John Zysman

Globalization With Borders

In an era in which the electronics sector is the driving industry in the economy, “Wintelism” is the codeword used in this article to reflect a shift in competitive dynamics away from final assembly and vertical market control, towards a struggle over setting and evolving de facto product standards at any point in the value chain. It is argued that “Wintelism” has its origins in the American high-technology sector, but is now diffusing through the creation of international production networks.

Winning coalitions for climate policy

Green industrial policy builds support for carbon regulation The gap is wide between the implications of climate science and the achievements of climate policy. Natural sciences tell us with increasing certainty that climate change is real, dangerous, and solvable; social sciences report that key constituencies largely support action. But current and planned policy remains weak and will allow a long-term increase in temperature of 3.6°C (1). How can we address the gap between science and policy? From the political successes of climate policy leaders, we identify key strategies for building winning coalitions for decarbonization of domestic economies. Green industrial policy provides direct incentives for growth of green industries, which builds political support for carbon regulation.

The algorithmic revolution---the fourth service transformation

e are in the midst of the fourth services transformation. The core story is the application of rulebased IT tools to service activities; it is not about the growth in the quantity or the value of the activities we label as services. The application of IT has the potential to transform the services component of the economy, altering how activities are conducted, and value is created. Services were once seen as a sinkhole of the economy, immune to significant technological or organizationally driven productivity increases. Now the IT-enabled reorganization of services, and business processes more generally, has become a source of dynamism in the economy. There are four interconnected service stories that must be separated and clarified. The first is an accounting error, or perhaps better, a matter of financial engineering. Activities outsourced from manufacturing are relabeled as services. The GM window washer is a manufacturing employee; but when contracted by GM he becomes a service employee. The same window is washed, perhaps by the same window washer. Initially, at least, we should assume the activities stay the same, just conducted by different organizations. The second story is that services become a larger part of the economy with the evolution of consumer and business purchases. Services have become a larger portion of both the consumer market-basket and of what businesses use to produce and distribute their goods and services. The third service story is about the transformation in and changing role of women in the work force and, with that, the conversion of unpaid domestic work—washing floors, watching babies, and delivering groceries—into commercial services bought and sold in the market. It is a form of household outsourcing. The fourth service story is the digital or algorithmic transformation. Service activities themselves are changed when they can be converted into formalizable, codifiable, computable processes with clearly defined rules for their execution. This is an algorithmic service transformation facilitated by IT tools. Much of the service innovation then is around the adoption and effective implementation of IT tools. Certainly business processes from finance and accounting through to customer support and CRM are altered when they can be treated as matters of information and data management. Routine and manual functions are automated, and fundamental reorganization of activities is enabled. Likewise, sensors and sensor-based networks change many personal services. Then, as service activities are conducted by and with IT tools, the worker skills required change as well. And of course, as information moves, many activities that were previously tightly linked to particular places can be moved. Just as important, this algorithmic transformation blurs the line even further between product and service. For example, it is conventional to observe that products such as media products are simply encapsulated information. Conversion into digital format facilitates their online delivery to computers, cell phones, iPods, and the like. Slowly the particular product, the purchase of a CD, blurs into a service, a subscription to download music. IBM has transformed from a company selling a product in which service support provided competitive advantage into a service company embedding products in its offerings. The services that ride on the product platform become the differentiated asset that creates value for the firm. The drama is that tools and technologies based on algorithmic decomposition of service processes may have the power to revolutionize business models the way manufacturing was revolutionized in the industrial revolution. The digitally implemented service processes and activities will displace people when it is embedded in automated processes, but often complement the effective use of human insight, intelligence, and knowledge in the choice, development, application, and effective use, of these tools will remain central. The crucial issue in this era will be how underlying knowledge and insight is developed and applied.

Manufacturing innovation and american industrial competitiveness.

An erosion of manufacturing capacities has contributed substantially to Americas trade problems. The difficulty lies not in U.S. machines and technology, but in U.S. strategies for automation and the goals American firms seek to achieve through production innovation. Mass production and administrative hierarchies created the basis for American industrial preeminence in the years after World War II. There is substantial evidence that American firms have been unable to adopt or adapt to the production innovations emerging abroad. A sustained weakness in manufacturing capabilities could endanger the technology base of the country.

American industry in international competition : government policies and corporate strategies

A shortened version of the introductory and concluding chapters of a volume of case studies of American industry in international competition, this article examines the contemporary debate on industrial policy, building on lessons drawn from the case studies. The authors identify several possible economic and political rationales for an industrial policy, as it is one of the instruments with which the government can respond to the competitive difficulties of individual sectors in international trade. They conclude that, in the absence of such a policy, the government will continue to respond to such difficulties with protectionist measures that thwart necessary economic adjustment and reduce our national economic well-being.

Reunifying Europe in an Emerging World Economy: Economic Heterogeneity, New Industrial Options, and Political Choices

This article examines the industrial reintegration of central and eastern Europe into the broader European economy in the context of the emerging world economy. Since the Cold War, Europe’s economic heterogeneity has sharply increased, making it comparable to Asia. And Europe as a whole must adapt to a global economy of three regional centres and industrial strategies implemented through International Production Networks (IPNs). The article asks whether policies favoring IPNs that link east and west can reconcile eastern industrial development with western prosperity and employment. Thus the eastward enlargement of the European Union, which has been driven primarily by security concerns, can also improve the region’s competitiveness in global markets.

Countertrade, Offsets, Barter, and Buybacks

Countertrade, offsets, barter, and buybacks have existed since before money was invented but over the last few centuries have been treated as marginal phenomena. However, current estimates of the volume of these activites range from 8 to 30 percent of world trade and could reach 50% by the year 2000. What is surprising is not just the imprecision of the data but the fact that we have no control over this enormous volume of international transactions. This article examines these forms of trade, their causes and policy implications, and their future impact on our open trade system.

The French state in the international economy

The French state bureaucracy, able partially to shelter itself from Parliament and to influence the industrial sector directly, has been able to protect national interests in an economically interdependent world. It struck a regional bargain that committed agriculture to the European Community and in effect provided a German subsidy to French farmers. It mediated between the national and international market to promote industrial modernization and force a restructuring of critical industrial sectors. It has grown increasingly sophisticated in its dealings with multinational companies. Early efforts to insist on purely French operations have been abandoned, permitting the state to negotiate more effectively with the multinationals and obtain substantive rather than symbolic goods. These policies have cushioned agricultures transition into an industrial world and helped pressure a previously protected industry to modernize. Finally, the state has played trader, trying directly to market French goods and assure payment for imports in package trade deals. The French have not been able to impose their own rules on monetary and energy matters. Yet their efforts suggest that a nation-state can use administrative or domestic economic resources to reduce its vulnerability to international developments, though it cannot of course escape from the system.

Services with Everything: The ICT-Enabled Digital Transformation of Services

A fundamental transformation of services is underway, driven by developments in information and communications technology (ICT) tools, the uses to which they are being put, and the networks on which they run. Services were once considered a sinkhole of the economy, immune to significant technological or organizational productivity increases. Now, they are widely recognized as a source of productivity growth and dynamism in the economy that is changing the structure of employment, the division of labor, and the character of work and its location. Yet, the actual character of this transformation is often obscured by the increase in jobs labeled as services and by a focus on the digital technologies that, certainly, are facilitating this transformation. This transformation, central to the growth of productivity and competition in the economy, poses basic policy and business choices. The core of our story of the services transformation is not about the growth in quantity or value of the activities labeled services, the conventional emphasis of much of the writing about services. Nor is it about the revolution in digital technology. Rather, it is about how the application of rule-based information technology tools to service activities transforms the services component of the economy, altering how activities are conducted and value is created. There are significant implications for how firms compete. Services are increasingly the way that firms pursue value-added activities to avoid ever-faster commoditization of products, that is to avoid competition based solely on price when market offerings are relatively similar. However, the unbundling of services activities themselves accelerates this commodification, since competitors have the same efficiency-enhancing business process and infrastructure services available to them. Firms increasingly become bundles of services purchased on markets, and at the same time some of those in-house business functions that are maintained are then offered as services. A consequence is that the distinction between products and services blurs, as manufactured products are increasingly embedded within and recast as services offerings. Clearly, traditional sectoral boundaries break down, as information and services offerings bring previously unrelated firms into direct competition.Likewise, the consequences for business organization, production, and work are profound, just as work was transformed by the evolution of manufacturing. The automation of basic activities both frees, but also requires, professionals to perform more advanced tasks. And the analytical tasks of managing information flows generated by ICT-enabled services often require a different set of skills than providing the service itself. Capturing the possibilities from the services transformation presents new policy challenges for governments and regions. Services are deeply rooted in social rules, conventions, and regulations. Consequently, capturing the value possibilities inherently means recasting the rules, regulations, and conventions in which the services are embedded.The development and deployment of ICT-enabled services should be considered a form of production. As ICT has become integral to the creation and delivery of services, ICT-enabled services have taken on the characteristics of production normally assigned solely to manufacturing. ICT systems that deliver the services have to be designed, developed, built, and implemented and they are very much open to innovation and productivity increases. Investments are often industrial in scale. ICT-enabled services are the latest phase in a long history of production innovation. The history of manufacturing production progressed along distinct epochs, each with distinct manufacturing processes, management structures, labor practices, productivity, and outputs. The development of ICT tools and their application to services activities has driven a shift to the latest epoch. The advent of Cloud Computing, emerging as the next dominant computing platform, accelerates the transformation of services. Cloud Computing, a distinct set of business models and performance attributes (not simply a code-word for everything online), enables new business models, transforms existing strategies, lowers the bar for new entrants, and raises a myriad of policy issues.From a policy standpoint, the question is how to conceive, design, develop and build and deploy the new system. The “good” jobs, high value added functions, are in the innovative development and deployment of these systems. Policy makers need to employ strategies that will help communities and firms to develop the competencies required for this new form of production.The continuing debate in political, economic and public policy circles about the relative value of manufacturing jobs and service-sector jobs is increasingly irrelevant to policy debates in the real economy. Just as it is inaccurate to assume that manufacturing jobs are secure and well paid, it is also inaccurate to consider service jobs to be dead-end, low-wage, unskilled positions.

Between the market and the state: dilemmas of french policy for the electronics industry

Abstract This case study of the French electronics industry suggests the limits on a governments ability to shape the growth of a domestic industry that forms an integral part of an international market-place. The French state has been unable to alter the structure of the international industry or isolate French firms from its pressure. As a result its efforts to force firms to conform to the political goals of the state has slowly weakened them in the market-place and endangered the long-term basis of French strategy in the industry.