Private firms make a far greater contribution to the pace of change than public institutions As many countries have learned, simply purchasing technology is not enough for increasing long-term productivity. Trial and error are central to technology's operation and improvement. Even minor innovations often require the use of pilot process plants and the design, construction, and testing of prototypes. When policymakers design national science and technology systems, they should keep in mind that much of what makes up a technological base is personal and experiential. Skills and knowledge are often acquired through hands-on work, and the transfer of expertise is neither cheap nor quick.
Technological accumulation tends to be incremental.
Individuals and firms rarely jump into entirely new areas of technology. Instead, they tend to move in directions where past learning supports their efforts to acquire new expertise. Private firms lead the way Research by Bank consultants Martin Bell and Keith Pavitt shows that private firms, sometimes with public support, make a far greater contribution to the pace of change than public institutions. Policymakers seeking quicker technological change need to take the needs of private firms into account. Firms can be the most potent forces in accumulating technology because they learn from developing and operating specific production systems.