Page 153 - Global Political Economy_Understanding The International Economic Order

CHA PTER S IX
contribute not only to an understanding of the rise and decline of
nations, but also to improved comprehension of the international po-
litical conflicts to which shifts in international status frequently give
rise.
If technological advance is revolutionary, a technological leader
may suddenly find itself at a decisive disadvantage and may even need
to start anew and make substantial investments in the new technol-
ogy. Whereas a technological leader with high wages and large invest-
ments in state-of-the-art technologies may have little or no incentive
to take advantage of a newer revolutionary technology, a more tech-
nologically backward economy with no vested interest in the pre-
viously established technology and with cheaper labor and an under-
valued currency is likely to view the new technology as a promising
means to leapahead of the leader. In times of normal incremental
technological change, increasing returns to scale generally favor eco-
nomic leaders. However, a new invention or a major technological
breakthrough may favor the interests of a rising economy while disad-
vantaging those economic leaders who pay high wages and, as
Mancur Olson has demonstrated, are also strongly influenced by ves-
22
ted interests that oppose adoption of new ideas. In this way, success
in one stage of economic development may create barriers to success
in the next stage.

Intensified Competition for Technological Leadership
Historically, there has been a high correlation among technological,
economic, and political leadership. The rise of particular nations to
global preeminence—for example, Great Britain, the United States,
Germany, and Japan—resulted from their ability to take advantage
of the first and second Industrial Revolutions. As in those earlier revo-
lutions, the latest technological revolution has given rise to intensified
competition among national economies for leadership. In the late
nineteenth century, the great powers struggled with one another over
the commanding heights of mass production. At the close of the twen-
tieth century and in the beginning of the twenty-first century, the bat-
tleground has been located among the high-tech industries of the
computer and the information economies. This has produced an in-
tensifying competition among the great economic powers for global
supremacy in these technologies and, consequently, for dominant po-
litical power in the future.

22
Mancur Olson Jr., The Rise and Decline of Nations: Economic Growth, Stagfla-
tion, and Social Rigidities (New Haven: Yale University Press, 1982).
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