Science and Engineering in Global Economics
Posted on August 12, 2006 Comments (12)
The main point of The Global Race – Is America Still a Contender? by James Schultz is that the United States is too complacent: thinking its past success guarantees future success. I have stated that I believe the economic comparative advantage the USA has enjoyed due to science and technology leadership is almost certain to shrink and we should take steps to slow that decrease. Also see: Engineering Education and Innovation, The Future is Engineering, Engineers and the Economy and The Science Gap and the Economy.
From the article:
There are many reasons why taking action on these issues, as a country, are difficult. One is that it is difficult to judge what actions are effective – even looking at countries that do well it is very difficult to judge which actions they have taken deserve credit and which may actually be a negative factor.
My belief is that investing in science and engineering education is wise (in my view this provides the market with resources to use effectively for economic development). My belief is that maintaining a dynamic capital market is wise (and largely let the marketplace define economic decisions – though obviously I believe in supporting science and engineering education above the natural market, the strong positive externalities make it a wise societal investment). I also believe that improved management practices can make a huge difference, this post on our management blog discusses this point: The Dramatic Spread of Lean Thinking.
The rule of law is also very important. I do not believe it is an advantage to have a powerful central government that takes too direct a role in the economy. That government can be helpful in certain ways (like making science and technology a huge priority which will help). Some government are better at attempting this, such as Singapore, and for them it might be arguable what the final impact is but in general governments cannot successfully adopt this strategy. Quashing labor may seem like an advantage to some but it is not (even in the short run) and will not lead to a powerful economy (the same is true of lax environmental standards and other failures to regulate the market effectively – playing the role government should play).
In any event there are many countries that have a desire to gain economically and critically are taking the steps to make that happen: improving the rule of law, strengthening capital markets, investing in science and engineering education, supporting the development of a science and technology economy… And countries, like the United States, that have benefited from a huge comparative advantage with the rest of the world in these areas (and thus gained huge economic benefits) will have to focus on key economic factors or they will be surpassed by those countries that do.