The best place to start this summary is with part of the conclusion:
“U.S. firms are collecting record royalty payments for their IP from China and generating gangbuster profits due to their access to Chinese labor, suppliers, and the country’s growing consumer market. American consumers benefit from US-China economic interdependence and so do some workers. The consequences for the U.S. economy as a whole are positive.”
Clear enough? However, Victor Menaldo and Nicolas Wittstock from the University of Washington have a little more to say.
On the subject of technology transfer the researchers find China following a path well trodden by other developing nations. Such transfers, in the most part, proceed lawfully and are neither damaging for U.S. consumers or firms. For U.S. policymakers to angrily rant about this is then “..hyperbolic, overwrought, and disingenuous.”.
In the paper they provide some historical vignettes about how Britain, in vain, tried to prevent their technologies from crossing the Channel in the early stages of the Industrial Revolution. Then, from the mid 19th Century, how inventors licensed and even followed their technology* around the world to assist in its implementation and exploitation.
[*I have a vivid memory of finding a German technician some time ago in a Chinese ceramics factory helping staff translate the control-knob and gauge label on a new kiln installed from his German based company. He looked like he’d have preferred to be somewhere else. I hope, for his sanity, by now he is!].
More recently, and in Asia, the Korean experience provides a useful roadmap. Early on Korea industrialized without much recourse to fancy technology; but, as they moved up the value chain, just look at what happened to their payments for IP (below).
China now runs a large IP payments deficit making U$34bn worth in 2019 of which 23% went to the United States. The chart below shows just how much China’s IP payments are linked to and accelerated by its economic growth.
This highlights how preposterous the hawks’ argument, that its the theft of ideas that drives China’s economic progress, is.
As China’s economy matures and the demand for higher value added manufacturing and service goods increases the red line in the chart in the chart above can only going one way (the researchers says “mushroom”).
The final and best word is, literally, the bottom line of the paper.. [To stand in opposition to this process] “..is simply not the American way. Plus, it’s stupid.” Amen! Well, it is Sunday after all.
You can access the work in full via the following link Does Technology Transfer Hurt America?
Happy Sunday.