Figure 1-14 



"Radicalness" of Innovations, 



by Selected Countries, 1953-73 



(Percentage ot each Country's Innovations) 



10 

 I 



20 



I 



30 



40 



I 



50 



I 



60 

 I 



Improvement of existing technology 

 Major technological advance 

 Radical breakthrough 



United 

 States 



United 

 Kingdom 



France 



West 

 Germany 



Japan 



SOURCE- Gellman Research Associates, Inc. 



and manufacturing rights) of a country is one 

 indicator of the technological position of that 

 country vis-a-vis other nations. Several other 

 factors, however, may influence the volume of 

 such purchases, such as the economic develop- 

 ment policies of the nations involved and the 

 trading arrangements among them. 



Information on payments and receipts for 

 technical "know-how" is available for transac- 

 tions between multinational companies and 

 their foreign affiliates as well as between 

 independent organizations. The latter informa- 

 tion was selected for use primarily on the 

 assumption that purchases by independent 

 enterprises are more likely to be based on the 

 technical merit of all available "know-how". The 

 omission of transactions between corporations 

 and their foreign affiliates, however, results in a 

 substantial understatement of the extent of 



technology transferred. In addition, a significant 

 amount of "know-how" is transferred through 

 the exchange of technical and management 

 personnel, and through informal agreements 

 which are not reflected in the financial data 

 presented here. 



The dollar value of U.S. receipts, payments, 

 and the resulting balance (i.e., receipts minus 

 payments) for exchange of technical "know- 

 how" is shown in figure 1-15. Over the 1960-74 

 period, U.S. receipts from the sale of "know- 

 how" grew exponentially while its payments 

 grew more linearly, resulting in an increasingly 

 large positive balance of payments in this area. 

 Increases in the U.S. balance are due principally 

 to purchases of U.S. "know-how" by Western 

 Europe and Japan (accompanied by relatively 

 small purchases of Japanese "know-how" by the 

 U.S.). From 1970 onward, for example, nearly 45 

 percent of U.S. net receipts were associated with 

 Japan, and 30 percent with Western Europe 

 (including the United Kingdom). The developing 

 countries are increasingly important purchasers 

 of U.S. "know-how", accounting for 15 percent 

 of the U.S. balance in 1974. 



U.S. purchases of foreign "know-how" are 

 primarily from Western Europe. Approximately 

 80 percent of U.S. payments in 1974 went to 

 these countries, with nearly 35 percent going to 

 the United Kingdom alone. 



Although considerably more technical "know- 

 how" appears to flow from the United States 

 than to it, the volume of foreign technology 

 acquired by the United States is substantial and 

 expanding in various areas. Machine tools is one 

 such area in which the advanced "know-how" of 

 foreign countries has been acquired for use in 

 the United States. In plastics, the European 

 developments in polyethylene have impacted 

 significantly on American industry. Imported 

 technology and "know-how" have also had 

 substantial influence in the optical equipment 

 area. 36 



PRODUCTIVITY AND 

 BALANCE OF TRADE 



This section presents indicators of inter- 

 national trends in productivity, as well as 

 measures of the contribution of R&D to the U.S. 

 balance of trade. Trends in the level of national 



■*° International Economic Report of the President. Council on 

 International Economic Policy, 1975. 



21 



