ows-asnsas 34m O1mAs Pergamon Mew Ls Wools Devtopment, Vol 1, MO. Printed in Gren Drain Microelectronics, Long Waves and World Structural Change: New Perspectives for Developing Countries CARLOTA PERE? Science Policy Research Unit University of Sussex, Brighton, UK INTRODUCTION inuitwionst teamework, on internation leveh, Fntitutonst tanstorntions re of ceimenic eve ‘At present the prospects for developing coum: lies seem hake Ine imostitized wor sortie spats ie wive hy thas detoned fre a the toe nieve he fmt Wanation fromm one moe wt “Ths, coined sa tedueton is Unbearable pressures un weik debtidden cc homies. At dhe sate tint, the ekeronics revel tion seem to have widened te technological ps) te unbreachable. proportions “Ts rice wil preset will Segue that the world is expetioncing. bis. during which, ia spite of ‘obsiovs abificuies,tnete would be prester ~~ father than lesser — scope for x tajor postive haze in-development prospects. ig based. ent wmeabat interpretation of the seed Reanutatiey lang sven ©The explosion prop ‘ved het forthe reeutvence of eyes srt yest aration in econoruie prov. stibutes enteal role to. the uilfosion of successive {echnologieal revolutions, representing {ues junsp in potent fo the econ. The reson fo Pattern wld be thats to yield i tlt vost the rng cesta Epes tows, is pulling “Te presen peti i seen ss ne such tans ited to thc ba fh ha um sere. Te ed buat mo ke the ta fl institutional aerangemcnsy sh tarstcrsion — feat — of # constellation ut Fecinalogies bised 0 Cepable of ffl sod aor ‘sth neve system of fesile technologies, sed fn fowcost cect Schumpeter" st etespabtins I ‘or Trom the Turbulent prevent are mniesdng I Sn when new using. ucaned n the Std econoany it fliely to be feared By set ‘of nations sd interatin nsiutons, wh Sheffer at such from thane of the St he Delle Epp” the tra the ‘The Economies of hinovation wa WORLD DEVELOPMENT: ly the period of ercation wf thwe future cond tions and thst all socal actos. including the deseloping countries. can and should take an ommplex — and hviusly ‘cf ridden — uiaandernoe puncess. ‘To unveriake mis task successfully however it is essenia to emily the new range of the posible, The deeper the understanding of the Pteniaities nd timtaion ofthese “tee conomie paradignn the pester the scape for i effectively through Aid ont ssn ‘Secon 2 of thin ‘concept twill Hnteuce the Techninesahonie. parulnn an outline ofthe tong weave gun This Mioretiea ramesork int necessity pee= ‘or ye relevance of the Section } undertakes the features othe presen Atitisingecrycectrs en srt ay Ime steatepis. Sel Tn the press whole the atil je itemded 9 food for ‘The reader will Hind ew faites: fefeserces will be sparse, thovgh hundreds could tre yen: examples will Ye provided ony hen ley seem inuisncrsable Ig ilustate nid father than to prove i. This is fly lntemion “The paper is canecived mainly 383 comiiation for opening new paths in development thinking. As the. argument evaives, Hill heonne Te ‘ecanngly lear thal we ave mahing seine Sctining the present petiad st Hive for tte foraned epeevtition ani baht experimentation, 2. TECHNOLOGY AND LONG Waves, Conventions wim tenis 28 mutes fo selena sa emerges a ‘roltian gyn series wt individ nvenons fesuling in cninvuns. cumulative advances forthennore. most peop tnd I easter to Mk of technologies in the plural, in view of the tremendous vatety. Vek since tcehnslogy Tw and the "what pratense et pnees of techy Enowtedge ‘snd ventions = enplatinn and ihnion of spi techies in ihe productive sphere — i very inc eee, inet by sia eon Eee tics Th ccs eanpe enn Even the autonomy of he wscaich ‘nly relive. an econ eters ate mpi Bredent inthe minds of acientst nd engineers ‘The object bas alwys been ts turn ane met into gold ond othe tevene. So. ash 9 rea propostion of basi siene>fendgem Fvided, applications and Weveopment ctr ‘shite si eeping eriin vx urtetsutonome, ‘ue mach moe divcetly engaged i he inter y ‘8 supply pos and ean ‘the ecanomie sphere “The reudiness to atworh technology varies grestly ne dif nie conditions. even in the sine Sts of technical sols sought inthe eon spheve can change in aie dcpemtiag on iy of intemal an exer facts affecting Fovlctiviy.proiaiy snd onnkes, tn ree {eeades, much soci science research hes fr used on the nature of this fechno-ccommie interaction, On general evel snnnecions have teen lite y ther impact on produit towhether they are mainly bor soni on epi saving!" by thelr iclaive imoortance, ein suishing rica fem Incrsmenta ination Sind by ier abject either proses or duc? Otter elfons ave focused on the palermo evoltion of ech pret ination lenin to ihe notion of technologtea iajectotes the ‘concept isused to deseribe the pth rom beth to mato of any pater tetlogy. om the Fncrllyawhwatd fs nixon falloweu By the ideniteaton of ane botencel ser sani binging forth complementary” Inventions, eptiniation an ht Process ot pit al eons bing dmishing re ime. the lve of pl cult tecotypel procen, iL iy subjected succes improvements through additional fncesiment. wou then pes fot the °S" shape of any biog eth ocestes “This proving body of incteasngy clear th tech change dyes not secur at an even shytin Bat nite i meely ara process. Faster i ihe analysis of the pattern of prpspition a new schtnies scyrs the ecnshmy tends can Sump Feaging 0 th achieve byt ature as mae i review about the banching of inaestions nd {hte dffsion in hawsgon fs. thaw en found. for example, that dining certain periods process innovations tend ytrig. pred Innovations in mest iadestin The sugges Hat innovations ta eqsipmnenl gnide secu in068 The Ecosonies of lava iss ree LONG WAVES AND WORLD STRUCTURAL CHANGE “a lane eyces in ecomie grit tis conte (ChistopierFreernan has itoiuced the ante ew ie i yatem, te desc cas tovzationdl inneatons.lesing ny sof the eeunnny. Takang We sect say fom th fis nttoducton of sng in tions ind focusing am thei rate twill i five com Hg het asp seit conneyorncey ould wade the code ee hong ee There su Hike 40 fse the concepts of technolugal ajecorks sed techie sy temwand take them one stp farther We wee thar tse notin sve spl to the anys tthe mile houy of technology diag cle lant periods. We prpese that i pose to idonufy cach successive Rendstiee save ih the deployment af apeiialtperenis technologie revolution. In olhor sds. Tet Schind the apparent ffm variety of tech Aoliies of enh longwave upsving. Tete Aisin set of cepted “conumunsene” enc esc shich define» broad technological tr {ory towaniy agence bet pecie™ fn “These pvincipes ste align the eencaton ef xtion an inthe nganation production is'one frm sir wouter, tn one bach her nother. within and sere coum Aa ths focen» of propagation exoles, thee sp Angst perod of economic growth, Bed {chavely hgh profits and incre oy ir. Dur, grolgs nie tang ol pation ‘nore or eos fully covered nd hen. tug Secesive incrementak imprest, the be Practice fromfer actualy proached, the Forces undesying tat ave of in tes As this ocr imi gro icred by more and more sectors of frothy decease and producty growth sows sow ve «Yeh well before the downswing i sible ws snersh phenomenon. diminishing ‘eto e Experienced by some of the most dynam Kies Sectors. Among them. here casice 3 com plex tiakand-eror process spurred by the prot Motive, rcsults in woven of mergers rd Dequsiions various forma o pelt. to'stett ihe teebroges by containing I Ceuts or eiesting. Dut alain pes ily profitable, This flensified feedhockInterae tion’ between the technological and econaine spheres, eventually Teuds — through dseovery 3d rediscovery — to the gadusemergence and subsequent ean development of ne tecnica Clements As these prove capable of exereoming {he specie huttenecks eacrnintered sin the mature. techoohagis, nutans. and forther Innovation along those Hines, gradually converge Symes oso in detincs gence uel oon Enel now nade fase “The dinemowing ut cach fang wave set athe puscess of sharonmeat of the exasted yl fd the int wae ne (2) Atectaroec wai paragon ase eonmunsense pe liner far tech atl Tiveatmcatdeiions ‘Technological decisions ate taken in a specific socioseumumic context sin util ae th ‘context. Eeanomic tory seul hase us elen st managers Take into accognt the tclative forces ant justo Labor nd capital im eenerl bot of cach posible combination of differen types of Tabor. of wiferent snes of sipmacet and nf allereat sons of tap. for 3 tamge of msec products, Ut, mds th wrk fa racic? ‘We suggest that the behaving wf the rtaive cost srucne ofall pats prsclon felis fore o ex preictsble tens oe rete tog. petiods. This predicibuity Becomes the Bats {he eomsteocinn of im ieal typeof praductise ‘ganization, which defines the cantor 3 the Imunt elie nd “Kas ext combina far 3 fven period, I thus serve a poner ate hunt guide for investnent and technogiea Uceisions. That general eilhne mode i the echmo-cconemie paraligh.” Ast pencralzes introduces stray. hist, bath Acad nd Creanieatonal inmdvation. Eventuly the range Of choice in technique ssf contined within {latvcly areow specttum. the soppy ‘Capital eyuipmen increasing embies the new Fuincipcs. Furthervore, for cach type ot peo uct expected productivity levels. opm sales fi rebaive prices scum gradually established together wih the forms of canypeliion in exe smirk. “The proces ean te set 5 anaagns 19 the appearance of anew gett pox which coins the Hoepuiat fur 7 pveal viely gan, i hee ton Bybvihestivn tlon-brceding,eveluijon and ese entra increasingly sivivas stlvantages incitaly Us tine H to teamsotey swat an sulsate aang The Economies of banovation 6) us WORLD DEVELOPMENT the old species’ and create & new “eco-system.” “The focusing device at main erganiing pin- ciple of thn secetive mec would be 3 Darlcuie ingot oF set of inputs. capable vonglyinlacacing the behavior of the rela {Ipelely perceived Tow aed descening — relative cot, {Gynpatenty lites soppy al pra fal purposes. {G) herve potential forall perasive in tee in the productive sphere. and AA) generally recognized capi, based on ‘seh of interwoven technical and organi ‘change the quality of eapitalequipme’ and products ‘This conjunction of characteristics holds today for microelectronics. For this reason. i is ine ‘essingly steering both engineering and manage Fis common sense wards is atemsive use and friday shaping the new "best pusetie” Frontier for eld and new indsres I held unl recently gether i fnergysntensive materials. which underly bow exhausted mse production paradigm ofthe [postwar upscing. Inthe previous lng wave. at the torn of the eentuty. the role of "Rey factor tos ployed by lowecoet tee. spog the prowah ofthe Neany mechanical, eletieal and eemiad engineering industries. The Vielorian boom the mith century (the “taiway age) hed sand stetnponered transportation reed that in the ren poring i taura. none of hee np ates new in echnical rs. Exc ho a peo tory ar deenpmert within the presous poten Sd even frfer sf the pt Te ly ne spe enh cove fe the dante tedselon ih icine cost whi gener anocsted ih 3 {ecngater ogonatonl bedtbrourh And thee beathvoups are more ty Yo oct — oro be fly ots. eaploted and. widely Stoled when the st ecinotois bed ite prevaing hey Toston hn ethane ts otc for fortes tcressng producti. ut a fsedged tecinoecoromie ptaign pons in conpichty an coherence, ging ES chimest change sa siceing. snot etry pel ofthe rene sper The hl Stimleion once eaataed == ivaive "iy Nee cones of elcenyfor he oni Sion of prodection atthe pan evel (2) A new model for the mamigement smd ‘reanization of the fam. {AA distncly lower akor input pet wit fulputs with v.dilerem still protte Employment. | (AVA strong bis in technologie ianuvation, {avoring hey factor use : {S}A new patien o invests, favoring hey | Fecior relied sectors. plopeling und. prep: flied by invest in ne ifeteuctorad network. {61 eanseqent bis in the compeniton of frouction, with faster estes of gramh in ey factor telaied product. maf opal scales Iading wo ‘ot praction between large tnd smal (Anew pattern inthe geographic tcation Df invesiment, based on ihe shila compara: tive advantages {and disadvantages) (9) A testcwuing of intesbranch’ velo + ionships where those Branches thst produce fr intensively use the key factor. become the nese engines of giowth and generate & new ange of “induced activites, hich generally froiferate in Bandwagon fasion. once the Upswing begs. To pve 5 rough ilustaton of these tlemtens, let_us Took. at the. now exh fechno-economie paradigm. It came together in The 1920s and 1980s and underlay the presen mode of ow esiablished after World War I Tivos based on low cost ol ad energy intensive | Iateias- especially pelrocherieas. The mode! {or ecient productive ovpavieation at the plant level was. the caninuoos flow process ev tsvembly ie forthe mass prodveton of iden fal producis, The ideal typeof fm was the} Corporation un by 9 separate, potessions. nogeril and. admiivative hierarchy: fed inshouse RED and operated in oligopoly i markets. Growth was led by giant ol chem fils, tutomobile and other mass producer, SSurable goods for the defense Or consum markets The growih and interplay of these core tranches, indeed the proliferation of the service, sector {ram gasoline sations und supermarkets) fo the advertising Indusry and the diversified Tinancil setor). 38 well 35 the growth of the constriction indsty. I demanded increasing amounts of middle eange specialization in both, tues and white-collar sis. It benefited (con! cconamies of agplomertion and required an Cyerenpanding highway network, together ith bi and electric Wstributionspters ore Iensive production, vamparation and. He styles. “Today. with cheap miciocletonien widely468 The Economics LONG WAVES AND WORLL ie (logether with the consequent faw-cust ‘oF inforsation handliog). a new texte ‘economic parade is coining together und IV ro longer “eemmmon sense" faowexpensive! catly seventies. bvings together minageme Noun amma ny ove ae oe sted stent (a proces ee ght es finch ton turning oat a MATBC output Iwelersblyinfaroition intensive. raphy ching: Ing produc and serves. Growin woul pre Snahiy he ted hy the cleanin snd ifn tan sector, propeling and. propel by an reneompassing tclecommniations ina Sructure. which would bring sen To negigie Tevels the cost of ices for provucers ond consumers slike. The sil profil ends tn change {eam meinly middle tinge to ineremingly igh Sind ow range questions, snd Irons mace Specialization fo broader and melipurpose base Shils for information haling. Diversity an Mesiblity ata evel subttote vnitormity nc fepotiiveness 25 ‘common-seme’ bos pr DDut why the erin? Why can the productive syatenr nol make a asioath Watson Tom ene psig tothe other? (0) Long wove recesions at she munifettion of “mite eween the sci inatona framework onde velino-econaniesphere The ttamsition to. new techno-ecomonic regime cunmot proceed smoothly. not only be- ‘ase implies maesve Wanstornstion si mich Sestruction of existing plies. but mainly heeause the prea cexisling institutional Stound the requirements and possibilities created by ihe previous paratigen. That is why. a8 the polenlial of the hd paratigm is exhausted previously succesful regulating oF simulating Policies Uo ot work. fn fuente rive ines fe scloiasilutional framework becomes 3m fll Uepoyorent the very ot Fnsermounable obstacle for of the sew patadigan, Worse i Sitosion of he new technologies. 3s ‘condition allow, is self an aggravating f beause the new investment patern distupts he social brie aed creates unexpected 103s farrenis and counterends ip all markets Under these condiions. Tong wave recessions nd depressions ean be seen as he syndrome of 3 Scout "nsmateh” between the socio- tutional amewerk and the new dynamics fn the techna-cconamie sphere, The ess i the f Innovation 10 STRUCTURAL CHANGE us emergency sign calling for 3 tedefstion feneral mode of geet ‘AU the migra Teel when numerical cone oF computer technology i setewuced 49s hem previusly working ih cl ology it mot possible Droduciity increase without Schole organiation rst the hat the pent ad the oe aed e tonne interniton. hiew techmereconomie potadign tends Ser the hulk of patton shi society ih Sl mot yic it Tl grou potenti an the ocioumsittions frameworks tramseraed Wo ‘spr toy tequitennens “This would indiente thal eur “ecosystem ans ogy han at fandsnsentat tation, While tote it he external ensionment tht fre The adaptation ofthe living specie: in eeunomie ecelapments it guid be the environment Tha feshupe ts tre penta the new genet pout, Yet taut Be emphasized that in spe of Epncsrances, we ite not raking arguement fe iee technologies! delceminiom. The variety of fable envinnments f quite large. and what ‘ever specie form fs the wie ange of sable upton: avin he im which the ial ‘devstops throughs SHcedhack” Selective scion and gradual eat adjustment ‘So. when the downing of lone wave occurs, the ew tecne-ecanoriie paradigm 19 Shih institution man respond i alte dil ing. Weanically, iis precisely then the seeds of thaoge ate Being ssn around pesk prosper that snatitations become mate ot Tics that seem to has tnrclemling grosth, This is hyo spatially ico te bring about the reyuited. profound Transformations. Mult mre sa'in viet af the (Get that this iertia bs abo upheld By powerful vested interest Historically. when the required structural tnanslormations hove nil heen bros at rig he mew fo | ee iheaod unlesnhing te upswing. they have Fencrlly flected the following. among many biker, sepects of socel {1} The specie fore of wpetaton and fepulation of the varieus marke (pic Tabor. capital, money) wa the national ad international levels (2) The organization ofthe banking und eet syaters, {0} The relative proportions snd character of fullic and private Fespasiiy im gener The Economies of Innovation 469 4 ‘WORLD DEVELOPMERT tion, d sttbution and tedistibution of ns come. well-ap the conesponding socal range nents (4 The ferns of organization of workers imsjor lattes grap together withthe Tega th iis quaity, vol tin the type a nations in chug ot (6) The comitons wide wich invention are Feherated, protected aad Wied {0)'The iniernationa division of production Seely the meat for rspuliting infer coun Trade und fnvesnint (2) The international relative pace alsnee find the serangements Tor motntsining inthe economy. atone Reyncsiin Pincifes. "eas necessary to fester the. full Aeployment a the eibbased mune pusdution ptadigm. A’conplex sel of demand manige: tert mechanisms wos estaMished, fam the mist direc. such" central conta of the. money Sonply and of the evel of government spending. {othe more indirect such the expanding systems bf consumer ered and the public prosion of tina "for matheting and prodtion unions bem ‘public. service™ mad "government spn mechanisms for cediatbation of iaeame” Oa the evel, these niin arrangements ‘omplemented hy the UN wsganaation, the leading tole of the’ United States. Dretion ic IMF. the GATT, the provisional mmenicreted un ade ey he micas regulating and fostering the Mid expansion of intermitionat investment and tides (€) The contruction ofa new monte of grovel at ‘he nvtenne nfm iatenivepenceseo social ‘confrontation, erctvty ond courant Clearly. such widely ranging changes do out ‘cur all at once. ‘They. emerge erodualy Converging ins) more or. less coheren eameswork, Now do they come at ey. They require am gna simian of inventieeness im experimentation ar well compranise favors some groups to the deinen of thers is tstablishmen does nat occur wilhat social ind rational canfeonttion. So Ie eatrucion new mode af gros paced hy tnertaning, “the eigh pesition af thise who pine reasons. The me fnew framework and the specie Inv a he ‘imate autenme depen oa the esate strength fof the verious soit forces and Iie espe to develop. and implement sable innovative fespomes. Nathing. ef cause. cam tuseantee Success nor that eallapse OF devoting wor Can be avoided, ithe Tas structural est in the 19m, sent Thitd Word wos ol among the players. Most counttcs were unde canis Hot cre marginal potiie fecosomy. with no inter: 3 #resulo the previous ede ‘af etowth there vre teal posites ef iflucne Ing the course of events Tor the next upswing. Some ofthe reasons for this rlate to the worl paltalseene, bat ethers sem from the specie Imarkel expansion requirements ofthe ew tech nologies. “However, the general diceion of change sequired to accommodate 3 poticulr techn Togiel potent crite anslogeus teresting an ceceam tha to following tavoad tack. Its 8 ‘wide space for innovation in sacl organization ‘and national and international isitatons. The Proposed solutions can vary yuite wilely nd ety ailferent polities Irmewurks-con achieve High ‘rates of erowh, ‘Tho they cin bea silferen 35 fascism and. Keynesian democracy. ‘was clesy scen in the bist Ronde tray a shaugh wil somewkat cee festtions those counties hae sh encountered Timits to guowth and face the need fo Hessen the socfosinstitutionslfeamewyrk, Bul thi it mo the place 10 disease thal have “The iniportsat iden to bese in mind that what Ihuppens fa the wansiion pio Ras enoumous Aeting on theatre fhe ewig, Once ana ‘ways in which the ew lechnalogeil pt ited, Because 2 quanium utp in product i contains. song the posible conte, widespread inprovements i ving same70 The Economies of Innovation LONG WAVES AND WOWLD STRUCTURAL, CHANGE an ach transition. then. by impinge testructaring. teopens the qucain of the devel pment perspectives of the saroos extn wel es spite of the crisis and becouse of the: sins ifs Caen open new apace ny hrkingin ict he tne Ye ihm a hs heen aged saa nts ikeyein be ished neu neg wea ingot he demandes the peel it scope nd he osteo re see ech Scone potadigonAnd thi ua footie because on sc isk wo he tet the main fates he new pater of eho conte shay fan onthe rev tchwogrUtingishing hate Svs tacts of hose edt eM pag trom the more cleat ives potting be enmtruced i thi In the fllowing. section. nalysisof the msi festutes af the nee paradigm hich is griduully becoming more amd nore ‘isle and more sid more cheren 8 organic Uinvalsoosaions within firms join the leshots luster growing steuad wierocletanies fe allenpt the 3. TIIE CHARACTERISTICS OF THE ‘TECHINO-ECONOMIC PARADIGM BASED ‘ON MICROELECTRONICS In considering the specific features of the techno-cconomie paradigm whichis taking shape around micoelecronis: we shill ty to me 8 leat a eanttast a posible with those which have Characterized the masy production. ci-hsed pe {align For the sake of brevity. the anal wi belied to some of the esental features, ait svth'a substantial amount of overs ‘The Tet prt wil-snalyze hse twwands “informatinn intesiy” wont ‘modify opt -mix and investment {ermss of relive cost advantages, Te seeund Pt wil focus on the tren awards fenliny tn [Plann product nix snd in product change over fine. The tied and lst pat ofthis secon will ‘explore the new reads in fit expiration: on the ane hand. he eonespt af sfstemation and ‘onthe other he penta for dente, In the course of the uscinsign, stentin sill Be nto ome of the woes rane fat He ‘ alway in a telat 5p vate thinking smd capetientain 0) nfonmasan inensne energy mrs ‘The overriding feature Wf the new pata find iby one that ie likely 1 Mave He aed Prfund msequct “es fs the rem tows Ioreation ingen te caeeey. td in ft. “This Mens Ueety teow feneral rl Eheaper infor ion handling potential weg sould Be ele that this hn echatine cont angament. toes ot ip that raterils pies ate expel rs in ste erm. Hot tht the deste cost and rong potenti of merle! resus inn icreving tlie papa the fut Tn product engineering. ete. would he i rieney 10 teeign exting gol Wake ther smaller ess emery wi Tess tnoving pars: ane cleroniee aed mote sof sare Tp hs ead been the eae faa etety (of pucduels such 35 watches ind loch, cae Ture, cash risers, sewing snchines sid com pote themselves, but the posses are Tar rors being tally capieted he ation, sua feds tht are ta foie wih dae gon Ae tothe characterises ofthe pesious para ‘ig. might tend to be met with no ‘scviees insted. sevng ech ined omtin as amt of govad process design. hut also itera saving techniques, The: pssiliien fencrated by both computer espn and Eomputer-cunielled manutscturing. gey i ‘ontralsand emline quay contr would allows Feducton in este snd sjeca, Doth these trends, together with the reduction in sac nd pats cauy riiioned. wn ton esiiee es further testo mates eid port af product or. ss Sh puts wou tally Increase the “predicts of gesoutes” ‘New predated Serves: The st ing trend in sheer grow terms ete Msishing Of innovations snd entrepreneurs sets ning teil ron hi ent elects ‘Me Economics of lanovation a us WORLD DEVELOPMENT furry of consumer dorsbes of the present scaningpataigm, which beam a gather momen: tun inthe 1920 with suromables rd sd fcligeratoys, acquted ful ove through the 19th. an peaked tn the late Ttth wth such css" elecric am openers on cecre cng Knives. thal ener was» quest ienttbing home wets ‘energy and desipig pct fall tery yen 3 new mares dnt present tines te 3 question of detecting home cad Especially. Producer” actives tht reqalre information handling. or decbionking und designe an elecwonie product or suliare rece ling up a fumation neve ferice to open # ndw market. The inportent ining to note i thet these mew products oF Servees ae in fet relly snpleSppisfons of sheady wellknown principe so {Rau he mo. doubt am to techcal feos. Succes would depend a8 i od wilh consumes sirabes) om an adequate peseyion of rake Becotance andthe dinning cst of tapas, ‘ind new gn: Ths pene advantage of information intense ces reveated Ve fat that present the md ef recession ad sitoag infiionay” presses. she i, mont bie cated othe roducton or inteve se fof mitrctectonies ae showing tenes {romth tes andthe products ete only ones Aecissing mice, even insole teinst Asin Devious patie shill he dvsness analites ink unesualy igh prot sts Tor selects the fms tan. by low oF versifiation wl become the ages and mst Aymamie "of the next pssing. Consequery. some of he new fins in theve Scone might jo ihe ranks ofthe gam ts borsomenttncatd anism" the mature indies we alvendy Showing ih ire or les succes sults fin increasing tendency, nat ott tnstorm iheipredues and processes et shot divest into the new and more dyramicefforaton. intensive areas ofthe new. paradigm: miro. lector components equipment forthe {ory of he future’ or the ofie of the fat faa vocesing. nancial technological tnd ‘iher ‘prod wet services tleconmoniclions, Satta is another apes of Ctansmision’ al boi the tara ie diy sector ™ Th! on a tse proccess The Weds xe hve Been dicuting runt he sen Uy ily. The reduction tn the energy. Sed vs cent onl rots nd the buoy faster erouth of acevics. fs puerta fc arene the Fourth Kona end i Tae ever ling matkels, The inal reductions ore ely tbe the most drastic: but ence a higher roductvity of resourees eomes ihe nove the sheer expansion af grdacon cea ite <0 rather, if — the upoving get unten Youll iow "resumption a au matte inh glow wth hallow ba cei iy not negative, liste in felon to tpn “Thus, the new tehnaogies bused on tw cot slectonics could Tes to. new alien im inter-branen relationships an inthe evolution ot the general produel mis. Not only would mont production ‘technologies “underea important ‘honges. but abo the goods they produce would become information inensive. The same would ‘occur in most existing service inuines. while there would be faetesting gown services ef fotally new character Une thes cur stances, national and world yross product and wade can be eapected to contain an incieaing Proportion of information and service elated ‘ale added, ise tt ae ince Sa cet i stan Se th an had ads Sh reese it Kec rn re trum recy pamn The Economics of Innovetion LONG WAVES AND WORLD STRUCTURAL CHANGE foster tte anspor "There irendsccnuily requive innovative re smn iow een crmine ese he Merce side ofthe Balance of payments a. more the concepts of induneteaion” and ‘ubutitution. ay well expont pron {y'tunyforme tne the cine altar Siainnmatnn’ aves whch fr the fon of elufopiad pally would have 10" Be {rstuignally 8rd Sl placed st the core. ttt the sdzs of develperen thinking ‘Depending upon bow far vanced the county is Song the previous path of taetisiaton, Steeple dechions are in order regarding the Suse the service sector ints neve much wid Sime anin poate means to develop and sec oc fects and conslaney cpa ficeThe liter il be es, moon io make 9 ‘cet contusion, but ako help void 3 Nod misiectedtechoolgeat series ang Wt “The prctest cheng. howe, Hes in idcnntyng the new opportunities, mone long term slew could bring fonh ew ype Of evan "For raw matnnts profits for istanee. re long un there would Be 3 fntage in wanaportation cons fr “ee ed serie oF for-smaltsited goods ih intorralionvlve sed. night leo fo yMlaher unexpected development” i could everae. a comparative aivonage for Toc froducionofensrgy or materia intensive geod In tesourcesich counties, That many OPEC cunts have been investing heavily i such nergyitenie industies ay aluminium. steel Sho petrochemicals could be neapeted eb) ~ manifestations ef such» tend. The question is Achether, inthe ease of certain products. further ‘erica integration will prave To be the most costelfecive aeangemeat (0 aveid the incteas: ing ahare of lip tansposttion coss in the final rice. () Flite vs mass produetion Alter information inteosty, “tex abby the moat inporiant keyed thew paragon It challenges the old best pr concept of mass. puedoction in Styeeb, High-olume output of Aeatical o> Seas is ao longer the main roule to hig uuctvity, whieh can now be sebieved for 3 “diverged cet of Unevelome products, The rent might no longer be necessity for cost {Hfcetiveres, as eat technical change Became fc fos emaly ad es inky. lark roth The hase of “homogenous” demand flanger fssentil,sv the new techies pon high protisbliy in cotering ta acprnented mares Eni provide ample space few adapting prodveion ‘specie toca comin dncun eel a these (0 connie of scope oof pein ve infest ecomnes of cate sed Iromogencs ‘he teprds the ac potenti for diversity production, the now pain alles Ul Meeqted onesps of optimal sete of pnt ed tharket When oducttn. 35 well poet iy, pended the tepaitive movements of motor snd woskers an eety lange of model tr tong was dowatine, epi fouls were closely related Stlame prodvetion of dent onic mts andthe et ini. With ele. ly how co Programaving tpi changes in preetion see ales, such limiions doappest ta” ptcat Tes, ofcourse, stil possible co gpl the nese technclogics for’ mass production of cer components oF products tac hat cou be = Tratiple of the preriously established ential site Hosrever,t ange Fc in eventual comb poten! productivity Ter smile ard medium arch prodvetion. I could be said that nese technics plant aca becomes relatively Independent of market size. Thus the question fof “barriers to entry” i vedefined fOr most Faust Fleitie manufacturing. technologies allow plant sae to relate toa changing inet range of products submitted to simukiransoxmaton processes, On the one hand. ne very ge pla an produce for several relatively sal arkels Snwhing. what nqe being refered Tous ‘economics of scope’ Oa the of in. since inva peces af equipment can be provided sth “inteligence’ they ‘cn ispay simul Teribilty in performance. This opens 8 range new oppartnities Tor elas small plants Serving one or # 361 of sal oval matkels OF Serie qarkel"wighes” These eam achieve ig dutty level with “economics of speciale, fiom, et necessaily dependent em tage se This potemial for ley amd sspsbility toss angi impact across industries se e108, Betsey sihia each snstr tm ence the The Economies of Innov a 40 WORLD DEVELOPMENT slectronics seems to be greatest Frdusties or seis tht were least amenable {o mass production techniques under the pre: Mious patadigm. Therefore, the activities most eaily iransformed ate the ost decision: intensive. such as office work. produch design, Stock conte. quality control and others thai ‘were peripheral othe production process proper Sand the past fen contiuted cost wad Hine indusies previously charaetertied by high tales of produtt change, Ugh erat intensity and small or medium produce right the feture go through’ farther revolution. beyond ink and paper. using an aray of new ompotceelated means of, recording and Sisseminating informationt Mechanical engineering {and therefore 2 substatial par ff the capital goods industry). while corti fo be muli-grocess, mull-product. is hing Mansformed by computer-aided design a ‘manufacturing (CAD-CAM), Mlexible manufac. {uring systems (FMS) and conpoteriniegrated manilactgring (CIM) tos continuoss Now Industy* To a certain degice. the potential exist fora sie translation elothing and forniture > Sshieh there has traditionally been gre ber of small ie. TMS might change in the Future a8 Tage fros ialoduce computerized Mexible systems and tend to cover greater por tions of diversified market. The smaller fms ‘ould be successful on the bas of locational ‘dvamlages ori skilfully selected market niches ‘By conteasi assembly a high productivity area in mass production techniques. mgt became the hltieneck. of: Mexible production fies, Robots are cleavly advaniageovs for ultrahigh precision tasks svch 95 lecironic chip produce Won: for the assembly of certain electronics preduets where quality Is central and for hazard ‘ove or unpleasant activites such 3s spraying oF ‘eelding. ‘Their economies ate very doubifl snd controversial as regatds medium or small bateh assembly, involving frequent. change [product range ox in prodtct design. ‘The fact that whereas itis very exsy Tor 8 computer (0 conte ‘uch tore sophisticated equipment and. sottware “Io perfor the ppaterily simple-task of corcely picking up 3 pert and anevtng itn the eight place, For this son. in achieving economies of cep. he new Inacengt Restle cei fo testo the other transformation process could stumble ‘evina the high cot of bateh assembly robotics, Solutions ate being sve in radial redesien ‘of parts and. producy to make them more amenable 10 robot manipulation (in some eases evento the point of bypassing assembly Slogether). Anather route whieh has atreudy been put in practices subcontracting the ser Diy tasks with spelled Ioel furs Both rence ably develop. depending on spell «onutions. Overcoming the botlencck. though. Aeperds on whether the cost of robots and Sensors a8 well 45 of their operation, con be Substantially veduced. This might hinge on how {quickly racial breakthroughs are made in “ai Sal infelligence for low cost programming and Teprogramming, 3: well st un the experience gained in the diffusion of robotics in certain Manipulation tasks where they are boord to generalize, such a those involvng high hazards, Figh skills high precision or actives that could simply no be done by huaans suchas deep 33 ‘mining oe work in duter spece. Tn the process industie. seh as chemicals, paper, eleciily. melallsgy. food processing. le the main impact might Se i plant design For’ continuous Now. processes. which hd ap plied clecirnic centrls very evry on. there might bea certain degiee of reversal of the trend {owatds fined output pant plans s a means for ‘inimiaing unt cos. The neve potential for cost reduction by means of precise contol of quantity find quality of inpus, throughputs and outputs 3s Wiel ae of process parameters might lead (0 miler ander more este cesign of plant th {eater adapiabity to market and input vaiae Tons: peshaps including closed Toop. no-waste systems On the other hand. some batch processes, common in the pharmsteutial and food indus: ght be wansformed ino eoainuous Move, ‘lements a fesble automate feeding. electronic selfcleaning system and auto- ‘packaging, ae being in ecemeal fashion: bu they could {ead to come together as 3 Toil system and become the norm for many soups of prodocts In service area. for informaiton “intensive activities, he Mlesibity potential tegaeding both Hee. and capacity to apt product mix Changing marke! patterns, seems pustcuary leat In the ease of software and Inforation Services however, it wil fake a fog time before the rules of the game are laid down both on the "supply and the demand se since they ae in the process of creaing new markets, whose site Fecunknasen nnd eten ener the eale of ‘achieving economes cf scope, Such new |“4 The Econoinies of tnnovation LONG WAVES AND WORLD STRUCTURAL CHANGE “I {losin of other equipment or of intastucture hetworks, Even the aciily elites themelves wt eefisilions In pracice, before optimal Product mix of scales ate. established.” Th Miakaniserror process of bounduty defiiion cers typical Of he new indies in ench fvadign shifts the “model” Ford plant in the {vith vertclly integrated even to include Fishing ‘As ropards the more tadionl service et se ihugh, the change towards “economies of feope” for the “pisnis and) “economies a Speciazation’ for the smalicr fms seems (0 Be Under way. An asile in the Furencial Titer Alescribed” the fondamenist tesructring of Tinincat services, Wentifying “three basic roles For svecessiolpatieipans (1) broad-based com is hich would he the merged and eos: fants wih slate-attheset information {ystems and very broad market coverage, pror ‘duct innovation, brand Irenchives and. image fadectsing: (2) Taw-cost producers which would be smaller fms wiih an emphasis on miniatom cost in simple product lites targeted at the Price-sensitive, commodity sega! of Ihe war Ket and (3) ‘speciality firms, 230 small. but geared at specific. highly deroanding, semi fintom market niches, “This exarople of reorganization isa particularly ‘lear ilstration of what could lend to be the patiern of eistibotion af mathe by Gr sites ‘many industries a5 they restructure, The laagest Tits would tend to widen their market coverage acrots 3 de range of technologically dyeamic ‘oducts This wauld leave spaces fot Stall oF fediuey firms, both in the more routine mass Production ateas of the market and ia the Explitation of skilfully segmented. specialized maker niches, ‘Outside indostey and information intensive ~ services all other pdtv. activities. from mining and agricliote™ to distribution and mest __ teas of the service sector ave being more of lest ‘adiclly tansformed by information teehnolog) in the dicection of computer-contaled, input adapable, marketadaplable Mexble systems ‘Beyond traditional industry divisions a para igm shit, as it sweeps aet0ss the productive sere, not only teansforms existing indusivies, and creates new ones it can aso change. estab {ished indusity bounties. The resent shift may ‘ut the distinction between manufacturing an services and, within each indus ean mod the traitonal patetas of haragntal of ver ‘i {ntegraion. This aspect of the tension makes ‘diel to ascss wha ie eally happening, shen Bealyzing industry asing "the "established ‘asicaion sistem, For descloping countries, the changes brought avo by the new exible technologies team. 3 they do for developed counties. that on the Sste, the bulk of existing plant is obsolete hy international standards, ‘Every single secon heeds to be re-examined afesh to ase 18 prospects in ational andi Under the mew conditions. The tesons ‘night a longer be valid, Ce tin exportnicnted secars may face new illic ies: Io other. previously uequate protection police call prove saci Able ef stersning inport compet ‘Bots national planning and i evaluation, by national or internation Jencten ‘Nout have to reenpnie totaly nev! scl of ‘condition goversing the eee of technique an Scale, Assessing aeqacy or competitiveness 09 the bats of past of even present average en Suthowt bese in mind the dynamics of techn ‘il change, could be highly nesting and bring Asati tell, This wuld apply to ny setor oF project forthe changes tend to atfet the Sehote specu, Hip paticobly crucial. hos fever, in the cae of the capital goods industry ‘which pit frm obiows impact in deter ing the productivity of the usceindusties. isn the midst of 9 profound transformation word wwe in bath products ani processes (i) Rapid tecnica cage v4» “The new Meni potential stctches heyond changes in optimal scale and sinh ovtpot ri, W expands the capacity to mabe. successive changes in product, both ia appearance an in technica performance withoul great tess im elle dency. “The coupling of computer-site deren with putersided manufaciring (CAD-CAN)." ther wih Mletslopmenls in mn rode the telaive fost of innovation and the time span of learning Cores, This feature opens the way for api product change inte: and loop i imp ould vary ely depending onthe ims i Tikely wo have a penfnwnd impact_on Banines. Tochavir, I could shape the forms of cep tion and heace of ehigopetaieprties im any reas it may chaoge the dsiibuion of predve- tion between large sn small fms. and it Wkly to pive 3 key role tothe iochouse research tnd eveltent departments “Chnnge efi of competion: Fs pase experience it cout re said that itis eeneally in ihe iteresi of highly concentrated eligopolen 10 ilniiterteelneat eee by pacinrthe winnie The Economics of Innovation 4 2 WORLD DEVELOPMENT shythm of ianavations take hes avant of ‘ach produer eye in yielding aptimw aver Fotishiy. We would srg thst such ak hm change’ strategy see indeed ppwopiste Under the previous prem used on mass om of kent! ut. within wih pros ange. imped High costs to deed “qipment and Toeing. a well 9 bigh sks. Imes 94 the rly tow ent of eli im under Ihe new coins realize “the struggle foe mothe sha ‘ertnin industries inctssigy take fest innovation and intston, Tiss neady Happening in the areas of softwate an cle nies products where protection ised on Dateating ems extremely aifeut 10 phot. ‘Onnorinities for smu wn sed fos “Tis capacity for uiek technical change have consequences nthe fg form of nde level of iavesimen tthe present stage of development. has reached prhiitive "poe peitions.* wide ares of product applications nd sofware are gute far Ink tcathing tht Situation lt canbe tgved indeed that peoerflcapales ad low a decreasing cst Sf both component snd development systems ties equipment with which tn design ico Processor based aplication). there sil Tor 8 Fehtvely long time. be spe space for new ew products Ard the sme can te sal aboot Innovation in series, mov si {cleconmonicaions da become sll scvsive ead fextdeeresing. Whether these fms become fete isktakers tobe taken over bythe pont Success or whether they wil proliferate in andwsgon tahion and etome typical of the reat upswing. canool be foreseen. Yet, the Second couse, which mould gononte cotinved tarketexpomsion or he component he equ ment the services nd the telecomniatons Tottced bythe lanl. seems tach. more Demising for overall prow The role of research nad evelopment deat meni Ihe pesos paradigm Ie existence of tin o-house R&D depariment was est pre ice feature indispensable mos tons, i role, however, nd the tl rgement matting the fwaducion process woed widely sess rane fhes, depending am how scence toned The po Shes wore: Altendy though, nd perhaps even more in the future the RED departoreat oF dkpsntrents, ate hecoming a Core manager tein moe nue fan Hatieemares shane RED might increasingly be the hey 19 the fexstence and survival of smill aad) medi Tims. especialy Ia the electronics and informs. Th developing countries. mow! of the R&D is done in more of Tess seademsie isitutes and {ating sige te question ofthe teal relevonee ‘of some of the problems tokled) grew difeuly Fsencountered in ying vo wansfer theres Brnlicaton in the productive spheres Wath the | nev paradigm. thete would be Inshouse R&D elf drecly inked to produc: tion. and for explicit technological stistegies on ‘he par of management. especialy — though mol only — in export oriented sectors (ii) Useedefined stein x producer efined product ‘The ceivcion ele won apa another end with reaching consequences: the aiversiy of ap. plications available to the ser ‘The typical products wf the previous Konda liey were conecived to perform a single task or Set of tasks that were more or less tly dined by the manufacturer, Products based on micro: clecironics are, at least potent Purpose. Net only Equipment increasingly versatile. ut ey esa be Tiaked together inio diverse combinations, depending. on user needs. This. hes. become common in office equipment. where the market ffs a range of banc core products and s vonge ‘ef optional peripheral elerens. As he necessnry ive towards standardization and compa advances in toth hirdware and softwere, the eneralzation of the Wend cowards modularity . fn the supply side for manufacturing equipment ‘ao likely to advance, Final systems in-use are thus. potently, user defined. and can grow ia ‘complet at a hythm alse dependent on the “This organic type of system growth creates scope for adaptatiiy in prucess design on the pt of producers, Itcan moan, for developing countries. that elfonts al matching techies! hoice to specific local eendiions have 9 beiter hance of sucess, Moreover, tis adaptsility aso applies (0 the products made with these Techniques. Under the miss production pir ig. the drive towards uniformity ia consump. {ion patlens encompassed the privileged mina Wes ofall developing countries. The question of! adapiog either capial or consumer goods t Sivewsty in climate or culvre was not om the | senda, a8 long. a5 productivity an profit ‘epened ensiny of erasing rans markets476 ‘The Economics of Innovation LONG WAVES AND WORLD STRUCTURAL CHANGE “0 “The new technologies open nothing ean guarantee itil be trodden for adspting 10 diversity in conditions. “Taking advuntige of this new potential is a It requires overcoming useades of implies willingness to recognize Focal needs and building confidence inthe teal jpowihlity of aldressing them sucessuly. Ard is apples bate the pobc smd Yo the private sectors. The general point that ence TRE ass. production comslrael fs eliminated os the only fcans of high productivity sehieverent, iver fiyin demand cun become’ source of investment ‘npertuniies. It can even este naturally pro ted markets und regions export advan Yet. fullilling this potential requires vast amounts of individesh soci! and institutions creaivly, Based om equate infouration und fedueatgn, appropriate stimulating patcies and, hope. a genuine interest inthe welfare of the rational population (6) Neweonern for ornate efienes When sneaking abut information intemily and fenbilty.we seemed 10 assume hal engine: id managers would imme respond to the mew dynamics in the relative cost stuctore {nd tothe potent offered bythe nese techn: {Bes The process, of ese, bathe simple nor Siutomatie Yelthe changer inthe, uptinst ‘organization of the frm are even more diel as they reqite ovetcomting deeply rooted behavior pattems. Infact. he. dilfasion of a new Technological style is also. a. conflict ridden process af creation thraugh tal and err of 3 hw organizational models regards the manage: meat at the Tum. This process is eatemely ‘neve and tends ta spresd through “sink or Sin imitation under competitive pressures. is refoundly linked to the charactertics of the Few technologies. especially tothe features that Contribute tothe quantum jump in productivity in telation to previous practices, Heve ve shalt tliseuss some of the elements already vse the proces of ilusion a he new exguniations roel ‘Obviously, there is never one and only one form of organization of the him at say one period. There sre differences stemming [rom {Spe of branch, nations eanditiuns. sn particu latly size and scope of frm. Yet. certain gerctal [inciples ean he widely accepted as constituting The! pratiee guidelines and wl therefore, ent forshape the oiganizational goats of mgs farms {olin the locer run even of rent onion tis in the sphete ofthese general principles te following dacusion wil be pled ‘Nevertheless, i should Be Kept in mind that the innovative process i this tes aking pace ‘wand there stil ouch grand tr eresiy Fords fis assembly Tine hich became. the prototype for plantdersheltiieney in the miss fpadietow naradigan, win extahlabed at the foginning of this century. However, Shas praessonsl_managenien! aval. whieh he ome the “ileal ype” of corporate miganestion, scially developed in Gener Mrs ome Tieen ests ater” Further, it wo. nly diving World War I that ergasie links bebwoen industry. science and government were esta Tinhed as 3 feature of the Keynesian avode of row (0, The imernat orgonisvion of the fon: “Tne Fath Kondaicr mou! of organization inplieds sharp separacon a plant management trom econeieeanage sent sn win each. Gear ifereniation et cities to Hea ll farm of epeltivenes ta auaequent oa, Hyman an sonia wodel Ht emned ening’ aileron On pots a ee frets of preset ed india dhaon sis, pt, depaiments sexi, taps Aer and to comple Hearts, Th new pa Aigo inteahy apie 1 farses on ks fal pig itera ar Bale tc ‘Aihongh mony ‘spplicalions of clechonic equipment ate gencrallyrelered a8 atoms: ant we supgelt the te of the crm spies tonto deserve the new rend vars mergng $Maethtien-— managers sn poets white nd be collar. design snd maristing. comomic dnd ‘teghncal atone. single interactive {psec hue The avanige of ee taphasing mere hardwite: and empiing the spsemt. Tecdbsek ate ofthe engi tonal oftware: We belive this iam eel tisngoshing late Deween the new an he 1a model of fm organization to fat cumny “smc mcrae at Ninking hey ane mee cen Rardvene, hich qan be tncorporeted im the preios pa ot atie wise retainer tances But topetily heer tases, cap te ans Dt the new technology vee” 4 profound transformation n he sernl organization fe fae and na aterconnceions wih mtkets and sooner. tna cme, i stones os ‘The Economies of Inmovetion a 4st WORLD DEVELOPMENT t Hine did for the plas The fim. 94 = whole, becomes 3 conintous Mow syste of actives, Information, evaluations and decsions. But there isa crucial difference: whereas the asembly line was based an the comslan repetition of the Sime Sequence of movements, information technolo is hosed on w system of feedback loops or tie eptmization ofthe mest diverse — and egg ‘We have already seen thi. in plan oxgonae ation. the new technology nov only changes the Core iransformation proteses, but also the erste Stile peripheral tasks s0ch a3 design, sock onto quatty conta. saitenance fe, Tes. the potential exists for ihe compete fslon of production activites ‘nto one single. exible. Sptimied system trom the pt to fd. A sia ntgraion ean oc “Inough computenttiog and communications systems ot internal and ester. Yet although such tends fn plant and office ould slealy be considered enormous rans formations. they ae not the ruc pat of the story Iis the possibility of merging Both ito 3 Single system that consttes the tly rail Change: a the organizational vel Ths stems {wom the potential provided by the equipment sell, whith, atthe same tine 8 contol he physical volumes and. quali. of input, Teughpuls and outputs. can etd ott the technical data and the economic Information for {ensian monitoring af eehno-econonie pelorm: Tis does at mea, of cou hat al fn axsivites would be physically on a unted space ‘uch tothe conttary teleconnmurcaions capa Uities actully inerese the depres of freedom ‘oncetning location {inelding even that of ind ‘ial people). ta act. they might fad ton mucl ‘wider geographical upersion. 36 urban agglom: ‘rations foe thelr eapacly to provide external ‘conomies. Nor does it imply thal they would onsale a sigle Unit Ifthe old cxporale sit re managed malicplan,mli-county op- trato:s, the new technolo) infrasiacione ‘oul alow the ecient management of world: wide, git, complex and” topily. hme ongiomerote siuctores. (And ti indeed the Sirceion ia which transnational corporations have been moving ince the Ite 190) (8) Relationship between producion ond markets: dynamie ‘onstine' mentoring. vs periodic plonning. [Dut systemation goes beyond the internal ‘oxganization ofthe fit and allows the eta ish then of weasels cea fovaee sane th ing, can now be informatioa-based.*8 The Econom LONG WAVES ANO WOR 1 Gil) A neve manager sts informarion based ‘stnntonshayed hls “These developments a scqured monagement shill. Much ofthe exper: nce Of succesful managers involved leg the {ype of intuition that ould Tead to the ight ‘sions in the face of seam inornsion. Tht tng be why the fist reaction of tonal imsgers 0 the wos feat Thal ed ee 2 certain seve of tora. nthe fon and information mana Tikely te became event for diy live abl ght be ited for man reatons an fa ns uch 3 invent tend to change the far technolngcal decisions. a well 38 for the ‘design of the information sjtems themselves. oth ight ‘Asa mater of fac, sine fn ‘often depend market sep sd Imargement To ignore oF delegate the techie questions. Bot sttategic an shorbtetm dec | Sine ae tkely | ectingsccontiie package, This, the ne cond topmost Teva (60) A new spt of control decentralized Sor ts hererhie!bareawerces “Ts they ewe npn model ight have ed the tear to believe that BI tvces‘wthin he ew Tecnuly favor on fuss am ented cool Neverthe th al complementary charac sie tht eaty widen ME pace Yor 1s) Sutomomy and decenrteaon. tne complex the ovpstssinn the rear LL olcrton of fvraredine contol eve The Brio Iyer file’ management serve ax moat of flay sate cllecting and processing | information trom below. taking mir deans tr suggesting major ones to lop management ot {op goveramentofflss and then ianesing the final decsions dowawands. Today povided the adequate oltre, those relay and proces: {sing tasks can be-done hy computes: a the Present function of migde manogers made 1 fedundunt. “This. im iel, aleendy Matiens the control system bringing” eeesions ‘nd acions coset together, Date if thin were To fe To hyper Ceara of ‘comming the ran | Meni potential ofthe new sytem would be 4 hopelety ist. Te core feature of lw eat j omibroproresiors isthe capacity for ovsing ies of nnovation (LD STRUCTURAL CHANGE 4s sisted intligense which. in engi atonal terms. cans, bud "ees iibing, An lleiation from # Rawdwe system, tight clrly the implications. Let ws oa tw rimpe, at the ceoution af tlc ntl Min eleetomechacicl times, lle ight relay sncchanins wer inv ialy have 1 ane Stprecite mires cong cl ple disen up st the cone fies nthe hos Simple "count taben hy hand nuns By theend of irate, paved ithe is tafe contol ste, teattlized dessin weve made, Tansy. Ipmave Meaible sywens have heen developed wih abctopnocessne inline cas atl ght. Tereation om tee Hows at cach Intetcetion collected omlne, wm the Sp ach set fights ean teat te ema, Foor he per {intonation sharing fstilished for further in this new conlest, the centeal conta! unit seguir monitoring a eouting role tn ‘hatge af designing sad evaluating Ihc Ut Sed ioteligence network. This I "part fom being afinitely Tes esta {hte to moduli sata ‘nie electing and rene than the totally centetged ne. Bearing rind the obwinas fis analogy. H serves to make the srgnmiea Point yuite cleanly. A. cemleslized cision Faking system wou have toe ae to sitate very single posible combination of events ith very single prove cumtantian a clemcns Sand thi iy iced 3 umes sand neat Impossible tsk, I organizations ate be diver died and flexible, to ke tll advsntage othe eve potealil. they will probaly tend to he dared” on Mesihe,” interactive. telaively utonomous nits, lied in adsptive on-ine Systems of coordination under dynamic stratevc ransgement. tne analogy canbe taben frter. Because intelligence” eam he provi To single picees ol equipment, central evordinaton no ise rety cane nd many To Sand niche markets or products or serves, can be covered by independent. small Tumor cooperative nctiorks. And. pong sill farther prealer worker ibn, alieady. et Pevimented ome Westera| eu give Meter fesuls i ‘The Economies of Innovation 66 WORLD DEVELOPMENT pss ad mult-purpase sls, This ape Fo.our regret, ean not be diacussed here “Tis. in organizational tems, the new parse ign combines ends wands centelcation sd jenive cana smd ane Suomany. so ihe variety of cumbinstinns likely be quite wide, no only in the present evi, prety in fate only 1 fans, The Araves. vertlows into al sorte a eter 3 fctvites ram the eJveitionst stem tothe fanetosing ot goverment. “Durcareaey” Weber’ time ets an innowsn tat fet the sion of aor in the contol sphere. bers the eflceney of taganestions dering the Thi Kondtaten. in the Fost, Ht was taken (0 ts ton imis and has nos Bese cumersome and costly botieneek ets both those who Cry ‘ais gaverament hatesucrcis a thse defen thee acem to be tapped inthe same tent et: contsing the frm of the eran Sion with i purpose. The same steal its ould now be aeeved ith’ diferent snd ve ftlcentcrganitation: and. rather than reduce the number of penne at wks the objet could ten be To eapand an enrich he gosh. (©) Decentraltzaion: a hey feaure for developing ‘ew paravigm cauld open fut! paths for the ‘Thitd World. To begin with the planing system ‘self sight warrant radical rethinking. Central ‘coordination of regional, local or sectoral units ‘witha high epree of autonomy. especially economic. could prove more elfectve thin either tive eemalied contol or so-called “indicaive Planning." should also be remembered fan. There ndecl' danger of tmasive verinveseent a wrong technologies Choice: So: orginal soto 10 rel el eee, {ahng into Seeout foal condions nd ingest. posse" ‘Bui these solutions should be sought now, Lefove tects eholee becomes mr tly I foupsofdeveoping counter are abietosel sad Taint pace standards mare appropiate 10 condilons anda mote noeqeate inode a growth smote at hese coud tecome “powesul” investors tor “developed * beginning, this is'& me for specu county producers seeking expt oppostuites inthe Thi Worl {seems thal heft taomative was designed withhrseie les buted thd beea conceived ina wort without horses wight never ane one trouph that “yb sges I et {echnatogy nae ea Scope greater tam ‘i ave molded “To fake jst one core example: th afore gnerstion sd {fin esabiahed, inthe Thid ond Eenalzed network boned onthe veo Stel for lngeengincering equipment. Twas itaher posted inthis vccton By maoe duran concep an he ay of Tes fost il which eset he ote a mnt ether fosinesowrecs, Today, pel tees mack qowe Bitevnaive. Exiingifontrctne mates it fult "to conceive. tly uncraed sem Aecentaized system: Eveninihe induction solar technology. eaperinental sists, hse Eevered acres of lind wih soar collector for ental rediation, Thai seksad frm oF spplieton his been ued to spite of he ‘despa apremcnt tha is mre natn for $echology tat coec the only ll pervasive source individ Involving non-native Vehovir in these typeset Tues, could develop agro the em potenti towards mare apnropnte skort Third World coniion” Tn the fllonngsction. ne sll explore the mote genera perspectives in the contest ofthe Shanes inthe internation omer thst cn ceo in Tone wave trans 4. CHALLENGES AND PERSPECTIVES FOR DEVELOPING COUNTRIES IN THE PRESENT LONG WAVE TRANSITION Tour tong wave hypotheses ate cores the Uuppetmost idea that should uide development seategy today is tho planing meat address the Iwoblems and opportunities of tomorrow and not These of yesterday. At we suggested. at-the im and Innovation. Alitough the future is bil upon the past, in Uanstion periods mere extapoation Irom the past is Useless and even cunt productive. ‘Obviovsiy. the problem of siving at success: fol tesponses In developing counts is emendously complen. Tt requires not only an1 450 The Economies of Innovation LONG WAVES AND WORLD STRUCTURAL CHANGE, o Understanding of the new techno-economic pit2= tigm. bul also foresecing the posible responses ‘of he core industishized countries Wo pretigure the general climate of the fulure internation! frameworks haste dane in most eas in the face of scant financial resources ond emendo furan houlchip. Neveriheles. equate response is more Hkely with higher Infotmition. and understanding, Ax weave ‘cen. cetuinfetorcs of the new pataiga and of Usspecificlaration el he used taunt in opening new avenues for developmen! (a) A mevespnce for development hiking From what fs been argued. the first point 6 esp in rind is thatthe tesnsformalion inthe relative cost seuctre changes both eomparatie névaniagen and compiraive disadvantages. For ach country. This implies a undaniena thine ing of ils relative advantage postion within the few techno-econamic paradigm to identity the fnew posites. This should got he minds fond ae going buck on the dycussion of sale land dynamic comparative advaniyges, oor 383 negation of the role of the sate im creating 9 ‘enhancing such advantages oF using protective measures lo overcome Ussdvantages. It merely means that the orld of the past is dying al. ‘shit. the opportunities it apened or else Only sveasessment of teal posses can eid to adequate and innovative development pel “This basic rethinking involves the question of sec resource endowment, Toeation, she. flllutsl or ensitonmental Factors an previa teat of relative development. However i ako involves a reassessment of the technology :p- Since the new overarching lechology is now 8 itsrettively early stages, tis possible to ater pt 2 deel entry without going. through Be Technologist sages i leaves behind, AS Luc Soete has pointed ut in hit analyst of the Tn national uiffesion of teehnalogy. cach exsis in Tong wave results in. restractring ofthe rela ve portions of counties This is purl Beeause te Few technologies allow ‘Teaphoging foe some of the countries that do not entry the inertia of the previous industrial structure. In the particule rea of microelectronics pia Seate. Morr Teubot fay note rowledge ofthe type acquired in univers the essential nia aki required. This i ia antast to the need for prodoctve experince in taditionsl mechonieal engineering or Investment taperience needed for sceess in the process Intros, (0 course, thie station is teen. fry a8 the now ateas develop and standardize Ihe practices. experience wil once again be: come necessary fur suseess "These gener comments part, the tole 10 esclopment des aat hinge tn whsthcr coun tice cin oF canna entcr the microclecinonics oF Information race. Even indssrilized countries might he serong in eliesing thal. with cmigh fovernment fords 10 support the gromth of {nformation technology. they can vntenh the tecovery. We have ales seen thatthe peers, ff aillsion. of the ‘ev techoology._ without hanges inthe secio-nniutonal ames uth, ‘etully sgeavates the crs, The real question for developed counties fs how to manage the Wansition. This docs involve an ello to reient tivity by enbancing the conditions {hi siimutite a sucessful retrctaring Bul so {fo avoid 9 collapse: and. this requires both remporary tanewatins to dl with The mark Trought about b. the tessiion — especly it =~ ag. well 35 more permanent tones to shupe the Toure For developing emuntis, tf 4 question of {aking advantage of the transitional phase to 1s forse. This also requites sociginstutionst {Mansfoumations, However, since Isis nt the pice to aires the wii social aves. the Sscussion wil be Hid to an overview ofthe new degrees of freedom for achieving econor Frowths Although increasing weatih can be un Evenly sbuted, better distebutinn and ener wellare are naire ikcly ih imercasing weit Deeause clectonies and information ch ology. and especily is Neale organizational ptadigen an transform any aetiiy. from mine fog aid agricole through Health cine se education to Biotechnology and ssetites, the feal question is which setties ta emphasize 38 the core ofa development potcy. The hos. 35 tess divcanied in Section A seems 9 inectse 9 rich more inlerated5)stems approach. rei ing. the development of design capacity. for frocess, prodvtts, general offanization and marketing sytem. Thus, there might he higher chances ofsecess by foesing on ane o ery fee Integrated complexes oF Menble decenteatized ‘usters of acliiies. centered atound eal te fovrces ot lpeat contin "Ths approach sould iy esision of the Iraditions! concept of indastesiation” subst Toting Hath uch widce concept of itegrtes evelopment. Amore adequate sppreach. 10 ‘loiing would reevtuate sll weal creating rom, apricllare and msining 10 Fnfoumatin services, and all the elements af cach roces om Hes he ‘The Economies of Innovation we WORLO DEVELOPMENT ational and world matketing. Ths means hho panicuae sector is intnscilly “beter Aeeetepment but thit cresting. 30s rated systems and iterative fs is heer fr the development of any sector (8) Somme otdatsuces reduced indrdevcaped coun he inlicent it f Toel oe fess lek af a expevonced ad shld works foc a asige mag, Une sndtions ene might no lnger be such ute ina alien "AS we ave cen, wih good process and cranitationsl design (and provided te pols Srl chosen} W shoul ow Ue posible to ahve igh productivity tevek on the bai of » sn Imatket Tor one product or s snmbination of them: These portunities are fren enhanced bythe now potential for estering to speci lcsl recds and onions. So, seveliping counties oul now ploy a more ace oe in Sepa emand an proc ercathn, fr loa Swell as fer tnlenationlighes. [AS tepaeds the types ail profile, the new technaopy ei be applied ith combination af tecneal and” profesionst personne sd acto tively Tossed rapidly ined isu, Ths see che more industriel countries ms face the challenge of resting te bull uf the wdind Sri shi developing counrc cout by-pass that iotlentek when catering new secs of ‘Astor an monaperar concern pr coming, hut now has a difercst hort ‘Apne ec foro shill ea be move ies Hyoossed and the new skills esed 3 ‘apatity to esign and courdnat information: intemve sytem can be seqized and devel ped tn this ea: the lanavation process {aking place now al ovee the wow, Jo there They to be tne for edestional and tisond> cor leaning In ts context, might be ‘rth ta testes presen lors i pote: Sional education or taking (icing tse to ine acqifedabvod) Abn, singe many eviousy ined engaccrs ave olen unre Site inthe passive operation of We aid Iechnopies hey ean he tr ned nt vate See i they ate wll dsc and piven 8 (¢) Trenmatinate snd auenonos development 1 got Int he relive us indosiatizaton of Thiet World counties is feneally not in the isttes of tansnatinal! {orporation. For longtime, these counts have been said to be 3 source of cheap tw materials and Tabor at wells 2 quote tmatket for massproviced goods eh finished tr asserted In foes! tobridarse. However. i fur Tong wave mudel is sound. thn need Tanger be the ease i Tr the fis pla am energy ond materiah ingen the ‘ecreasng relative cou of of rei materia ln Increasing productivity eotiabity and grat Tithe pateutar ease ofthe irssnationah i Ihe field have aeceped, 3nd sometimes fostered {ally compensated naionatiation and now de Ive prot rom sing feehnaopiest and mari. ing services lo thet ertwile subidities. A phenomenon is eeetrng In some of th tnetllrgica indus, where father then 3 ing vp ‘ubsidaries. uamnatonsls, have often: Entered either iniorhiy share. agrcements or ‘esi, constuction and lechnalopy service com tacts with developing counties. "These evens ‘ould be scen a3 analogovs (othe med Blessing {of poliialindependcnce- without ceonomie futonomy. Yet, it ir ahorbighled to deny ths, they erene better conditions for increased ston my. ‘Secondly. thete is reason to belcve_ tot Ueansnattonals may no longer seek assembly sulsiiny” tou, This practice org Ally served market expsnion. objectives an {ater atthe peak ofthe pronpe 2 secching Solution to he mis on products growth under the ld pardignm. ty. reducn Fibor cost, While the dew teehmlagies bre Aci sry sags, init market expansion com from product change and cont reve there much scope for ost eduction in proces: anu organiatinot change in the min lan ‘Thus although the queton of robaiced Sse yi not yet clear the rend towatds ashore imiration st Teat for some time! ane srgved shat omer th new conuitions, 9 certain fevel of autonomous development in the Third World could be vers Fnmportant fr the new isnsnaionals. 38 thet restruciore. High les investment levels ooh wally increase the work rare fr the cor provct ofthe new pataigm cletanic compo hens computerized office ur production equ tment” and teleeommunications, swell Engineering camtulincy, plant eaign ‘amc onstection and all alr information intensive Services, fem isaneal to lechnolgies ‘Acer she Th484 ‘The Economies of tanovation LONG WAVES AND WORLD STRUCTURAL CHANGE “a houmacewies and G9) pradcton, Westy Mfctng uch ppateety welt arco mni tn Fallon cam al espormenn ste unicef the prodution nl mitectcewonie'boshipas Yet mach Boing’ might have ta be evered tele rae {este heAthnege ih rae ence Income dnrivluin and inthe cela ofc {rn Tes hil desea ot ave ince Se Pevee 8. pp ees, 1S. Far ima apprich athe ettgmshiphstwen technulny” ned the cine a “Roguon a Sella asap eamprehemsive vais what eam ‘Fonds raas of prodaclon aed onsumpn, oe Aiea (079) 1. Although the inact om smploymemt pad Ne most inparan singe Hou the pect Patoiem chong. ula he uss here Dae {seomplesity ai be anlsed spac ie ‘he reader Wivite to Leap the be mn the ‘oume of he presat dct ard 19 som Me {Eosing bigtaphy on te whee Soest sean Rada 'tivan: Copter 0st Frenne I 7 Smith (1980, 1. shuld ty som Be ec thatthe genet tend ‘vad ffarmaton inten nt be eee 2 Teang ina patelysengeceommy Macht the ‘onary ou service sppation i leciniey are feneted by wang mantactared eyuipment ad Ihe train 'marker fre mony vf the ae Serer 1 the mmomatiiwing iy 19, Neveuhelessteton should so he pio he wave of hinge in miter themselves: The fiesinn {f teyeing Techelquen ier op seri and Similar Ueetopments could watery chine the brags a pce mati ed fc Eee 2, See Basie Week (Ferusty 19H, pp. S471. 21. Im the pas. somewhat onsogsse sonny, ‘rested "natn pete hier forthe posh Foca comsacio mater nd cleng ines 22 Dylnaky 10) pp. 08 2X. Ina seme. ne could suptest hat focus ‘of produ of aersees the siya eens faulomen uh ery hog Sta tieined marke sepmentain nimay tea gether Sitlan iniase inthe ine ogee owe Imatets and sepies cout pad ie ea fate of the ew techmulice te uh Aa hs amore bth ender Totony type unions on 3.9 home ell Far an crime desing hth peso Emits ithe ee wl wsseng, eee ttage indosry with! AVL toons.” im Bhalla 1a ft tiny ee ae ie ham and Ranh (198: ond Gay ( ‘yes Bey an Socchoun 2, Forum cuample abut hs tnt ecm dealin the eee! Inasty a he snd sas Beste jowcine tn the Unied Sats, soe ey Weak (98 pp we Den a. (4, . fart ntmiy and ei in ago ‘nih bs baned rn ony tm ritctectoni ha se ‘nbiocehmology.Iereming sesh as hee Ime To. develop natural pstcntoh sens nd $hikemtiching teri, abit ou nim capone Spread lomiee ahile telkting the teed for ‘Petochomicl ences und fees M._ For 9 thorough dessin wf th i CAD. see Keplinhy (8 BN. See Drucker (972. BAA dette snaps of “nexaphere and ine FSeures ean be found ve Kepinty (1080). Se sas ele i th te v9 (170, 36._The genealston of onting maths inp ne itelhoo of pening the {eles da oinveny cis mae wi the tse paged de tier ppg iat 142089 te 1840) hy te tte Sse of sae eslated by rnin ete ‘ment, This comida siniiean sep wan the ameuat af imation sea ohne Ploning and contort, tothe sah mer me Sones to Yee the Iiey of shit eyes. cn ampates th resin Reniatics 37. In apan, aninseminy aptens, ested ime hate ben Geveaped. wtih me es ite les nd pester none anne od pap See'Schonberger (80. JR. Lowethisetampteta Dr R, Suast Prien Me Econowies of Innovation wo ‘WORLD DEVELOPMENT EYT CA. an elect compuny in Coca, ens fuels, where one auth syle wo scape 1. Peter Dempey, manoging dei wf tgersl Tegincen. the her regu fr the tai ine Si aOR ES nh ce ‘hanges withuol ing fundwanes sce Proeedings fats | Foe set af ene sacs ining tin nations new tebe. he a ‘ndhinnsace hata a CH AN, Swete IN) ees aie fn this ve Ah Teatat REFERENCES Abernathy. J. and 1M Wieck, “Pateny of Indestliongaton* Techialgy Reve Mo, (hane Jay 19 Apa, M.A Thea of Caplin Retoon: The U3. Enivence (Lanioos NLD, 199), Alken 1) Bete ad As Mapa TGS. of mcting Giana series” Ful Tne Sane ‘Aye. TU. and 8. Miler, “Roba, CAM sod Tndantit produtey Aaron Protas Be ew. Vol tea | 19h) Sel esi. Jn. "Conpeiion, iehweel change and ‘employment in the UK tour insy gh to. UK: InightonPayeca. Innate Reseach Group, 98} (irc Dhat"A!'D. ames aed. Stevems (els). ‘edn of Meroe Treditonal Feces (Buh Tne 1B, "Tycoty nterntonal 98 Business Werle Sotintes the new diving foe (ebrenty Tits) rasa change: (1 By (8, ‘tke man wh fehionel a cing cme 19 Octoer 1, Bylmty, Ge "The race tothe some toe. 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