Commentary on Gregory Tassey’s “Rationales and mechanisms for revitalizing US manufacturing R&D strategies”

Abstract

Greg Tassey’s new paper pulls together and augments a number of themes and recommendations that he has espoused and championed over the past decade. During that period, he has been an unabashed critic of the ‘‘vast majority of economists in the United States’’ who espouse a ‘‘neoclassical economic philosophy’’ that is ‘‘inaccurate,’’ because of dependence on outdated views of comparative advantage based upon shifts in relative prices. Of most concern to Tassey, who is chief economist of the Commerce Department’s National Institute of Standards and Technology, is an alleged indifference to allowing industrial technology ‘‘to offshore in response to trends in comparative advantage’’ and the lack of policies to maintain ‘‘a viable domestic-based manufacturing capability.’’ Indeed, though he alludes to the necessity for more broad-based economic growth models, Tassey does not provide such a comprehensive alternative: rather, the bulk of the paper is concerned with one (quite important) component of economic growth: technology policy, as a subset of broader R&D and innovation policy. He argues for a new public–private paradigm in this area that will create policies to manage the ‘‘entire technology life cycle,’’ including all major elements of domestic and global supply chains. Implicit in his critique of current ‘‘neoclassical’’ economics is a deep-seated skepticism of the effects of globalization, particularly the impact of outward foreign direct investment (FDI) by US multinational companies, and—most important—the movement to locate R&D facilities outside the United States. The paper underscores repeatedly the purported danger from the fact that R&D investment by US multinationals outside the country is growing at three times the rate of domestic R&D investment. ‘‘This trend needs to be reversed,’’ he argues. In the brief space allotted for this comment on the paper, I will not be able to pass judgment on all of the facts and arguments advanced in the dense and detailed analysis. Indeed, one preliminary note on presentation would be that the paper could have been cut by at least half in order to sharpen Tassey’s most important points. I found a slide presentation of the paper a good deal more cogently argued. In any case, whatever my