Cover

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Title Page, Copyright, Dedication

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Contents

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pp. vii-viii

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Preface

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pp. ix-xii

The growing integration of the world’s economy in general, and the increased participation of China and India in international trade in particular, raise important questions: Will competition from more than a billion Chinese and Indians reduce wages and imperil the prosperity of the West? What, if anything, is to be done? ...

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Introduction

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pp. 1-30

Many manufacturing companies that once flourished in the United States have succumbed to overseas competition or have relocated much of their activity abroad. Domestic employees of U.S. companies make few of the ubiquitous objects of daily life—most of the clothes and shoes that Americans wear, their furnishings, children’s toys, TV sets, phones, and computers are produced by foreign companies, typically in foreign factories. ...

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Book 1: Cautious Voyagers Why VC-Backed Businesses Still Favor Home

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pp. 31-40

“No right-thinking businessman or woman, whether in El Paso or Detroit, thinks in terms of the U.S. only now,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. But how much does the world outside really matter to the more than twenty million small businesses in the United States? ...

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1 VCs in New Ventureland

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pp. 41-58

VC-backed businesses differ from each other more than do barber shops or restaurants—for instance, in what they sell and whom they sell to. Yet they do share common characteristics. I will highlight some of them by comparing VC-financed firms with other kinds of new or emerging businesses. ...

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2 Advancing the Frontier: The Nature of Mid-level Innovation

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pp. 59-100

The role of mid-level innovators—as exemplified by many VC-backed businesses—has not received the attention it deserves. Many researchers and policymakers make no distinction between levels of know-how and product development, or they focus only on the development of high-level knowledge. ...

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3 Marketing: Edging into International Arenas

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pp. 101-151

Advocates for free trade and globalization argue that rapid economic growth in China and India is good for the United States because it expands opportunities for U.S. exporters, particularly of advanced technology products. As evidence, they cite the fact that international sales of high-tech companies such as Intel and Microsoft have boomed. ...

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4 Offshoring: The Ins and Outs

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pp. 152-205

Colonial powers once went to war to secure overseas markets, but today export opportunities do not have a significant place in the popular consciousness. Rather, offshoring—which leads to the importing of goods and services—dominates the discourse on trade. Populist critics, such as Lou Dobbs, oppose offshoring of any and all jobs, ...

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5 Founders and Staff: Global at Home

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pp. 206-238

The participation of immigrant scientists and engineers in the U.S. high-tech industry is in some ways a forerunner of and a substitute for the offshoring of innovative activities. Programmers from abroad working “on-site” (on client premises) in the United States paved the way for offshoring; ...

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6 On Methods and Models

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pp. 239-250

Some scholars will ask why I have not tested my conjectures (about, for instance, what factors affect the number of immigrants employed by a firm) through a regression analysis. A traditional econometric procedure would start with a linear “model” of the form ...

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Book 2: Embrace or Resist?

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pp. 251-256

In book 1, I suggested that globalization is not proceeding at breakneck speed on all fronts. But to deny that economic engagements across great distances have increased—including those involving innovative activities—is like questioning the spheroidal shape of the earth. ...

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7 Alarmist Arguments

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pp. 257-271

When the United States secured independence, its economy was dominated by the production of agricultural and other commodities. Alexander Hamilton, the first secretary of the U.S. Treasury, produced, in 1791, The Report on Manufactures, which proposed a system of tariffs and subsidies to nurture “infant industries” ...

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8 The Reassuring Realities of Modern Cross-Border Flows

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pp. 272-286

Once upon a time it might have been reasonable to assume that new technologies would only be used by domestic, vertically integrated firms (or “regional clusters”) and that only the final goods and services they produced would cross national borders. This is not an accurate representation of cross-border flows today. ...

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9 Valuable Differences

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pp. 287-295

In the last chapter, I discussed how high-level know-how developed abroad benefits the U.S. economy by stimulating the development of mid- and ground-level products tailored for the U.S. markets. Obviously such products generate a larger surplus for U.S. consumers than they do for consumers abroad. ...

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10 Serving the Service Economy

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pp. 296-307

In the last chapter, I discussed how high-level know-how developed abroad benefits the U.S. economy by stimulating the development of mid- and ground-level products tailored for the U.S. markets. Obviously such products generate a larger surplus for U.S. consumers than they do for consumers abroad. ...

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11 Venturesome Consumption

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pp. 308-323

Why is the United States a good place to innovate? The question has attracted considerable attention in recent years, particularly in Europe and Japan. Much of the writing on this topic emphasizes “supply side” factors such as the availability of venture capital, the IPO (initial public offering) market, the rule of law, and the enforcement of intellectual property rights. ...

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12 Winning by Using

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pp. 324-340

Rich countries tend to make greater and more effective use of IT and other advanced technologies than do poor countries. But even within rich countries (as defined by membership in the OECD), we find considerable variation in “venturesome consumption” of new technologies. ...

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13 Nondestructive Creation

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pp. 341-355

In the last two hundred years or so, innovative technologies have reduced labor costs through a combination of automation and specialization (as in Adam Smith’s famous pin factory) and by facilitating the relocation of production to low-wage locations.* ...

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14 Immigrants: Uppers or Downers?

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pp. 356-379

Immigration—the cross-border flows of people—is a particularly contentious facet of globalization, often stirring up more emotion than the importing of goods and the offshoring of services. As with imports and offshoring, populists and techno-nationalists have different concerns about immigration. ...

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15 The Elusive Underpinnings

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pp. 380-410

Let us return to the puzzle raised at the end of chapter 7 about why the United States has not fallen behind in economic growth. According to convergence theories, poorer countries naturally grow faster than richer countries. ...

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16 First Do No Harm

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pp. 411-438

In previous chapters, I disputed the techno-nationalist prediction that disastrous consequences await the United States should its lead in cutting-edge science diminish. However overly dire forecasts can lead to desirable outcomes, particularly given the human tendency toward optimism and inertia, and people can make good choices for the wrong reasons. ...

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Acknowledgments

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pp. 439-442

A generous grant from the Kauffman Foundation gave me the time and the research assistance I needed to do the fieldwork and to write this book. I am especially grateful to the Foundation’s Judith Cone, Robert Litan, Carl Schramm, and Robert Strom for their confidence that something good would emerge from the more than six-year-long effort. ...

Appendix: Tables

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pp. 443-460

Notes

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pp. 461-482

References

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pp. 483-498

Index

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pp. 499-508