effects of profitability and liquidity on r d intensity japanese and u s companies compared this study investigates the proposition that japanese companies have a greater propensity than u s companies to sustain commitment to r d in the face of fluctuating profits and liquidity the anal

multiple solution indeterminacies in monetary policy analysis abstract a sizeable fraction of recent research on monetary policy has been concerned with issues relating to analytical indeterminacies i e multiple solutions in rational expectations re models most of the literature features sophisticated re analysis conducted within dynamic models that reflect optimizing behavior by individual agents and incorporate taylor style policy rules a few papers have suggested that some of the particular indeterminacy arguments are misleading or irrelevant for the most part however there has been little dissent from the position that these indeterminacies present a genuine problem for monetary policy makers the purpose of the present paper by contrast is to argue that conclusions based on multiple solution indeterminacy findings are of dubious merit rather generally

impact of food safety information on us poultry demand the impact of poultry product recall events on consumer demand in the us was empirically tested for four major categories of poultry broiler young chicken eggs turkey and other chicken mature or nonbroiler chicken from 2000 to 2004 poultry food safety inspection service fsis recall events had a consistent positive impact on demand for turkey but no significant impact on other types of poultry products united states department of agriculture usda fsis recall as a complement to food labelling did not undermine poultry consumption but promoted turkey demands on the contrary media recall undermined poultry demands moreover it demonstrated that turkey consumers were a special behaviour group of poultry consumers

innovation and bureaucracy under soft and hard budget constraints because of the inherent uncertainty promotion of innovation critically depends on screening mechanisms to select projects this paper studies the relationship between bureaucracy and financial constraints as two such mechanisms the lack of commitment to hard financial constraints interferes with its ex post screening capability ex ante bureaucratic screening is optimally chosen as a substitute however bureaucracy makes mistakes by rejecting promising projects and delays innovation and the efficiency loss due to soft financial constraints increases as prior knowledge becomes worse and as research stage investment requirements become lower in a centralized economy bureaucracy may reduce the number of parallel projects particularly for projects with higher uncertainties and less research stage requirements this theory fits much of the evidence and in particular it explains why the computer industry but not the nuclear or aerospace industries has fared so poorly in centralized economies the fundamental importance of innovation to the survival and evolution of economic systems and organizations has long been recognized marx 1978 schumpeter 1950 innovation is characterized by its inherent uncertainty because it is a process whose every element takes considerable time in revealing its true features and ultimate effects schumpeter 1950 p 83 and people are unable to anticipate the future impact of successful innovations even after their technical feasibility has been established rosenberg 1994 an understanding of how different systems and organizations deal with the uncertainties associated with innovation and the resultant consequences is crucial for understanding alternative economic systems and organizations in this paper we provide a theory to analyse how different systems screen uncertain innovative projects and the impact of the various screening mechanisms on those systems we distinguish two alternative screening mechanisms the bureaucratic screening mechanism vs the market screening mechanism the latter is directly linked to financial constraints with this perspective our theory explains why centralized economies did well in certain areas of innovation but fared poorly in others for instance in the early 1960s the west was frightened by the ussr s great success in launching the first unmanned satellite and the first manned space capsule while in the 1980s in contrast the centralized system

the impact of bse on the demand for beef and other meats in great britain indices of media coverage of bse are incorporated in a dynamic aids model of meat demand the publicity which bse has received is found to have had significant effects on the allocation of consumer expenditure among the meats a short run impact has been identified which accounts in large part for the discernible drop in the market share of beef in the early 1990s and more important there also appears to be a significant long run impact of bse which by the end of 1993 has reduced the beef market share by 4 5

impacts of meat product recalls on consumer demand in the usa the impact of meat product recall events on consumer demand beef pork poultry and other consumption goods in the usa is tested empirically beef pork and poultry recall indices are constructed from both the food safety inspection service s meat recall events and from newspaper reports over the period 1982 1998 following previous product recall studies recall indices are incorporated as shift variables in consumers demand functions estimating an absolute price version of the rotterdam demand model findings indicate that food safety inspection service s meat recall events significantly impact demand and newspaper reports do not moreover although elasticities related to recall events are significant they are small in magnitude relative to price and income effects any favourable effects on the demands of meat substitutes for a recall are offset by a more general negative effect on meat demand the general negative effect indicates a shift out of meat to non meat consumption goods

the effects of american and japanese style employment and compensation practices on innovation success in the global marketplace increasingly requires that firms develop capabilities in innovation in this paper we argue that firms can use employment and compensation practices to foster innovation and support for innovation by employees conversely some employment and compensation systems will inhibit innovation a system that allows gain sharing by employees and provides employment assurance will foster innovation in the firm however a system that compensates employees with a fixed wage and allows for termination at will contains anti innovative incentives the former system is the prototypical japanese system particularly in large firms while the latter system is the prototypical american system the commercial success of japanese firms is increasingly attributed to successful innovation particularly in processes we argue that this success is partly attributable to the japanese style system of employment and compensation none of this suggests however that the japanese style practices c

technical progress and the growth of the japanese economy past and future this paper considers technical progress and the growth of the japanese economy many economists are pessimistic about the economy s future because of the rapid ageing of the population however capital and total factor productivity tfp are much more important than labour in determining economic growth during the high growth era of the 1950s and 1960s tfp contributed almost 4 percentage points to the 10 per cent annual growth rate since then however tfp growth has fallen significantly during the 1970s japan s machinery industries became world leaders and made possible the export led growth of the period 1975 85 i argue that the stagnation of the 1990s was caused by demand deficiency and that demand creation by technical progress is the key to economic growth copyright 2000 by oxford university press

monetary and fiscal theories of the price level the irreconcilable differences the fiscal theory of the price level ftpl has attracted much attention but disagreement remains concerning its defining characteristics some writers have emphasized implications regarding interest rate pegging and determinacy of rational expectations solutions whereas others have stressed its capacity to generate equilibria in which price level trajectories mimic those of bonds and differ drastically from those of money supplies we argue that the ftpl attained prominence precisely because it appeared to provide a theory whose implications differ greatly from conventional monetary analysis accordingly we review monetarist writings to identify the primary distinctions in addition we review recent findings concerning learnability and therefore plausibility of competing rational expectations equilibria these indicate that when ftpl and monetarist equilibria differ the latter are more plausible in the vast majority of cases under ricardian assumptions necessary for clear distinctions theoretical analysis indicates that fiscal and monetary coordination is not necessary for macroeconomic stability copyright 2005 oxford university press

industrial governance structures innovation strategies and the case of japan sectoral or cross national comparative analysis in comparative research on industrial policy strategies attention has shifted from national level variables to sectoral variables in both the description and the explanation of policy the sectoral literature however lacks analytic focus and has provided little systematic insight into the causes of cross sectoral variance in governance structures and policy strategies based on recent contributions to the economics and sociology of formal organizations this article attempts to sharpen the concept of industrial sector and to provide a rationale for why sectoral structures and strategies vary next it develops a synthetic explanatory framework that combines sectoral analysis and national domestic structuralism in order to account for industrial innovation strategies in advanced capitalist countries in the final section the fruitfulness of this approach is illustrated by developing a new account of japan s success and failure in industrial innovation an account that overcomes the contradictions among the main alternatives offered in the past the key objective of the article however is to develop a new set of theoretical hypotheses for cross national research not a rigorous empirical test of its main propositions

consumer preferences and product and process r d firms often conduct both product and process r d consumer preferences typically play a vital role in determining these r d choices the economics literature however has mostly ignored the interrelationship between the r d choices of firms and consumer preferences istudy product and process r d from the perspective of their relationship with consumer preferences in doing so i find a novel distinction between the two kinds of r d this distinction can explain several empirical observations regarding firms choices of the two and can also potentially enable us to better empirically identify the two

interindustry technology flows and productivity growth a reexamination the relationship between productivity growth and r and d intensity is reexamined using detailed data for 193 us manufacturing industries and a breakdown of r and d into own product and process improvement oriented components and imported r and d from other industries a significant interindustry relationship between total factor productivity growth and r and d intensity is reconfirmed with used r and d having larger coefficients than own product r and d components but own product r and d is also significant and the explanatory power of the used r and d component rather than the embodied component imported from other industries thus the evidence for r and d spillovers remains tenuous 6 references 2 tables

learning about monetary policy rules abstract we study macroeconomic systems with forward looking private sector agents and a monetary authority that is trying to control the economy through the use of a linear policy feedback rule we use stability under recursive learning a la evans and honkapohja learning and expectations in macroeconomics princeton university press princeton new jersey 2001 as a criterion for evaluating monetary policy rules in this context we find that considering learning can alter the evaluation of alternative policy rules

indeterminacy bubbles and the fiscal theory of price level determination abstract the recently developed fiscal theory of price level determination contends that there is an important class of policy rules in which there exists a unique rational expectations solution that shows the price level to be dependent upon fiscal policy and independent of monetary variables the present paper argues however that there is an alternative solution to these models that has entirely traditional or monetarist properties this latter solution is arguably more plausible since it is the solution that is typically regarded as the bubble free fundamentals solution the paper s analysis involves the specification of feasible instrument variables

on non uniqueness in rational expectations models an attempt at perspective abstract many macroeconomic models involving rational expectations give rise to an infinity of solution paths even when the models are linear in all variables some writers have suggested that this non uniqueness constitutes a serious weakness for the rational expectations hypothesis one purpose of the present paper is to argue that the non uniqueness in question is not properly attributable to the rationality hypothesis but instead is a general feature of dynamic models involving expectations it is also argued that there typically exists in a very wide class of linear rational expectations models a single solution that excludes bubble or bootstrap effects one that occur only because they are arbitrarily expected to occur a systematic procedure for obtaining solutions free from such effects is introduced and discussed in addition this procedure is used to interpret and reconsider several prominent examples with solution multiplicities including ones developed by fischer black and john b taylor

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

input measurement and productivity growth in japanese and u s manufacturing in their article in this review j r norsworthy and david h malmquist 1983 have presented interesting comparisons of productivity growth in the japanese and u s manufacturing sectors their paper starts with the discussion of whether the conventional value added or gnp measurement of output is an appropriate framework for productivity analysis some confusion frequently arises as to whether a production function should be structured on the basis of gross output or value added output separability is a pivotal concept in the analysis of production structures especially in relation to the existence of a real value added aggregate it is well known that there are two types of separability which pertain to the existence of a real value added function weak local separability and strong partial separability the practical advantage of distinguishing these two different forms of separability is that the double deflation method in conventional gnp accounting is justified only when strong partial separability holds using the approximate separability tests of michael denny and melvyn fuss 1977 norsworthy and malmquist have shown that a value added aggregate does not exist in either u s or japanese manufacturing and they conclude that the appropriate output measure for joint investigation of both countries for purposes of productivity analysis is gross output p 953 the purpose of this comment is to indicate some deficiencies in norsworthy and malmquist s analysis in particular it will be demonstrated that the conditions for weak local and strong partial separability in norsworthy and malmquist s paper are incorrectly formulated and as a consequence their findings may not be used as conclusive evidence that a gross output measure is an appropriate basis for the analysis of capital labor substitutability and productivity growth in japan and the united states

money as stock abstract the fiscal theory determines the price level from the value of nominal government debt as a claim to government primary surpluses just as private stock is valued as a claim to corporate profits valuation equations are not constraints so this theory does not mistreat the government s intertemporal budget constraint i anchor the analysis in a simple cash in advance model when money demand falls to zero i show that the price level can still be determined by the government debt valuation equation

productivity and economic growth in japan and the united states during the period from 1960 to 1973 the economic growth rate in japan was at the rate of 10 or 11 percent per year japan was not the only country that grew rapidly during that period france and germany grew at 5 9 and 5 4 percent per year between 1960 and 1973 and italy grew at 4 8 percent per year even the united kingdom grew at a respectable 3 8 percent per year the united states grew at 4 3 percent per year during this period to fill out the roster of the seven major industrialized countries canada grew at 5 1 percent per year after the first oil crisis in 1973 and even more so after the second oil crisis in 197879 there was a dramatic decline of economic growth among industrialized countries growth in the oecd countries dipped to 2 6 percent per year between 1973 and 1979 japanese growth dropped from the doubledigit levels of the 1960 s and the early 1970 s to 3 8 percent per year from 1973 to 1979 in the united states the growth rate dropped to slightly above the oecd average at 2 8 percent per year the rate of economic growth in germany dropped to 2 4 percent and in france to 3 1 percent in every major industrialized country there was a precipitous fall in the rate of economic growth the sources of economic growth in japan and the united states over the whole period from 1960 to 1979 are given in table 1 if we compare japan and the united states during the period 1960 79 we see that the growth of output over the whole period was 8 3 percent in japan and only 3 5 percent in the united states we can allocate this growth in output in the two countries among its three sources namely the contribution of capital input the contribution of labor input and the rate of technical change by far the most important contributor to economic growth in both countries is the growth of capital input this growth source accounts for about 5 percentage points of the japanese economic growth rate and about 1 5 percentage points of the u s economic growth rate this amounts to 60 percent of japanese growth and 40 percent of u s growth labor input in the two countries is a major contributor to economic growth accounting for 1 5 percent of the japanese growth rate and 1 2 percent of the u s growth rate the rate of technical change is an important contributor as well at nearly 2 percent in japan and 0 7 percent in the united states i conclude that by far the most important contributor to economic growth in the two countries is the growth of capital input the relative importance of capital input is much greater in japan than in the united states focusing attention on the period from 1973 to 1979 after the energy crisis we can see that capital input retained its lead as a source of economic growth in both countries however the decline in the growth of tdiscussants john w kendrick george washington university j randolph norsworthy rensselaer polytechnic institute rolf r piekarz national science foundation

high tech and productivity evidence from israeli industrial firms abstract the main purpose of this study is to characterize and analyze high technology industrial firms a technology index is constructed and used to classify firms the largest concentration of hightech firms is israel is found in electronics and transport equipment industries and the lowest in textiles and clothing high tech firms appear to be more productive more export oriented pay higher wages and earn higher rates of return than low tech firms the fact that high tech firms in israel are export oriented is shown to be consistent with the international trade theories of comparative advantage and strategic rent seeking

r d reactions to high technology import competition for a seventeen year panel covering 308 u s manufacturers the authors analyze companies r d spending reactions to changes in high technology imports on average r d sales ratios were reduced in the short run as imports rose reactions tended to be more aggressive the more concentrated the markets were in which the firms operated when company r d operations were multinational and with greater company size and diversification reactions were less aggressive when special trade barriers had been erected reactions became more aggressive over the longer run copyright 1992 by mit press

union bargaining power subcontracting and innovation we show that if a firm can subcontract production to an informal sector an increase in union power may either increase or decrease innovation an increase in union power makes the firm worse off irrespective of its effect on innovation however in contrast to the usual belief an increase in union power may increase consumer surplus and decrease union utility by affecting innovation thus suggesting that a union may not want to be too powerful an increase in union power may create an ambiguous effect on social welfare our analysis provides new insights to the relation between union power and innovation

the macroeconomic role of fiscal policy this article examines the new consensus that fiscal policy should have no macroeconomic role in flexible inflation targeting regimes there is little basis for this presumption fiscal policy remains important in setting the policy mix and in managing shocks and imbalances the credibility of an inflation targeting regime should be enhanced rather than reduced if fiscal policy plays its proper role it is true nevertheless that the costs of focusing fiscal policy narrowly on public sector concerns may not be very great most of the time however when interest rates cannot be used the role of fiscal policy must be different with interest rates at their lower bound of zero there is no plausible alternative for asymmetric shocks and adjustments in emu fiscal policy needs ideally to substitute for the interest rate policy reaction function of the consensus but the difficulties are very great we suggest a policy focus on real exchange rates as a way of resolving some of the dilemmas there is a serious danger that orthodox views about fiscal policy drawn from the consensus will be inappropriately applied especially in europe copyright 2005 oxford university press

impact of bse and bird flu on consumers meat demand in japan in this article we investigate the impact of bse and bird flu on consumers meat demand in japan by using the almost ideal demand system the bse and bird flu scares brought about a fall in demand for beef and chicken respectively and an upturn in demand for pork and fishery products which are substitutes for beef and chicken in japan we also find that the bird flu outbreak had no impact on the market share for beef this suggests that bse had a larger impact on consumers meat demand than did bird flu our empirical results also show that bse has had a persistent impact whereas bird flu has not these differences might depend on the characteristics of each disease such as the incubation period cure rate and infection risk

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

r d capital rate of return on r d investment and spillover of r d in japanese manufacturing industries the effect of r 50d on productivity growth in japanese manufacturing industries is examined using more accurate firm r 50d expenditure data than widely used data based on financial statements series of r 50d capital are constructed then rate of return on r 50d investment is estimated in addition the impact of other industries r 50d on the productivity growth of an industry is also estimated an attempt is made to determine the effect of electronics technology upon the productivity growth of other industries through the transaction of the intermediate electronics goods with improved quality and through the diffusion of the new technological knowledge discovered japanese technology trade 1977 1981 copyright 1989 by mit press

does food safety information impact u s meat demand a theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to u s meat consumption evidence is found for the existence of pre committed levels of consumption seasonal factors time trends and contemporaneous own and cross commodity food safety concerns the average demand response to food safety concerns is small especially in comparison to price effects and to previous estimates of health related issues this small average effect masks periods of significantly larger responses corresponding with prominent food safety events but these larger impacts are short lived with no apparent food safety lagged effects on food safety concerns in the united states have dramatically increased in the past decade with regard to incidences of contaminated meat products concerns have arisen because contaminated meat products can result in serious risk to the well being and health of consumers contamination comes from a myriad of sources including but not limited to outbreaks of listeria monocytogenes escherichia coli e coli and salmonella centers for disease control and prevention food safety problems are not isolated to the united states as other unsafe contaminates in meats have emerged across the world including highly publicized outbreaks of bovine spongiform encephalopathy bse in europe the potential impacts of publicized food safety events on consumer s demand for meat products in the united states include own effects on the demand for the contaminated meat involved as well as cross effects impacting the demand for other meats the objective of this article is to investigate whether publicized food safety concerns surrounding beef pork and poultry chicken and turkey have impacted meat consumption food safety indices are constructed separately for beef pork and poultry

trends in the substitution of production factors to technology empirical analysis of the inducing impact of the energy crisis on japanese industrial abstract japan successfully overcame the energy crises of 1973 and 1979 maintaining productivity in the face of drastically increased energy prices despite the fragile nature of its energy structure this was due to technological innovation efforts that led to rapid improvement in japan s industrial technology as a whole this paper tries to prove this hypothesis on the basis of an examination of the trends in the substitution of production factors by technology as represented by r d investment efforts since the first energy crisis in 1973 there have been a number of attempts to identify the possibility of substitutability of energy by other production factors but none have been successful in taking technology into account this paper tackles this subject on the basis of the measurement of the technological knowledge stock and en empirical analysis using a translog cost function incorporating this stock and shows that over the last two decades all production factors have been substituted by technology in japan s manufacturing industry or have been moving towards that direction

the fiscal theory of the price level a critique abstract this paper argues that the fiscal theory of the price level ftpl has feet of clay the source of the problem is a fundamental economic misspecification the ftplconfuses two key building blocks of a model of a market economy budgetconstraints which must be satisfied identically and market clearing or equilibriumconditions the ftpl asssumes that the government s intertemporal budgetconstraint needs to be satisfied only in equilibrium this economic misspecification has far reaching implications for the mathematicalproperties of the equilibria supported by models that impose the structure of theftpl it produces a rash of contradictions and anomalies jel classifications e31 e41 e51 e52 e62 e63 key words fiscal theory of the price level ricardian fiscal financial monetaryprogrammes government budget constraint price level indeterminacy author willem h buiter european bank for reconstruction and development oneexchange square london ec2a 2jn uktel 44 20 73386805fax 44 20 73386110 6111e mail buiterw ebrd comweb page http www nber org wbuiter index htm

research and development human capital and trade performance in technology intensive manufactures a cross country analysis abstract this paper comprises an extensive examination of the relationship between commonly utilized policy indicators of national technological capability and observed trade success in technology intensive manufactures across 52 countries in the 1980s a central focus is the relative performance of policy indicators which directly measure innovative activity such as patent output and expenditure and employed scientists and engineers in r d versus those measuring general efforts at increasing national levels of human capital the study design is guided by the inter country intrasectoral approach outlined by dosi et al 19 it emphasizes differences in trade performance based on the notion of international competitiveness but also compares results for conventional revealed comparative advantage indices the large number of countries included and the nature of the policy objectives adopted have necessitated a highly aggregated approach using nation wide attributes and trade in one broad technologyintensive sector as the measure of demonstrated international competitiveness simple correlation and multiple regression techniques are used to assess the association of four main sets of national attributes indicators of direct innovative activity general human capital development physical capital formation and natural resource endowment with technology intensive trade performance the empirical findings provide further support for the importance of national differences in technological capability as a determinant of structural and international competitiveness within the technology intensive sector of production they suggest that policy indicators measuring actual innovative activity and physical capital formation have a much closer link to technology intensive trade than the general educational effort or output indicators demand side measures which proxy the actual employment and application of resources for r d purposes demonstrate the strength of association required for reliable policy evaluation of real national differences in technological capability the poor performance of the general human capital supply variables highlights the need for a careful consideration of the optimality of the allocation of substantial levels of scarce national resources to broad based educational output a number of other significant results concerning the link between technology indicators technology intensive trade and economic performance are discussed

why are japanese firms so innovative in engineering technology abstract japanese firms belonging to the electric and electronics industry have been producing a large number of innovations concentrated in the field of engineering technology and directly related to commercial products one reason why japanese firms have such characteristics can be explained by their unique behavior and organization of research and development r d the behavior of the r d division of japanese firms is characterized by less independence from other divisions of the firms a close relationship with other divisions and concerted behavior to maximize total corporate profits these are indicated by the fact that r d funds are allocated flexibly by taking into account the intentions of other operational divisions or the headquarter s office and the fact that there exists a unique career path in a japanese firm by which r d personnel do not always stay in the research division but are frequently assigned to other various divisions as they climb upward however these structural and behavioral characteristics of japanese corporate r d which so far have been efficient in applied research and product development are not adaptable to basic research recently japanese firms are seeking a new r d organization and management system to solve the problem

the fiscal myth of the price level i examine the fiscal theory of the price level according to which non ricardian policy and predetermined nominal government debt fiscally determine prices i argue that the non ricardian policy

asset profiles for technological innovation abstract this paper proposes a conceptual distinction between four generic categories of assets for technological innovation 1 scientific research assets 2 process innovative assets 3 product innovative application assets and 4 aesthetic design assets technological innovation may sometimes require the activation of only one asset type but more often a specific constellation of more asset types has to be mobilized the asset categories differ profoundly with respect not only to their respective competence bases but also with respect to their functional contribution to industrial innovation and mostly also to their organizational attachment this way of conceiving technological innovation is opposed to the one dimensional r d conception that tends to view r d as one functional asset along with others like manufacturing or marketing it is argued that the different innovative assets are often located in different organizational settings within the corporation the coupling between assets is discussed in terms of inter asset specificity we illustrate the great variation of innovative asset profiles across a wide spectrum of product categories the concept of technological trajectories is reinterpreted in terms of asset profile oscillations and regroupings finally the framework is related to recent efforts to formulate a resource based theory of the firm and the implications for innovation strategy is discussed

dynamics in innovation systems evidence from japan s game software industry in contrast to the us and recently europe japan appears to be unsuccessful in establishing new industries an oft cited example is japan s practical invisibility in the global business software sector literature has ascribed japan s weakness or conversely america s strength to the specific institutional settings and competences of actors within the respective national innovation system it has additionally been argued that unlike the american innovation system with its proven ability to give birth to new industries the inherent path dependency of the japanese innovation system makes innovation and establishment of new industries quite difficult however there are two notable weaknesses underlying current propositions postulating that only certain innovation systems enable the creation of new industries first they mistakenly confound context specific with general empirical observations and second they grossly underestimate or altogether fail to examine the dynamics within innovation systems this paper will show that it is precisely the dynamics within innovation systems dynamics founded on the concept of path plasticity which have enabled japan to charge forward as a global leader in a highly innovative field the game software sector 2008 elsevier b v all rights reserved

the productivity slowdown the oil shocks and the real cycle f ive facts stand out about economic performance in the united states since world war ii the first is that for most of the postwar period the u s has had a slower rate of economic growth than the other major developed democracies except great britain and much lower rates of growth than germany japan and italy the gap between the growth of per capita income of the united states and comparable countries has however tended to diminish over time and the united states has lately grown at about the same rate as most other developed countries the second outstanding fact is that the united states has fallen far behind in many mass production industries in which it used to lead the world whereas it is ahead of other nations in many new and especially high technology industries in automobiles steel tires household appliances and earth moving and farm equipment for example u s production has fallen dramatically in relation to output in most comparable countries and the country has become a net importer of most such products by contrast in newer industries such as computers jet aircraft sophisticated weaponry and high technology in general the united states is often dominant both as producer and exporter the third outstanding fact is that most of the older heartland of american industry roughly the area north and east of an arc drawn from baltimore to st louis to milwaukee has declined dramatically in comparison with the south and the west this change in regional fortunes has been due in large part to migration motivated by differences in economic prospects from the declining to the advancing