dominance of the “Wintel” PC
architectural standard. One important future
challenge is the integration of the PC with
the proliferating array of consumer devices
that “orbit the user” and provide computing
and communication capability (e.g., PDAs, phones,
The global division of innovation-related activities
within the industry is characterized as follows:
component-level R & D (concept design and
product planning) is performed in the United
States and Japan; applied R & D and development
of new platforms (particularly notebook computers)
take place in Taiwan; and product development
for mature products (mainly desktop computers)
and a majority of production and sustaining
engineering are performed in China.
U.S. PC firms have benefited from the international
division of labor in innovation that has supported
rapid innovation and quicker integration of
new technologies into new products. The growing
demand for smaller, more mobile products plays
to U.S. firms’ strengths in product architecture
and early stage development. The shift in production
activities away from the United States has pulled
new product development activities to Asia,
but design jobs, which are relatively few in
number, are expected to remain largely in the
The study also discusses what has and has not
changed since 1990, and policy issues and challenges.
A copy of the book can be found here.