For the DRAM example, there's no technical barriers to European production (I would say the political barriers like lack of will are more relevant) of this or any other technology. It is just that Asian workforces are more readily exploited (like Soviet slave labor). If European social costs were added to Asian production they would be no more competitive than a European workforce.
This is a convenient excuse used by Europeans to explain their own failure. The fact is that Asian workers (in particular Japanese and Koreans) do have a high standard of living. Thus, there is no exploitation. There is, however, a willingness to make a collective effort (for the nation or for the company) that we don't have in the West. But that is not exploitation. This willingness to make a collective effort has paid off in that it led to a strong industry and a prosperity for all.
There is also a difference in company culture, while Western companies look at short term profits (shareholder value), Eastern company looks for the long-term objective of conquering market share. I have known companies of the Mitsubishi group in Japan that were operated at a loss for more than 10 years because the group decided it was of strategic importance to get into a particular market segment. No Western company could afford to do that.
The strength of Asian manufacturers is in mass storage devices. Western companies managed to keep a lead in processors and specially designed chips. But I think China will change that. The Chinese are bound to get into processors sooner or later.
Paul Sanderson wrote:My question was why we wouldn’t be able to do it ourselves, not why wouldn’t we be able to do it to the same standard.
We ARE able to do it, both East and West Germany developed a DRAM, but it wasn't any use because it couldn't compete with the state of the art. So investment into the development was wasted.
You will never be able to outperform everyone at everything but you could still innovate, manufacture and steal technology to a high standard with a population the size of Europe and a country with the population and geographical reach of the Soviet Union.
No, you can't. The experience of the SU proves it. A "closed" Europe would encounter the same fate.
There’s no reason why it would be half the standard (whatever that is) when you consider the technological achievements of the Europeans and the Soviets.
It doesn't matter if the performance is half, as long as it is inferior, it can't compete, and in the "closed" economy that sends you on the downward spiral I described.
Both the Soviets and the Europeans are better at satellite launchers than the Japanese; however, that didn't prevent the Soviet economy from falling behind the West. In the same way, a "closed" Europe would also fall behind the rest of the World.
You assume that everything this hypothetical country (or the Soviet Union) makes is substandard and could never be exported. Remember, as others have pointed out the Soviets made a lot of scientific breakthroughs in their time and they weren’t totally isolated from the rest of the world. Where they may have trailed in some areas they excelled in many others.
But that is what effectively happened. The GDR was probably the most developed Soviet country, yet after the fall of the wall, it was found that most of its industry couldn't compete. They made most things in the SU, it just wasn't up to Western standard.
If you design something, a TV, a car, a washing machine, no matter what, you will source the best parts you can get for your money. Some steel from Sweden, some chips from Japan, some LCD device from Korea with LCs from Germany, a processor from the US, and so on. In the closed economy of the SU you couldn't do that, you would have do make do with whatever second rate parts you could get from within the closed system. The result will invariably be substandard.
I don’t think any economy is fully closed off, not even North Korea. Protectionism isn’t necessarily going to be the reason behind stagnating technology or science.
That doesn't matter, the economy that is relatively more closed or protectionist will invariable suffer disadvantage.
We could probably point towards the economies of quite a few countries that were very open and market orientated that lagged behind the Spaniards couldn’t we?
You have to compare what is comparable. It wouldn't make much sense to use, for example, Zimbabwe as a base for comparison. I compared Spain to South Korea (not the SU) because Spain did have car manufacturing and other industries many years before Korea, yet due to decades of protectionism it fell back behind Korea.
As pointed out, the Soviets could draw on a wealth of people, resources and internal competition as well.
I have to insist, they where still "relatively" closed off from the international market. The US imposed restrictions on things that could not be sold to SU countries. SU space launches, the one field were they excelled, could not be exported. Finally, they didn't have foreign currencies. The GDR, for example, had a constant shortage of Western currencies, which prevented them from trading. They tried everything to get foreign currencies, they even sold dissidents and prisoners for hard cash. The US controls international trade and global financing.
Their problem was that they didn't have the price mechanism to tell them which industries and products were worth keeping and developing and which were worth removing.
I think the problem runs deeper than that.
Again I have to ask, do you need your technology for everything to be absolutely state of the art for your country not to implode like the Soviet Union did? Is “good” just not good enough to avoid catastrophe? And how do you know it takes that long to reverse engineer a state of the art product? If Russian spies and scientists can figure out how to build a nuke in the 1940’s using stolen information in a matter of a few years (and this being the most highly guarded information you can get), why would it not be possible to do this in a matter of months in the 90’s?
Again, as I explained before, your whole production goes into producing second rate stuff if you are closed off from accessing state of the art components.
It doesn't matter how long it takes to do reverse engineering, you'll always be too late because by the time you can reverse engineer the product on the market, your competitor is already preparing the market launch of the next generation. And you can't copy production technology, which puts you at a severe disadvantage because a lot of innovation is in production technology.
Especially when you get accustomed to doing it time and time again and the technology doesn’t change that much. In fact, this scientific investigation into the new technology would spur innovation skills for the Soviets themselves.
No, the speed of technological change is astonishing. Forget about "scientific investigation"; technological innovation is incremental and happens in the factory. You improve the product by producing it. The more you sell the more you produce, the more you improve your product.
That’s true of the modern day European Union maybe, but we’re talking about why the Soviet Union collapsed. Shareholders wouldn’t exist in a communist country and I’ve got doubts about union power in a nondemocratic country.
I was replying to your question about why a "closed" Europe wouldn't succeed. I wasn't comparing conditions in Europe to the SU.
We don't have to speculate about how the SU could have succeeded economically. We can simply look at what happened in China. China succeeded economically the moment it decided to "modernize" by opening to the outside world. There is a story about how the Chinese tried to develop a car industry under Mao. They bought one Mercedes Benz and one Cadillac, took the cars apart and copied all parts to build a Chinese car. In other words, exactly the method you recommend. That obviously didn't succeed in building an efficient car industry. What did work was to become part of the international economy, joining the WTO (the Russians still haven't been admitted), and letting foreign investors into China. With the foreign companies came foreign technology. They are now following the same way the Japanese and Koreans modernized before. They are learning the technology from their foreign joint venture partners, then they build their own domestic products, which in time will be improved to compete on the international markets.