Any nation should strive to be a strong manufacturer of advanced materials, components, and capital equipment since they are high value added high productivity tradable manufactured goods, thereby allowing the nation to achieve positive current account balance.
Because aforementioned advanced manufactured goods are know-how intensive, they have high entry barriers and therefore once a nation achieves dominance in these goods, that position is entrenched over time unless another competing nation comes up with a new innovation which obsoletes these goods(hypothetically, carbon nanotube based semiconductor supplanting silicon based semiconductor).
Yes, that is a good description of the reality of manufacturing development and trade. I would add, however, that a nation can obtain parity with an existing competitor by a combination of copying technology, protecting its domestic market, and subsidizing its developing industry. This is essentially what Japan, the Asian Tigers, and China have done over the past sixty years.
Any nation should strive to be a strong manufacturer of advanced materials, components, and capital equipment since they are high value added high productivity tradable manufactured goods, thereby allowing the nation to achieve positive current account balance.
Because aforementioned advanced manufactured goods are know-how intensive, they have high entry barriers and therefore once a nation achieves dominance in these goods, that position is entrenched over time unless another competing nation comes up with a new innovation which obsoletes these goods(hypothetically, carbon nanotube based semiconductor supplanting silicon based semiconductor).
Yes, that is a good description of the reality of manufacturing development and trade. I would add, however, that a nation can obtain parity with an existing competitor by a combination of copying technology, protecting its domestic market, and subsidizing its developing industry. This is essentially what Japan, the Asian Tigers, and China have done over the past sixty years.
Thanks for a clear and concise essay on this important topic.
Clyde, excellent contribution. Thanks for the work you do. I'm looking forward to following it closely. Best regards, John