By the way, in a neglected passage of the Summers/Pritchett memo, it says: <quote> What's new? Throughout the outline I struggle with the evidence showing what exactly the proclaimed revolution [in production] has revolutionized. FDI has always existed and many of the world's largest firms have been transnational from birth. The "globalization" of production has happened sure, but has the telecommunications revolution really had a major impact? I would guess the invention of relatively simple things, like steamship transport, did more for world trade than digitalized data transmission through fiber optic cables. How exactly has the nature of manufacturing been "fundamentally altered"? Aren't people just incrementally better at doing things they've always done, like locate production in the lowest cost location for delivery to markets (now "globalization of production"), like manage inventories in a least cost way (now "just-in-time inventory management"), like choose the appropriate level of vertical integration depending on the production process (now "critical buyer-seller links"), like match production to demand (now "short product cycles"). Is a "revolution" really the appropriate metaphor for these changes? I think the detailed evidence from the US about the very small impact on productivity from the large investment in information technology should convince us to hold off on the breathless tone about technology. </quote> They don't often talk like this in public. Doug
