Government Financed Technology Development Is Necessary for Economic Growth

Contrary to the belief of many politicians, economists and business people, government investments have been necessary for economic growth in the past. Market-based activities have only been complementary to government-financed long-term technology development. This is the conclusion of Professor Vernon W Ruttan, who studied the development of six different general purpose technologies and found that investments by the government in military technology development have been necessary in order to develop the American production system, airplane and computer technologies, the Internet, space technologies and nuclear power. In the case of nuclear power, Ruttan argues that this technology, most probably, would never have developed in the absence of government-funded programs. In the cases of other technologies, development would have slowed down substantially.

Governments have the ability to invest in high-risk and long-term technology projects that are required to develop new general purpose technologies. Companies generally do not take the risks of decades of investments in new technologies. When we consider photovoltaics, wave energy, fuel cell or electric vehicles and a number of other technologies, we are looking at long-term development projects.

Governments need to analyze the challenges, opportunities and prospects of technology development in a number of sectors of society and the economy and make overall plans for action in the sectors of

• transportation,

• the built environment,

• industrial processes,

• agriculture, and

• behavior and work life change.

Governments in each country also need to determine the level of planning and government financing needed. This analysis needs to be made in cooperation with companies that are involved in different technology areas and technology and management experts in different fields.

Plans need to be made for the overall, aggregate level of society and for each of the sectors above. Based on these plans, projects need to be initiated that solve different technical and management problems in the same way that there were technical and management projects within the Second World War transformation and the Apollo program.

Plans need to be based on an understanding of the limited resources that need to be used in the transformation program. The most important of these are the following:

• competence (technical, financial, economic, administrative and management).

In Part 2 of this book a number of tools for the management of the change process are provided and, in Part 3 technical and transformation opportunities in each of the six areas from transportation to behavior and work life change are discussed in some depth, mainly from a change management perspective. Case examples are provided illustrating the opportunities and the challenges offered by the different alternatives.

The situation in each of the sectors is summarized very briefly here. In all areas, financially justifiable investments need to be prioritized. When necessary investments are not financially justifiable or very risky for single companies, possible financing solutions need to be analyzed and debated. Sometimes public financing may be required or innovative financing solutions may have to be developed.

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