Findings From the Four Indicators
Several nations have made tremendous technological leaps forward over the past decade. Some of these countries are well positioned to play more important roles in technology development because of their large and continuing investments in S&E education and R&D. However, their success may hinge on other factors as well, including political stability, access to capital, and an infrastructure that can support technological and economic advancement.
This section assesses a group of selected countries and their potential to become more important exporters of high-technology products during the next 15 years, based on the following leading indicators:
- National orientationevidence that a nation is taking action to become technologically competitive, as indicated by explicit or implicit national strategies involving cooperation between the public and private sectors.
- Socioeconomic infrastructurethe social and economic institutions that support and maintain the physical, human, organizational, and economic resources essential to the functioning of a modern, technology-based industrial nation. Indicators include the existence of dynamic capital markets, upward trends in capital formation, rising levels of foreign investment, and national investments in education.
- Technological infrastructurethe social and economic institutions that contribute directly to a nation's ability to develop, produce, and market new technology. Indicators include the existence of a system for the protection of intellectual property rights (IPR), the extent to which R&D activities relate to industrial application, competency in high-technology manufacturing, and the capability to produce qualified scientists and engineers.
- Productive capacitythe physical and human resources devoted to manufacturing products and the efficiency with which those resources are used. Indicators include the current level of high-technology production, the quality and productivity of the labor force, the presence of skilled labor, and the existence of innovative management practices.
This section analyzes 15 economies: 6 in Asia (China, India, Indonesia, Malaysia, the Philippines, and Thailand); 3 in Central Europe (Czech Republic, Hungary, and Poland); 4 in Latin America (Argentina, Brazil, Mexico, and Venezuela); and 2 others (Ireland and Israel) that have shown increased technological activity.
The national orientation indicator identifies nations whose businesses, government, and culture encourage high-technology development. This indicator was constructed using information from a survey of international experts and published data. The survey asked the experts to rate national strategies that promote high-technology development, social influences favoring technological change, and entrepreneurial spirit. Published data were used to rate each nation's risk factor for foreign investment during the next five years (PRS Group 1999).
Ireland and Israel posted the highest overall scores by far on this indicator. (See figure 6-14 and appendix table 6-8.) Although Ireland scored slightly lower than Israel on each of the expert-opinion components, its rating as a much safer place for foreign investment than Israel elevated its composite score.
The national orientation of both Ireland and Israel was scored consistently and significantly higher than that of the other countries examined and was well within the range of scores accorded the more advanced economies of Taiwan and Singapore. Hungary, Poland, and Malaysia also scored well, with strong scores in each of the indicator components.
Except for Brazil, the Latin American countries (Argentina, Mexico, and Venezuela) received the lowest composite scores of the economies examined. Two factors contributed to their low scores: they were considered riskier or less attractive sites for foreign investment than the other countries, and the experts did not consider these three countries to be entrepreneurial.
The socioeconomic infrastructure indicator assesses the underlying physical, financial, and human resources needed to support modern, technology-based nations. It was built from published data on percentages of the population in secondary school and in higher education and survey data evaluating the mobility of capital and the extent to which foreign businesses are encouraged to invest and do business in that country. (See figure 6-15 .)
Ireland and Israel again received the highest scores among the emerging and transitioning economies examined. In addition to their strong track records on general and higher education, Ireland's and Israel's scores reflect their high ratings for the mobility of capital and their encouragement of foreign investment. Their scores were similar to those given to Taiwan and South Korea.
Among the remaining nations, the Philippines edged out the three Central European countries, which all posted similar scores. The socioeconomic infrastructure score for the Philippines was bolstered by its strong showing in the published education data and by the experts' higher opinion of its mobility of capital.
Mexico received the lowest composite score of the 15 nations examined. It was held back by low marks on two of the three variables: educational attainmentin particular, university enrollmentsand the variable rating of its mobility of capital.
Five variables were used to develop the technological infrastructure indicator, which evaluates the institutions and resources that help nations develop, produce, and market new technology. This indicator was constructed using published data on the number of scientists in R&D; published data on national purchases of electronic data processing (EDP) equipment; and data from a survey that asked experts to rate each nation's ability to train its citizens locally in academic S&E, make effective use of technical knowledge, and link R&D to industry.
Israel received the highest composite score of the group of newly industrialized or transitioning economies examined here. (See figure 6-16 .) Israel's high score on this indicator was based on its large number of trained scientists and engineers, the size of its research enterprise, and its contribution to scientific knowledge, especially compared with Ireland and the smaller, less populous nations in Asia and Central Europe. Ireland received the second highest score, followed by India and China. Ireland's score was bolstered by its large purchases of EDP equipment. India's and China's scores were nearly identical, although India's scores showed more balance across indicator components and more overall strength. China's score was influenced greatly by the two components derived from statistical data: its large purchases of EDP equipment and its large number of scientists and engineers engaged in R&D.
The productive capacity indicator evaluates the strength of a nation's current, in-place manufacturing infrastructure as a baseline for assessing its capacity for future growth in high-technology activities. It factors in expert opinion on the availability of skilled labor, numbers of indigenous high-technology companies, and management capabilities, combined with published data on current electronics production in each country.
Ireland scored highest in productive capacity among the 15 developing and transitioning nations examined, receiving high marks for each indicator component. (See figure 6-17 .) Ireland's score also was boosted by its prominence in the computer hardware manufacturing industry. India and Israel were second and third, attaining strong scores on each indicator component.
Several developing Asian economies, particularly China and Malaysia, had higher electronics production than did Ireland in 1996, the reference year for the published data. However, they scored lower on indicator components rating their labor pools and management personnel. Mexico's score showed an even greater imbalance than those of China and Malaysia. Although Mexico's production of electronics productsthis indicator's published data variablewas greater than Ireland's, scores rating the quality of Mexican labor and management were extremely low. As a result, Mexico received the second lowest score of the 15 countries examined.
Findings From the Four Indicators
Based on the set of four leading indicators discussed, Ireland and Israel appear headed toward prominence as exporters of technology products to the global market. Ireland led the group of 15 developing and transitioning countries examined in three of the four leading indicators and received the second highest score in the fourth, technological infrastructure. On that indicator, Israel ranked first because of its large number of trained scientists and engineers, its highly regarded industrial research enterprise, and its contribution to scientific knowledge. Israel placed second on two of the remaining indicators and third on the other. (See figure 6-18 .)
Hungary and India also posted strong scores on at least three of the four indicators. Hungary ranked third on the indicator identifying nations that are taking action to become technologically competitive, fourth on the indicator rating socioeconomic infrastructure, and fifth on the technological infrastructure indicator. India scored nearly as well and sometimes better than Hungary on the leading indicators, but its scores were not as balanced. Hungary's lowest ranking on any of the four indicators was 8th on the productive capacity indicator, while India's lowest ranking was 11th on the socioeconomic indicator. India's large population helped to elevate its scores on several indicators.
These indicators provide a systematic approach for comparing future technological capability on an even wider set of nations than might be available using other indicators. The results highlight a broadening of the group of nations that may compete in high-technology markets in the future while also reflecting the large differences between several of the emerging and transitioning economies and those considered newly industrialized.