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Abstract
The US national innovation system has a dual structure: part suited to rapid innovation, and part stubbornly resistant to change. The complex, established ‘Legacy sectors’ that resist change, particularly disruptive innovation, share common features that obstruct the market launch of innovations, over and above the ‘valley of death’ and other obstacles that have been the traditional focus of innovation policy. Innovations in Legacy sectors must penetrate a well-established and well-defended technological/economic/political/social paradigm that favours existing technology, characterised by (1) ‘perverse’ subsidies and price structures that create a mismatch between the incentives of producers and broader social goals, such as environmental sustainability, public health and safety, and geopolitical security; (2) established infrastructure and institutional architecture that imposes regulatory hurdles or other disadvantages to new entrants (3) market imperfections beyond those faced by other innovations: network economies, lumpiness, economies of scale, split incentives, needs for collective action, and transaction costs (4) politically powerful vested interests, reinforced by public support, that defend the paradigm and resist innovations that threaten their business models (5) public habits and expectations attuned to existing technology and (6) an established knowledge and human resources structure adapted to its needs. Beyond these obstacles, more socially desirable technologies that are driven by environmental or other non-market considerations must overcome the lack of agreed replacement standards against which putative alternatives can be judged. We have developed a new, integrative analytic framework for categorising the obstacles to market launch faced by Legacy sectors, and earlier applied this method to energy, health delivery, the long-distance electric grid, building, and air transport. In energy especially, the requirement for innovation is sufficiently urgent that large-scale domestic and collaborative international research should take place even at the cost of possible competitive disadvantage and even if it is some time before the USA adopts carbon charges and thereby puts pressure on the prevailing paradigm of fossil fuel use. We now extend this method to sustainable agriculture. American paradigms in agriculture and in energy are exported worldwide, delaying the development and spread of needed innovations that are not consistent with them. Foreign manufacturers wishing to enter US markets must suit their products in these sectors to American paradigms, while American exports of technology may be insufficiently cost conscious or respectful of environmental sustainability. Developing countries are technology takers and suffer from asymmetric innovative capability. They need to choose sources of technology best suited to their situation. India and China constitute new competitive threats, but also represent ‘innovative developing countries’ that have large domestic markets in which they are launching innovations aimed at their lower income populations.
Notes
1. An early version of this article was posted in Atlanta Conference on Science and Innovation Policy. All URLs are up to date as of 22 October 2013.
2. The term ‘techno-economic paradigm’ has been used by growth economists Christopher Freeman and Carlotta Perez to refer to a far-reaching cluster of technologies that creates ‘a new best practice frontier’ with ‘pervasive effects throughout the economy’, giving rise to a ‘great surge of development’ that constitutes an innovation wave (or Kondratiev wave). We use the term somewhat differently to refer to the technologies, and the related political-economic-social systems built around them, that form an entrenched Legacy sector resistant to disruptive change. Freeman and Perez were studying the innovations that do happen and we are studying innovations that do not, but the basic phenomena are much the same. The term paradigm itself goes back to Plato (Timaeus 28A), and was made prominent by Thomas Kuhn (Citation1996), who defined a scientific paradigm as: ‘universally recognized scientific achievements that, for a time, provide model problems and solutions for a community of researchers’.
3. Here we distinguish between the dominant design of products, as defined by Utterback, from the larger paradigm that is the hallmark of the Legacy sector. The latter concept is in essence an extension of the former.
4. The definition of ‘disruptive innovation’, taken from the website of its originator Clayton Christensen, ‘describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up-market, eventually displacing established competitors’. As originally conceived, this process takes place entirely in the private sector. In his later work, Christensen broadened this concept to include a product or organisational framework (as, for example, the rationalisation of the hospital and indeed much of the healthcare system), whose introduction could lead to the rationalisation of an entire industry. The latter process often exceeds the capacity of the private sector acting alone and requires substantial changes in public policy.
5. The first four of these features are taken from Weiss and Bonvillian (Citation2011). Numbers 5 and 6 are added in order to bring our definition closer to the definition of regime found in the literature on socio-technical systems, which emphasises the link between technology and social systems, especially in firms and other organisations. See, for example, Russell and Williams (Citation2002, 128). Where our previous work emphasised the dimension of political economics, we now refer explicitly to the social dimension that underlies the politics that in turn often dictates the economics. In practice, all of these elements are intertwined.
6. For analytic purposes, we distinguish between pricing structures (how prices differ between purchasers of the same product, or among types of product for the same purchaser), on the one hand, and the change in the prices themselves due to subsidy.
7. Wu calls the results cited here the Kronos effect, after the mythical king that ate his children because they were predicted to overthrow him.
8. We refer to the market in which many innovations operate as ‘quasi-free’; it is not completely free, not only because it is designed to provide economic rents to the innovator and is affected by market imperfections at the stage of market launch, but also because such innovation benefits from extensive government funding of early-stage research (which greatly exceeds private-sector expenditures at this stage), and major support to science and technical education.
9. This statement is a variant of the commonplace that technology embodies the economic factors and social values of the place where it was invented or commercialised, so that the importation of technology may either require an importation of these values or, alternatively, may be inappropriate to local conditions or factor proportions.
10. Prahalad, writing for a business school audience, emphasises profit-seeking initiatives of the private sector, but many of the examples he cites required intervention at some point by government, foundations, development assistance agencies or other institutions not motivated by profit.
11. Roberts argues that large-scale food production created paradoxes where high-volume factory food production systems created new risks for food-borne illness; high-yield crops generated grain, produce, and meat of declining nutritional quality; and where nearly a billion people are overweight and a similar number are hungry.
12. Although overall agricultural production is decentralised, there are centralised, large-scale agribusiness elements in the system, including major equipment producers, agricultural chemical firms, and commodities trading firms.
13. US agricultural law states that the term ‘sustainable agriculture’ means an integrated system of plant and animal production practices having a site-specific application that will, over the long-term—(A) satisfy human food and fiber needs; (B) enhance environmental quality and the natural resource base upon which the agriculture economy depends; (C) make the most efficient use of nonrenewable resources and on-farm resources and integrate, where appropriate, natural biological cycles and controls; (D) sustain the economic viability of farm operations; and (E) enhance the quality of life for farmers and society as a whole. (7 U.S.C. 3103, Sec. 19). See also the definition used by the U.S. Department of Agriculture (Citation2013b) National Center for Appropriate Technology, National Sustainable Information Service (ATTRA) and the sources referenced therein. For research for small-scale farmers in sustainable agriculture, see also the Rodale Institute website, http://rodaleinstitute.org/new-farm
14. The USDA supports farmers, ranchers, organisations, businesses, consumers and others in improving agricultural sustainability through a number of activities and programs, including: the Sustainable Agriculture Research and Education (http://www.sare.org/); Alternative Farming Systems Information Center, National Agricultural Library (http://afsic.nal.usda.gov/nal_display/index.php?tax_level=1&info_center=2); Agricultural Research Service, National Sustainable Agriculture Information Service (ATTRA, https://attra.ncat.org/); National Agroforestry Center of the Forest Service and the Natural Resources Conservation Service (http://www.unl.edu/nac/); Cooperative State Research, Education and Extension Service, Sustainable Agriculture (http://www.csrees.usda.gov/nea/ag_systems/ag_systems.cfm); Agricultural Research Service National Program: Integrated Farming Systems (http://www.ars.usda.gov/research/programs/programs.htm?NP_CODE=207); Economic Research Service publication: Green Technologies for a More Sustainable Agriculture (http://www.ers.usda.gov/catalog/OneProductAtATime.asp?ARC=c&PDT=2&PID=46); and Direct Marketing, Agricultural Marketing Service, National Organic Program, Agricultural Marketing Service (http://www.ams.usda.gov/AMSv1.0/nop).
15. For example, the 1913 Haber-Bosch process that allowed large-scale chemical fertiliser production appears to have been a significant enabler of world population growth.
16. Dahlman points out that rapid industrialisation of emerging nations is placing significant strain on world environmental resources.
17. USDA is supporting adoption of renewable energy by US farmers in a number of programs (U.S. Department of Agriculture 2013).
18. Sustainable agriculture was emphasised at the June 2012 Rio+20 meeting on sustainable development.
19. Certain controlled pesticides are barred from application but not production in the USA, and so are applied on crops abroad, which are imported back into the USA.
20. McIntyre (2009) is a comprehensive assessment of the state of agricultural technology in developing countries. The World Bank Independent Evaluation Group (Citation2010) conducted a review of this assessment. The 2012 Annual Letter from Bill Gates (Citation2012) of the Gates Foundation delineates the need for innovation in developing world farming as it faces the twin challenges of population growth (9.3 billion world population by 2050) and the disruptive effects of climate change.
21. The first use of the term was in a speech by W.S. Gaud, director of US Agency for International Development (1968).
22. Thawing environment for transgenic products outside of Europe partly reflects a realization that grain commodity prices are threatening food security and that, according to the UN, agricultural production will need to rise by 70% to meet the needs of the world's growing population.
23. ‘Galvanizing plant science in Europe will depend on an overhaul of the tangle of indefensible regulations,’ Giddings et al. (Citation2012) regarding transgenic research that is key to plant breeding advances.
24. A similar lumpiness makes it uneconomic to develop commercial pesticides specific to ‘minor’ crops whose markets total ‘only’ a few billion dollars, forcing growers to use less effective and more environmentally harmful chemicals developed for other crops.
25. See, for example, work of the International Service for the Acquisition of Agri-biotech Applications. The example of golden rice is instructive. See http://www.goldenrice.org. This product was created by scientist Ingo Potrykus, genetically engineered from a gene introduced from daffodils to provide sufficient pro-vitamin A in rice to reduce the incidence of dietary-induced blindness; it was supported by the Rockefeller Foundation and is unencumbered by IP restrictions.
26. This approach reflects ongoing conceptual work by Prof. Sanjay E. Sarma, MIT.
27. The comparative lack of public investment in agriculture basic research (especially compared to the level of public investment in research related to health, as for example through the National Institutes of Health) and the lack of competition in the awarding of research grants has resulted in quite limited US technology new entry. The entrenched, non-competitive entitlement system for allocating research funding to established agriculture schools has been supplemented by the competitive grant awards from NIFA embracing more advanced biology advances; these reforms could be accelerated (Stokstad Citation2010).
28. This report applies an Agricultural Knowledge, Science, and Technology (AKST) framework and argues that “Scientific and technological knowledge and information can (1) add value to resources, skill, knowledge, and processes, and (2) create entirely novel strategies, processes, and products … . The creation of favorable conditions making it possible for different actors to engage in collaborative learning processes – i.e., the increase in space and capacity for innovativeness – has thus gained prime importance. Approaches based on linear understandings of research-to-extension-to application are being replaced by approaches focusing on processes of communication, mutual deliberation, and iterative collective learning and action” (National Research Council Citation2009).
29. This pattern is already visible. Although Department of Energy efforts to undertake carbon sequestration demonstrations began in 2003, the program was subsequently reorganised into seven regional partnerships; only one of seven regional partnerships has reached the stage of injecting CO2 for geological storage.
30. National Science Foundation's (NSF) BREAD program of global agricultural research, a partnership with the Gates Foundation through NSF's Plant Genome program, may prove an exception in agriculture to this pattern.
31. The energy-conserving traditions of Arab agriculture are to be showcased in Abu Dhabi's eco-city of Masdar.