Technology adoption

Derek Thompson has a piece at The Atlantic on why America “doesn’t build what it invents.” It covers a lot of good ground. Here I just want to link to a few other things that I think speak to one piece of this topic.

Paul Romer testified in 2020 that the US was first a leader in technology (adoption) not science, then briefly led in both, and now leads just in science not in technology. (I wrote a two paragraph post.)

James Bessen at BU may be the most underrated chronicler of technology’s diffusion. His book “Learning By Doing” is all about that but his newer book “The New Goliaths” is a fascinating look at how today’s giant companies might prevent adoption of new technologies. Here’s an excerpt.

On the theme of complementary assets that you might need for technology to spread, here’s Raffaella Sadun writing about CEOs needing to have skills and knowledge specific to their firms. You might add this to Bessen’s story and think about a lack of managers with the right complementary knowledge to allow new firms to use technologies housed in the dominant firm.

And here’s a ProMarket piece on incentives to innovate as just one piece of innovation:

The creation of these mRNA vaccines tells two stories about encouraging innovation. The first story is familiar: how enormous incentives (which have made senior executives at Moderna, Pfizer, and BioNTech billionaires) can marshal capital and talent to achieve herculean feats (let’s call this story Innovation-as-Incentives). The second story is less discussed but just as critical: how innovation happens when public and private agents share knowledge and combine capabilities, supported throughout by government and non-profit institutions (let’s call this story Innovation-as-Capabilities).

Derek hits on a lot of crucial reasons why the US lags in technology adoption and they all make sense to me. In the links above I’ve been trying to expand on one of them, closest in Derek’s framework to the “incumbency bottleneck.”

It’s not just that we have too many large firms or not enough antitrust. It’s that we need to actively create an economy where knowledge spreads, and where innovation incentives combine with innovation capabilities. We need to make it possible and profitable to adopt a technology, start a new firm, tinker and improve something invented elsewhere. That’s an antitrust problem, a management problem, an industrial policy problem, a labor market problem, an education problem, and more.