The Disaggregated Technology Production Function : A New Model of University and Corporate Research

To better understand the complexities of industrialtechnology, an examination of existing research and development (R&D)growth models is conducted and a new model is provided. Industrial technologyis composed of three elements: a fundamental technology base, proprietarymarket applications (innovations), and infratechnologies. A disaggregated technology production model is provided to explain theinteraction between these elements and how they impact private sectorinvestment decisions.For example, public good technology elements includea fundamental technology base and infratechnologies, which are both necessaryfor the development of innovations (proprietary technology). An industry'sdifficulty in using these elements include not having an adequate science baseavailable and the lack of the industry's investments to differentiate measuresof partial market failures. Consequently, exogenous sources, such asuniversities and government laboratories, are needed to fund research and toinform R&D policy by providing accurate models of changes intechnology. Several factors are identified as influencing the rate and direction oftechnological advance: availability of generic technical knowledge; adequacy ofthe supporting technology infrastructure; the demand of shifting roles oftechnology, marketing, and economic performance; and risk factors that affectthe R&D cycle. (NEE)