Technology and the rise and fall of Nations Y376 International Political Economy April 4, 2012 Michael Lee
Summary Why do economies grow (or fail to grow)? Historical patterns Why do some countries innovate while others do not? Why did America lead the Fordist revolution Why did America lead the ICT revolution? What is the next big thing?
Discuss “Computer chips, potato chips. What does it matter? They’re all chips!” Does it matter which industries the US is successful in?
Types of economic growth Smithian Division of labor Solovian Diminishing returns to capital convergence Schumpeterian Endogenous growth theory Process vs. product Geopolitical implications
Discussion Why did Britain decline in the 20th century? Why did the Soviet Union fail to catch the US? Japan? Do the same forces threaten American leadership?
Soviet and US GDP per capita, 1946- 2006
Relative production of high-tech goods, 1830-2007
Relative ownership of global foreign investment assets, 1829-2007
Past technological revolutionsTechnology Period Leading country CrisisTextiles, pig iron 1771 Britain Canal maniaSteam and 1829 Britain USA Railway maniaRailroadsSteel, electricity 1875 Britain Baring crisis ofand heavy USA/Germany 1890engineeringOil and mass 1908 USA Great DepressionproductionInformation and 1971 USA Dot com bust andtelecommunicati crisis of 2008ons
What kinds of things facilitate high tech growth? Property rights Access to capital Education (elite vs. median) Tax/subsidy policy Leading cities Catch-up vs. leadership Political cohesion
Some plausible drivers of growth don’t hold up (researchers/1000 people, OECD countries)
Competitiveness in Important industries historically Synthetic dye Aniline red Copyright rules Automobiles Mass production Engineering vs. pure research ICT Venture capitalism Hardware vs. software
Global synthetic dye population, 1857-1914
Motor vehicle production, 1930-1990
ICT value-added, 1985-2007
Question What is the next “big thing”? Who will get there first?