785 



specific technology industries and from within industrialized countries 

 (especially Japan), is the possibility of a rise of protectionism to preserve 

 dying or inefficient industries. The causes of the changed status of an 

 industry are likely to be many and varied: increased labor costs relative to 

 other countries; changes in costs of other factors of production, particularly 

 energy and resources; relatively lower productivity; lagging innovation; 

 Inadequate structure or industrial organization to make possible effective 

 competition; and others. The political temptations to respond to worsening 

 domestic unemployment and Its ancillary effects by preserving and protecting 

 inefficient industries are very large, especially when a certain amount of 

 implicit or informal protectionism is practiced by most countries in one way 

 or another (hidden subsidies, biased regulations). 



The economic costs of the emergence of a protectionist spiral among 

 industrialized countries, and the consequent loss of incentives for innovation 

 and support of R&D could be very great. In effect, protectionist measures are 

 an alternative to R»D investment, at relatively low short-term cost and very 

 high long-term cost. It would be a poor bargain, but one likely to be 

 proposed and actively sought by powerful forces in the near-term future. 



A particular technological aspect of protectionism has emerged in recent 

 years. That is the concern over export of technology which, it is argued, is 

 tantamount to the export of American jobs as that technology becomes the basis 

 of new competing industries. The argument is that U.S. -developed technology 

 is sold or made available to others at a price that does not adequately 

 reflect the true costs, or the broader effects of the sale on the U.S. It is 

 a disputed issue, not only with regard to the facts but also whether possible 



