There is a phrase, "Every breakdown is a breakthrough." This is a mythic form of awareness. Every breakdown is a breakthrough, whether it is in private life or in a corporate organization. Whenever you break down, you have just encountered a very rich untapped potential which creates a new form.

Dr. Seitz: Near the rear?

Comment: It seems to me the discussion this morning points up a fact which is overlooked in the application of technology in international trade. Because we are working in a computer age with things happening at electronic speed, we expect everything to happen both nationally and internationally at computer speed.

It is evident to many of us that in the applications of science and technology in industry that, some twenty years after the end of World War II, we are just beginning to apply many of the outgrowths of military research.

Dr. Casimir has beautifully pointed out that the application of fundamental research has taken anywhere from ten to seventy years before it found utility in engineering practice or application.

We are very impatient to expect that the rapidly developing technology is going to be exported and accepted to produce great forward strides in undeveloped countries immediately.

We have to recognize that in these affairs there is a time lag, that the precursor conditions of education, of acceptance of technical ideas and the ability to use them, have got to come first. When they do, then the applications of technology based on fundamental research in the more technologically advanced countries will find a fertile ground. There will be seeds that will be planted, will grow, and will

increase the potentials of the undeveloped countrie to have international trade in technological com modities.

Mr. Reynolds: I would like to add just one thing that. I think too that the international diffusion of technology depends very much on the ability of the relevant people in each country to be able to recog nize breakthroughs when they occur, and to adapt them to local requirements. This requires a substan tial base of technologically alert people.

One can draw a distinction here, between those who are actually generating new ideas, new products or new processes and those who are very quick at recognizing the useful developments of others. The second is very necessary.

One of the developments which has taken place i the tremendous growth of study abroad, especial in science and engineering and some of the social sciences. Students converge from all around the world on American and Western European univers ties, and this will in the course of time create this body of people who can receive and identify, recog nize and adapt innovations that take place else where.

One of the disturbing results that we have recenly observed is that the rate of return of many people from less developed countries from Western Europe and North America to their homeland, is in some cases strikingly low. This process of education abroad at least to some extent robs these countries of some of their best talent. But there is some return. It varies a lot from country to country and think we should work toward getting it up.

Dr. Seitz: Thank you. This morning's session is now ended and we shall adjourn for lunch.

Luncheon Program

ntroduction:

Mr. Pollack: Mr. Secretary and distinguished guests. The prospects and problems associated with the evelopment of technological capability and the movement of technology among nations are now the bject of serious attention in many countries hroughout the world. I am sure, therefore, that the iscussion under way here at this great and ventureome symposium will be followed with great interest ■y an international audience of governmental, indusrial and business leaders.

The need for a better understanding of and more actual data on these subjects is abundantly clear. This symposium and others that will undoubtedly ollow will do much to illuminate and clarify this most complicated topic. I think you will agree that we have witnessed a splendid beginning today to what I am convinced will be recalled in subsequent Fears as a landmark meeting.

The locale for such a meeting could not be more ppropriate. From its beginnings at the turn of the century, the Bureau of Standards has recognized the

need for international understandings and agreements in the area of technology and standards. The Bureau has been a pioneer in projecting the United States into international scientific and technical cooperation, and I think these new laboratories are ample evidence that the Bureau does not intend to rest on its laurels.

Along the way, the Bureau has made many friends in many lands, and those here today have come from many lands. Among them is our speaker at this luncheon, Mr. Pierre Uri. He is both a philosopher and an economist, and I think perhaps the combination and the marriage of these two disciplines provides insights very useful to the subject that we are here to consider.

It is an honor and a great personal pleasure to introduce to you one of France's most brilliant citizens and a man who I am sure will be identified with the future development of European unity, Mr. Pierre Uri, Counselor for Studies of the Atlantic Institute.

Speaker:

Address:

Mr. Pierre Uri

Mr. Uri: Thank you, Mr. Pollack.

We have been told this morning that we are in a world of accelerating technical progress, that we are witnessing some new patterns of trade. The question to which we have to address ourselves now is how far this change in environment should lead to certain changes in our traditional views of policies. We might only be in need of some adjustments in traditional economic theory, because the old pattern of competitive advantage seems now to yield to the very fact that there are now people with advanced production of something which the others can't produce, and that's the most absolute advantage which you can think of.

This doesn't necessarily make for one-way trade because, as has been pointed out, this technology can be learned, and can lead to a reverse trade when it has been learned by people who have lower wages. In other words, the way trade is now working is by innovation, then imitation, and finally the reverse trade.

Now, we know that this is not new. We have been told of the technological advance of Phoenicia and of China in the old days, but probably it is now a bit broader than it use to be, and people begin to be a bit jealous of the ones who have an advance on this. Let us be quite clear. It doesn't take technical advance to balance one's accounts and the United States is the witness to that. But it means simply you can balance your external account with a higher standard of living.

The Technological Gap and Its Influence on
Trade

If, as some people maintain, there is a technological gap, let's not complain about it. If it did not exist, the worries of our host, Secretary of Commerce Connor, about the balance of payments might be even worse. The real question now before us is whether this inequality, if any, is going to be increased or whether there are appropriate policies so that the whole world may benefit.

Measures of Influence of Technology on Trade One point is immediately clear. It is very often maintained that the balance of sales and purchases

of licenses might be a good indicator. I submit that any country, except the largest one, is bound to have a deficit on this. What is the probability that a small country could invent by itself as much as the rest of the world? And there is another way not to have a deficit, and that is not to buy any license. O this basis, the fact that some of our countries have deficits on licenses is just a sign that they are inter ested in technical progress and this is all for the good.

But there is another feature which I think is inter esting to mention. Usually when speaking abou conditions of international competition, it is most relative magnitudes which matter. In other words, in relation to the cost of a product, how scarce is cap tal and how scarce is labor?

And maybe with the great knowledge resulting from research, particularly applied research, the ab solute magnitudes matter. In other words, if yo have to produce something which is completely new there is a threshold below which you won't be abl to achieve anything, and I think that this is the really new feature which the advance of technology brings into the field of international trade.

Technological "Fallout"

Now there is another idea which I think is current but of which we haven't yet drawn all the possible consequences. We all admit that there is so-called technological fallout, meaning by that that the re search conducted in one sector spreads to others be cause a lot has to be learned, and orders have to b placed, and so forth, thus there is a certain cumula tive effect from research and development. To som extent, and within reasonable limits, doing the job oneself has more profound effect than purely im porting the recipes.

In other words, in a world of that kind, we car no more think purely of competitive advantage, and we have got to think ahead to potential capabilities of developing one day something for which one hasn't yet the start, and to the cumulative effect which may accrue. This is a rather important element which I think reflects even on present international negotiations. I have read somewhere, and i wouldn't disagree, that the famous eighty percent