Is There Need for Economic Leadership? Japanese or U.S.?

Abstract

There are two reasonably unambiguous definitions of the inherently ambiguous concept of economic leadership. Definition One relates to innovation and leading sectors; that is, the relative primacy of a country in commercializing a new technology and establishing, for a time, a dominant position in a major sector. In that sense, Britain led in the first phase of the cotton textile revolution (say, 1783-1832), and the United States led in the first phase of the mass automobile revolution (say, 1909-29). Definition Two relates to policy; that is, the assumption of responsibility for the successful operation of the world economy as a whole by a single country. I shall consider later the necessary conditions for such leadership. The leading sector and policy definitions are partially linked because only an economic power quick off the mark in converting new inventions into profitable innovations is likely to be able to sustain the balance of payments implications of policies of responsible leadership in the world economy. I shall now respond to the subject of this paper in terms of each definition of leadership. First, the new technologies and their implications for leadership in the innovational, leading-sector sense. By new technologies I refer to the microchip, genetic engineering, the laser, robots, new communication methods, and new industrial materials. Although germinating for some timeand by no means uniform in their timing-I believe historians will date the innovational stage of this technological revolution from, roughly the second half of the 1970's. Somewhat arbitrarily, I am inclined to regard this rather dramatic batch of innovations as the fourth such major grouping in the past two centuries.' The fourth industrial revolution has some distinctive characteristics as compared to its predecessors. It is more intimately linked to areas of basic science which are themselves undergoing rapid revolutionary change. This means the scientist has become a critical actor in the drama; and the successful linkage of the scientist, engineer, and the entrepreneur has become crucial to the generation and diffusion of the new technologies. The new technologies are also proving ubiquitous, progressively suffusing the older basic industries, agriculture, animal husbandry, and forestry, as well as all manner of services from education and medicine to banking and communications; and they are, in different degree, immediately relevant to the economies of the developing regions, depending on their stage of growth, absorptive capacity, and resource endowments. For our purposes, the extraordinary range and diversity of the new technologies bear directly on the prospects for leadership by Japan, the United States, or anyone else. I find it most improbable that any one nation will achieve and sustain across-the-board technological leadership in the fourth industrial revolution, or, indeed, leadership in