Monday, July 4, 2011

The Interests of U.S. Corporations and the Country ‘have diverged’

Following is the testimony of Ralph E. Gomory, Research Professor, Stern School of Business, New York University, New York, N.Y., before the U.S. – China Economic and Security Review Commission, Hearing on China’s Five-Year Plan, Indigenous Innovation and Technology Transfers, and Outsourcing on June 15, 2011.

Thank you for the opportunity to take part in this hearing of the China Commission. The subjects that we are discussing today are closely related to the topics to which I have devoted much of my working life. For almost 20 years I was the head of the research effort of a major international corporation, (IBM). For the next 18 years I was the head of a major foundation (Alfred P. Sloan) deeply interested in science and technology. In addition I have been a director of several major corporations and for the last two decades I have devoted considerable energy to understanding and writing about the economics of trade.

Many of the questions you have proposed to this panel relate to China’s efforts to move its people into more productive jobs where they can create more value for each hour worked, and to the means, ranging from foreign direct investment to direct acquisition of knowledge abroad, that China has used and will use to acquire the technical knowledge that is needed to produce that result. Explicit or implicit in many of the questions is also the question of the impact of these actions on the U.S. and the likelihood of their success in the future. A further implicit question posed is this: What can the U.S. do when these impacts are detrimental to the U.S.? (read more)