TNAG-1880-FCO40-2671-Student-demonstrations-and-internal-political-situation-in-C-1989 — Page 50

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"organic process" in the import of foreign technology. First they try to master a foreign production process technology to reduce in a second step dependence on foreign technologies. Therefore this process is focused more on process than on

product innovations.

Competition resulting from this profile of technological

change may turn out to be more threatening to Japanese and Eu-

ropean than to American producers. The latter's R&D profile is

stronger focused on product innovations at the expense of pro-

cess innovations. Therefore American firms may find it easier

to take advantage of a complementary international new division of labor in the high-tech field (via joint ventures, direct investment etc.) than European and Japanese firms, who

are subject to a more competitive technological division of labor in the high tech arena.

To sum up, the "old" (static) theory of comparative advantage, resulting primarily from cheap labor inputs neglects future

challenges resulting from the NIES' flexibility and adaptation

to new technological possibilities. A more thorough review of

the NIES prospective technological strength, the implied

adjustment needs in Europe, as well as the new opportunities

for an extended technological cooperation with the Asian economies, would seem appropiate.

3. The Pacific basin and implications for the international economic regime

The pacific region remains the object for concern: future

economic conflicts would probably have their origin there, and

if so, would occur in very sharp and critical forms.

Protagonists of an "Asian-Pacific free trade area" argue that

well-known disadvantages and world wide repercussions of

"PAFTA" could fall far short of those that would be imposed if

the US-market actually closed to external competitors.

The chances of success of any pacific basin arrangement will

in the last instance be decided by the position taken by the