Innovation and the Skill Mix: Chemicals and Engineering in Britain and Germany

Abstract

In recent years continued disparities between countries in economic performance combined with the rapid pace of technological change have led to growing interest in com parisons of 'national systems of innovation'. The devel opment of this concept reflects increased awareness of both the cumulative, informal nature of much innovative activity—especially the interaction between producers and prospective users of new products—and the ways in which national-institutional structures condition the decisions taken by key actors in the innovative process such as enterprises, universities, and individual engin eers, scientists and other members of the labour force (Lundvall, 1988; Freeman, 1988; Westney, 1993; Sos kice, 1993). Analysis of 'national' innovation systems has obvious limitations: rapid growth in trans-national corporate activity continues to reduce the influence of national policy regimes and, conversely, recent studies of localised RD Audretsch and Vivarel li, 1994). However, it seems likely that at least some institutions operating at a national level do influence relative innovative performance, for example, insti tutions underpinning the domestic supply of finance to industry and the education and training of the workforce. In this note we focus on the role of the latter set of institutions. Specifically, we draw on a recent study based on the chemicals and engineering industries in Britain and Germany to explore the links between inter-country differences in human capital formation and apparent disparities between the two countries in technological performance.(1) Long-term comparisons of investments in RD specialised intermediates Engineering: vehicle components; specialised high speed machinery The ordering of the note is as follows: Section 2 reports on comparisons of the recent performance of closely matched pairs of British and German production plants in the two industries. Section 3 assesses the mix of skills which companies need to respond effectively to inten sifying competitive pressures to speed up the rate of new product development and innovations in production processes. In Section 4 we examine in detail recent chang es in the employment of highly-qualified engineers and scientists in Britain and Germany and relate such changes to the high and growing level of technical