biotechnology in the global political economy

Christopher Chase-Dunn, Armando Lara-Millan and Richard Niemeyer

Institute for Research on World-Systems

University of California-Riverside

Abstract v. 3-15-04 (9002 words)

New lead industries have been important elements in the rise and prolongation of economic hegemonies in the past. For example, British cotton textile manufacturers were able to make profits exporting their goods all over the world in the early nineteenth century.  As other countries developed cotton textile manufacturing and the profits declined, the British economy managed to stay ahead of the game by exporting the machinery that made cotton textiles, and then by moving into other capital goods sectors such as railroads and steamships.  Similarly, U.S. economic hegemony after World War II was first fueled by automobile exports.  After greater international competition emerged, the U.S. continued to garner technological rents by inventing, producing and exporting new products including nuclear energy equipment, military technology and information technology. Now many believe that U.S. advantages in biotechnology could substantially contribute to a new round of U.S. economic hegemony within the next two decades.  This is report of an on-going research project being carried out at the Institute for Research on World-Systems at the University of California-Riverside. Our research is evaluating this contention by examining the spatio-temporal patterns of biotechnology research, development and commercialization in the world economy since 1980, as well as patterns of consumer and political resistance to some of the products of biotechnology. It is hypothesized that consumer and political resistance will affect some subsectors of the biotechnology industries differently from others. We are estimating the sizes of effects under different conditions in order to parameterize models of alternative future scenarios. Our research on historical comparisons and the quantitative nature of recent trends will allow us to estimate the probabilities of these future scenarios. [1]

 

 

Our project compares biotechnology with world historical patterns of technological development and globalization over the past two centuries to examine the similarities and differences of the British and U.S. hegemonies, and to consider the potential impacts of the emerging biotechnology industries on the current and future international power position of the United States.  The trajectories and internal structures of biotechnology industries are compared with other recent new lead industries, especially the nuclear power industry and the information technology industry.  Changing worldwide patterns of political and consumer resistance to biotechnology are being studied in order to assess the potential future impact of resistance on the profitability of commercialized biotechnology and the prospects of commercialized biotechnology for substantially contributing to the renewal of U.S. economic comparative advantage.  The results of our research will help to resolve theoretical disagreements between the power cycle approach, the world-systems perspective and the global capitalism school.

The 1984 study by the Office of Technology Assessment of the U.S. Congress (OTA 1984) compared the competitiveness in biotechnology of the United States with Germany, Japan, the United Kingdom, France and Switzerland with regard to ten factors argued to be important for competitiveness. The conclusions were that, with regard to all these factors, the United States had large advantages over possible competitors and so additional public and private investments in biotechnology were encouraged. A lot has happened in biotechnology (and the world) since this influential research report was published. It is time to reassess the role of biotechnology in international and historical comparative perspective and to compare it with other new lead industries. Our study employs an improved research design to comprehend the global trajectory of the biotechnology industry since 1980 and to compare this industry with other “new lead” industries that have emerged during hegemonies and hegemonic declines.

        The three hegemonies of the modern world-system have been the Dutch in the seventeenth century, the British in the nineteenth century and the hegemony of the United States in the twentieth century. Sociologists and political scientists have carefully studied the process of hegemonic rise and decline.   Recent research by Rennstich (2001) retools Arrighi’s (1994) formulation of the organizational innovations that have facilitated the emergence of larger and larger hegemons over the last six centuries. Modelski and Thompson (1996) argued that the British successfully managed to enjoy two “power cycles,” one in the eighteenth and another in the nineteenth centuries. With this precedent in mind Rennstich considers the possibility that the U.S. might succeed itself in the twenty-first century.

 Rennstich’s analyses of the organizational, cultural and political requisites of the contemporary new lead industries – information technology and biotechnology – imply that the United States has a large comparative advantage that will most probably lead to another round of U.S. economic pre-eminence in the world-system. But important resistance to genetically engineered products has arisen as consumers and environmentalists worry about the unintended consequences of introducing radically new organisms into the biosphere and ethicists raised many concerns about medical biotechnology. Even rather conservative social theorists such as Francis Fukuyama (2002) have called for public regulation of efforts to create a post human genome. We are studying the several subsectors of biotechnology applications and commercialization as “new lead industries” and their impacts on the distribution of power in the world-system. This entails a globe-wide examination of the loci and timing of private and publicly funded research and development, the emergence of biotechnology firms that are developing and selling products, and the emergence of public policies that are intended to regulate and test genetically engineered products. The emergence of the contentious discourse about the risks of medical and agricultural biotechnology is being content analyzed. Several scenarios and alternative models of the timing of the onset of biotechnology profitability and its potential future impact on the U.S. position in the world economy are being developed. Data on both the business history and the emergence of resistance are being used to parameterize these models and to examine the likelihood of these future scenarios.

 

 

The Biotechnology Sector

Our research examines the several related parts of the biotechnology sector and l compares them with one another. The biotechnology sector is defined as all those potentially commercializable technologies that are based on the life sciences – biology, botany, entomology, physiology, genetics, and their overlaps with physical sciences such as chemistry, physics and materials science. Our project studies both the new and the old biotechnology. The new biotechnology has been defined by the OTA (1984) as the industrial use of recombinant DNA, cell fusion and novel bioprocessing techniques. The old biotechnology was composed of the earlier economic uses of living organisms that have benefited from modern scientific research, but that were prior to the discovery of recombinant DNA and cell fusion. A comparative historical approach is necessary for comparing contemporary new lead industries with those of the nineteenth century. The international history of the old biotechnology is quite relevant for understanding the early comparative advantage that the U.S. developed in the new biotechnology (Pistorius and van Eijk 1999).

The principal industries that employ the new biotechnology are pharmaceuticals, animal and plant agriculture, specialty chemicals and food additives, environmental products and services, commodity chemicals, energy production and bioelectronics. Of these we will focus on medical and food-producing applications, and these will be compared with one another.

 

Factors Influencing Competitiveness in Biotechnology

        The ten factors that the OTA (1984) outlined as key to international competitiveness in biotechnology were (in order of allegedly decreasing importance):

Ø          Financing and tax incentives for firms;

Ø          Government funding for basic and applied research;

Ø          Personnel availability and training;

Ø          Health, safety and environmental regulation;

Ø          Intellectual property law;

Ø          University/industry relations;

Ø          Anti-trust law;

Ø          International technology transfer, investment, and trade;

Ø          Targeted public policies in biotechnology; and

Ø          Public perceptions.

 

This a good list of factors, though some important things are missing and it may turn out that relegation of public perceptions to the bottom of the list was a mistake.  We would add that international agreements and institutions are also important factors that need to be taken into account in order to understand the profitability and multiplier effects of new lead technologies.  The trajectories of international economic, political and military competition and conflict need to be taken into account as well as conditions and trends in the world political economy as a whole.  This is why research on trade globalization (e.g. Chase-Dunn, Kawano and Brewer 2000) is relevant for understanding the economic consequences of biotechnology. If financial instability or environmental problems cause the world economy to stagnate, or if international and/or domestic conflicts increase to the point that economic production and exchange are greatly reduced, comparative advantages due to biotechnology would be postponed and diffusion would have a greater chance. Arguably the very momentum of U.S. hegemonic decline could reduce the chances for the concentration of new lead industry returns within the U.S. economy. Our study considers these additional contextual processes and trends along with the factors specified by the OTA.

New lead technologies have long been important causes of the rise and prolongation of hegemony in the modern world-system. The political and military power of states are sustained and facilitated by competitive advantages in the production of highly profitable goods. Rising hegemons (or “world leaders” in the terminology of Modelski and Thompson 1996) manage to innovate new profitable modes of trade and production that allow them to finance political and military advantages over other states.  Thus the sequence of new lead technologies and their distribution across potentially competing core states is an important subject of study for understanding both the past and the future of hegemonic rise and fall.

The hegemonic sequence has alternated between two structural situations as hegemonic core powers rise and fall: hegemony and hegemonic rivalry. The three hegemonies of the modern world-system have been the Dutch in the 17th century, the British in the nineteenth century and the hegemony of the United States in the twentieth century. Sociologists and political scientists have studied the process of hegemonic rise and decline mainly by periodizing hypothesized stages. Exceptions are Modelski and Thompson’s (1988) study of the distribution of naval power capacity since the fifteenth century, and Modelski and Thompson’s (1996) quantification of the rise of new lead industries.[2]

Recent research by Rennstich (2001, Forthcoming) retools Arrighi’s (1994) formulation of the reorganizations of the institutional structures that connected finance capital with states to facilitate the emergence of larger and larger hegemons over the last six centuries. Modelski and Thompson (1996) argued that the British successfully managed to enjoy two “power cycles,”[3] one in the eighteenth and another in the nineteenth century. With this precedent in mind Rennstich considers the possibility that the U.S. might succeed itself in the twenty-first century. Rennstich’s analysis of the organizational, cultural and political requisites of the contemporary new lead industries – information technology and biotechnology – imply that the United States has a large comparative advantage that will most probably lead to another round of U.S. pre-eminence in the world-system.

Our research focuses upon the geopolitical aspects and consequences of the food-producing and medical biotechnology industries. How will these industries affect the global distribution of economic and military power in the next decades?  Will they be a big money-making success that will help to facilitate another round of United States economic hegemony, or will they mainly absorb public and private capital investments without bringing commensurable profits, and so contribute to U.S. economic decline relative to competing world regions and states? These questions can best be answered by comparing biotechnology with earlier new lead industries and the roles they have played in prior hegemonic rises and declines.  Our research time-maps the worldwide loci and timing of:

 

v                  Medical and food-producing biotechnology research and development,

v                  Medical and food-producing biotechnology firms that are developing products, and

v                  Public attitudes toward biotechnological research and products.

v                  National and global policies that are intended to regulate and test genetically engineered products, and to regulate medical biotechnology research and development.

 

Several scenarios regarding growth of biotech profitability and potential impacts on U.S. economic centrality are being modeled. Data on biotech business history and resistance to genetically modified foods and food inputs are being employed to examine the likelihood of these scenarios.

New lead industries typically follow a growth curve in which a period of innovation and relatively slow growth is followed by a period of implementation, adaptation and rapid growth as the technologies spread, which is later followed by a period of saturation in which growth slows down (Storper and Walker 1989). The logistic or S-curve is the hypothetical form, which is only approximated in the actual records of new lead industries in economic history. Figure 1 illustrates the important differences in the form of the growth curves of 14 new lead industries in world economic history since the fourteenth century as calculated by Alexander (2000:141).

 

Figure 1: New Lead Industries in the World-System

New lead industries are important as the bases of hegemonic rises because they have huge spin-offs for the national economies in which they first emerge, spurring growth far beyond the original sectors in which they appear, and because they generate “technological rents.” Technological rents are the large profits that return to innovators because they enjoy a monopoly over their inventions.  The first firm to market a calculator that calculated a square root at the press of a key was able to sell that calculator for several hundreds of dollars.  Now one can buy these for $4.00 in the checkout line at the supermarket. Patents, legal protections of monopolies justified by the idea that technological innovation needs to be rewarded, can extend the period in which technological rents may be garnered. But nearly all products eventually follow the “product cycle” in which technological rents are reduced because competing producers enter the market, and profits are reduced to a small percentage of the immediate cost of production. Inputs such as labor costs, raw materials, and transport costs become the major determinants of profitability as a production becomes more standardize and routine (Vernon 1966, 1971).  

The ability to innovate new products and to stay at the profitable end of the product cycle is one of the most important bases of successful core production in the modern world-system. Products typically move to the semiperiphery or the periphery as production becomes routinized. So the cotton textile industry was a new lead industry in the early nineteenth century, but it spread from the English midlands to other core states and to semiperipheral locations (such as New England, and later the U.S. South), and eventually it moved on to the periphery.  Thus the product cycle is important in the reproduction of the core/periphery hierarchy, but it is also important in determining relative competitive advantages within the core. Some core countries are better than others at innovation and implementation of new lead technologies, and it is the ability to concentrate these by means of strategic research and development activities, usually including important public investments and coordination of educational institutions and industry, that allows some core countries to do better than others. 

The United States has had huge advantages over competing core countries since World War II.  Because the United States is a continental-sized country with a huge “home market” that is a substantial share of the world economy, it has been rather difficult for contenders to out-compete the U.S. because of reasons of mere size. This said, the U.S. share of world GDP decreased from 1945 to 1992 (see Figure 2).[4]

 

Note: 12 WEC are twelve western European countries that became members of the European Union

Figure 2: Core States Share of World GDP, 1820-1998.

 

In 1992 the U.S. share began again to increase, while the East Asian crisis led the Japanese share to decline after a long rise. Some observers have attributed this to a reemergence of U.S. economic hegemony based on successes in information technology. Rennstich contends that the United States has cultural and social advantages over Europe and Japan that enable its workforce and business enterprises to adapt more quickly to technological changes and that these, combined with the huge size of the U.S. domestic market, will serve as the basis for a new “power cycle” of U.S. concentration of economic comparative advantage based on information and biotechnology.

        But other scholars have a different interpretation of the recent trends. The reversal of the downward trend in Figure 2 is interpreted by Giovanni Arrighi as the functional equivalent of the “Edwardian belle epoque” that occurred during the salad days of finance capitalism in the late nineteenth century decline of British hegemony. Many observers have noted that the rise to centrality of finance capital has been a key element of economic globalization in recent decades (e.g. Sassen 2001, Henwood 1998).  Arrighi (1994) points out that this shift from the centrality of trade and production toward accumulation based on financial services is typical of late periods in the “systemic cycles of accumulation” and signifies the decline of the contemporary hegemon. The comparative advantage of the hegemon in new lead industries declines as challengers rise, but the old hegemon is able to continue to make profits because of its monetary, financial and military advantages.

        The reversal in the 1990s of the downward trend of the U.S. shown in Figure 2 was contemporaneous with a huge reversal in the U.S. balance of payments. A large inflow of foreign investment in bonds, stocks and property beginning in the early 1990s turned the U.S. into one of the world’s most foreign-indebted national economies and was arguably an important contributor to the high growth rates and incredibly long stock market boom of the 1990s. This massive balance of payments surplus helped to offset the equally huge balance of trade deficit of the U.S. The dot.com stock bubble that burst in 2000 was a typical example of how financial speculation can create profits by means of selling “securities” rather than by selling real products that people buy and use. In such an economy the symbols of value (money, financial securities) become the product.

        The geopolitical dimensions of the U.S. trajectory may also have important impacts on the profitability of biotechnology. The shift from global Keynsianism to neo-liberalism in the 1980s has broken the social compacts that undergirded the U.S.-led wave of global capitalist development since World War II.  A profit-squeeze provoked an investment strike on the part of capital and the abrogation of compacts with primary sector labor and attacks on the welfare state. The financialization of the world economy propped up U.S. centrality in the effort to make money on money, and the demise of the Soviet Union left the United States as the only superpower.  The recent effort to use this near-monopoly of capital-intensive military power for “national” purposes in increasingly unilateralist adventures is likely to increase resistance on the part of former allies in both the core and the non-core countries.  Increasing political disorder and conflict may overwhelm the prospect of peaceful economic development that would be required for biotechnology to be an important mainstay of another round of U.S. economic hegemony.

The “new economy speak” of the last decade was typical of periods of financial speculation in which hypothetical future earning streams are alleged to be represented in the value of securities. But the stock market operates according to a middle-run time horizon. Profits need to be made within the next few years. Investments that do not pay a return sooner than a decade hence are nearly valueless in conventional financial calculations. This is why basic science is considered a public good that is usually financed by governments. It is not usually reasonable to expect a financial return soon enough for private investors, even venture capitalists, to assume the necessary risks.

An important part of the availability of public and private investments in U.S. biotechnology during the 1990s was directly or indirectly linked with the huge inflow of international investments into the United States. This was based both on the massive expansion of financial capitalism and on the beliefs of foreign investors that the U.S. had a great lead in information and biotechnology.

 

Biotechnology as a New Lead Industry

        Biotechnology has been heralded as the potential basis for a new round of U.S. economic hegemony. In this discussion we will distinguish between medical biotechnology and food-producing biotechnology.  We want to separate food-producing biotechnology from medical applications in order to examine how these may by differently related to public attitudes.  Agricultural biotechnology is the application of genomics to create new crops, new sources of animal protein, and to protect crops and domesticated animals from pests.  Much of agricultural biotechnology is intended to improve the human food supply by lowering the costs of production and by improving the products.  Medical biotechnology is intended to improve human health by developing new medicines and techniques for preventing diseases, curing ailments, producing products for transplants and improving the genetic makeup of individuals.

        An important critical literature has emerged that discusses the ethical dimensions and political implications of biotechnology (e.g. Shiva 1997; Rifkin 1998; Fukuyama 2002). Extremely fundamental issues are becoming important in public discourse, and the governance of biotechnology research and applications will be an increasingly central part of politics in the twenty-first century (e.g. Fukuyama 2002).  In this research project we will discuss the politics of biotechnology only insofar as it may come to be an important influence on the potential role of biotechnology as a new lead industry that might function as the basis of a new round of U.S. economic hegemony.

        In order for biotechnology to function as a new lead industry that could serve as a basis for a new round of U.S. economic hegemony several conditions would have to be met. Investments in biotechnology would have to produce a large number of products that can be profitably sold, and these would need to be purchased within the United States and in the world market.  Firms producing these biotechnology products would need to be able to obtain technological rents over a period of time long enough to recoup the costs of research and development. And public investment would need to also be recouped lest the private accumulation amount only to a transfer from taxpayers to private investors. And the biotechnology industry would need to serve as a source of spin-offs for the rest of the U.S. economy to a degree greater than in the national economies of competing powers.

        Figure 3 illustrates some of our hypotheses about factors that influence the likelihood of the biotechnology industry serving as a basis for a new round of U.S. hegemony.  We note that the huge decreases in transportation costs and communications costs in the most recent wave of globalization have increased the speed at which technologies and new industries can spread to competing regions.  It has been thought that the research and development costs of the biotech industry make it difficult for new centers to emerge, and this has been alleged to be part of the basis for the U.S. lead in biotechnology. It is true that the U.S. research universities and publicly funded research have been important sources of both medical and agricultural biotechnological advances. The U.S. Department of Agriculture and federal agricultural policies have long played an important role in agricultural biotechnology (Kloppenburg 1988a, 1988b; Pistorius and van Wijk 1999).  And the United States has taken the lead in the creation of an international patent regime to protect “intellectual property” (the so-called TRIPS agreement) that should, in principle, allow firms to recoup research and development costs through technological rents.  But efforts to enforce international intellectual property regimes have been undercut by U.S. unilateralism as well as by challenges based on the needs of poor people in Third World countries for AIDS drugs (Denemark 2004).  Some scholars support the idea that agricultural biotechnology should be provided inexpensively to small farmers in poor countries (e.g., deJanvry et al 1999).  Such programs might be helpful to poor countries, but they would also undercut the ability of producers and marketers of agro-biotechnology products from charging technological rents.

Figure 3:  Diffusion and Resistance Lower the Impact of Biotechnology

on U.S. Economic Comparative Advantage

 

        Allegedly high start-up costs of biotechnology research and development should retard the emergence of competitors. This has been seen as part of the explanation for why biotechnology research, development and commercialization in Europe and Japan have lagged behind the U.S.  But there have been some developments that cast doubt on these characterizations. The Peoples’ Republic of China began a substantial state-sponsored initiative in biotechnology in the 1980s and many important creations of this program have been implemented in Chinese agriculture on a huge scale, with allegedly great beneficial effects. Perhaps the large size of semiperipheral China allows massive resources to be concentrated on targeted research and development efforts, making this development not so surprising. But Singapore, a city-state in Southeast Asia, has also succeeded in establishing a successful biotechnology industry by importing scientific talent from abroad. These start-ups imply that entry into the biotechnology industry is not as restricted as had been assumed, and that competition for shares of world demand for the products of biotechnology will speed up the product cycle, making it more difficult for particular countries, including the U.S., to garner technological rents for very long.

        Another factor that may affect the profitability of commercialized biotechnology is consumer resistance to genetically modified foods (Buttel 1999). Japanese consumers have refused to purchase genetically modified soybeans and so Japan ceased to import these GMOs in 1999. This caused Canada to stop growing genetically modified soybeans and several countries announced that they were also going to ban the growth of GMO crops in order to exploit the market niche created by countries that have banned GMO imports.     

        In England McDonalds restaurants were persuaded to stop using genetically modified inputs by a consumer boycott. Significant popular resistance to genetically modified foods has emerged in Europe and parts of Asia. This could be an important factor affecting the profitability of food-producing biotechnology. Other important factors that may affect the profitability of food-producing biotechnology in Europe may have nothing to do with the science itself.  A series of dramatic health scares in the late twentieth century, such as HIV contaminated blood supplies and BSE infected cattle have created an inflated level of risk aversion related to the environment and the food supply.  Amazingly, known health hazards such as cigarette smoking are seen with less concern than GMOs.  Europeans see the negative consequences of smoking as clearly identified and the risk involved as assumed by the individual who chooses to smoke.  On the other hand, though risks involved with GMOs have not been clearly identified, the individual is unable to choose due to the lack of sufficient product labeling (Bonny 2003). 

        Campaigns to raise awareness within the United States have so far not been very successful.         Public opinion surveys carried out by the National Science Foundation from 1985 to 1999 demonstrate American approval ratings of genetic engineering hovering roughly around 45%, while disapproval ratings fluctuated between 40% and 35% (Figure 4). From 1999 to 2001 both levels of approval and disapproval dropped 5% respectively. During the same time period, a more wait and see attitude grew from 12% to 28% (NSB 2002).  This may be partly due to the cultural factors that Rennstich has mentioned as explanations for the U.S. comparative advantage. But this could quickly change if experiments with genetically modified organisms lead to major calamities.

Figure 4: U.S. Public Opinion of Genetic Engineering, 1985-2001

 

We make the distinction between medical and food-producing biotechnology in the diagram produced in Figure 3 because we believe that it is likely that public opinion will affect these subsectors differently. People’s food preferences and choices are highly conditioned by cultural beliefs and practices, as well as collective and individual identities.  People are not usually willing to take risks regarding food consumption, except under famine conditions. In most of the world today, but especially in the large markets of the core, food purchases are discretionary, and so they can easily be influenced by public opinion and attitudes.  Medicinal choices are rather different. Doctors prescribe the most profitable pharmaceuticals, and people are not likely to object to the use of a drug that is produced by biotechnology if the drug is alleged to be effective in the treatment of acute medical problems. 

In a cross-national study involving Europe, Canada and the United States from 1996 to 2000, Gaskell and Bauer reported approval ratings of over 80% in all three regions when asked about the usefulness of biotechnology in the detection of genetically inherited diseases.  Regarding biotechnology and the creation of new medications and vaccines, 80% of Americans and Canadians and 70% of Europeans approved.  Only 46% of Europeans, 57% of Canadians and 69% of Americans found genetically modifying food for higher nutritional value and less dependence on pesticides beneficial. Interestingly while approval levels regarding medical biotechnology remained relatively stable during the four-year period in the United States and Canada, European ratings fell almost ten percentage points.  Also, it appears respondents in all three regions are more willing to except the perceived risks involved in agricultural genetic engineering when it comes to improved nutrition and insect resistance than applications involving improved taste (NSB 2002). Thus, given no tragic mistakes, future medical biotechnology will probably be much less susceptible to public concerns over genetically modified organisms than will food-producing biotechnology.

Much of the recent attention paid to the international aspects of agricultural and medical biotechnology impacts has focused on North/South issues about patenting of genomes and genetically modified organisms  (GMOs) and the effects of the industrialization of agriculture on peasantries in the Third World (Shiva 1997; McMichael 2001). But there is also a North/North aspect that has emerged with strong resistance in Japan, the United Kingdom and Europe to genetically modified foods. Here is another way in which globalization studies are relevant for understanding the potential trajectories of new lead industries.  To the extent that biotechnology is perceived as new technology in which the U.S. has a significant advantage, anti-U.S. sentiment may fuel resistance to biotechnology. Declining hegemons use their remaining advantages in financial centrality and military power in ways that serve narrower interests than during the golden age of the hegemony. This causes resentment and it was an important factor in stimulating anti-globalization movements and challenges from other core and non-core regions during the British hegemonic decline.

 Reid (2001) cites European backlash against biotechnology and GMOs as a response to workers frustrations against globalization and the United States dominance in the production of new technologies.  Because many of the emerging biotechnology companies are U.S. owned, Europeans see all GMOs as products of the U.S. and thus benefiting only the U.S. economy (NSB 2002). One senses that the Italian glorification of “slow food” and the attacks on McDonalds in France and England are at least partly due to resentment toward a United States that is increasingly seen as pursuing narrow and self-interested policies. Ironically, this generalized anti-GMO sentiment slows the effort of European companies in developing a position in the GMO industries.  

        To the extent that the causal relations in Figure 3 are future outcomes we cannot test them. But we can quantify trends in recent decades and see how they interact temporally and spatially with one another using time-series analysis and these will be used to parameterize alternative models of the future. The main unit of analysis for our research is the world-system as a whole, especially those countries and transnational networks that are engaging in biotechnology research and product development, but also those countries that may become important markets for biotechnology products. We are studying trends of public opinion regarding genetically modified organisms and public policies regarding research, product testing, and regulation of the biotech industry and of imports of genetically modified organisms. Large retailers of food products have been noticeably important players in the drama of resistance to transgenic foods because of their susceptibility to consumer boycotts, and so they need to be studied as well.

        One of the causes of hegemonic decline has been the reluctance of older economic elites to allow the emergence of new kinds of business enterprises that are perceived to threaten the older interests. Rennstich (2000) contends that the U.S. should suffer less from this problem than did Great Britain because it is so large and is composed of quite different regions, and also that there is some institutional separation between old and new industries. As an example he points to the NASDAQ stock exchange that specializes in new technologies, while older firms are listed on the New York Stock Exchange. Of more relevance perhaps are episodic efforts by the U.S. federal government to prevent the formation of business monopolies through anti-trust legislation and legal consent decrees. The fascinating comparison made by Borrus and Millstein (1984) between the semiconductor and biotechnology industries points to the crucial role that the U.S. government played in the emergence of a rather competitive electronics industry based on transistors. Much of the basic research that produced usable transistors was carried out at the Bell Laboratories, a research division of the American Telephone and Telegraph Company. If ATT had been granted patents on transistors it would have controlled an emerging technology that immediately threatened its huge investments in vacuum tube equipment. The intervention of the U.S. government was also facilitated by the huge amounts of money that were made available for aerospace, communications and electronics research under the guise of “defense” spending after the Korean War. This paved the way for the computer-satellite and telecommunications revolution (Markusen and Yudken 1992).

        Much has been made of the fact that only the United States has seen the emergence of a large crop of “new biotechnology firms” (NBFs). These are small start-ups funded mainly by venture capital and the scientific entrepreneurs who start them to commercialize biotechnology. Other competing countries have sought to incubate NBFs because they seem to be more innovative and dedicated than the research and development divisions of larger firms. But Borrus and Millstein point out that these start-ups have little ability to bring products to market on a large scale, and so they usually affiliate with, or are bought by, older large firms in the relevant industries.  In the case of biotechnology there has been little government anti-trust effort to counter-act the tendency of the older firms to sit on new products that threaten their profits in established product lines. Whether or not this can account for some of the slowness of parts of the biotechnology industry in becoming productive and profitable is a matter that bears investigation.

        We are comparing the biotechnology sector with the information technology and nuclear power industries. The latter is important because it is a case of a global industry that experienced a significant contraction because of public resistance and political regulation. This observation challenges the contention in the OTA (1984) study that public opinion is a relatively less important factor influencing the development of an industrial sector.

        In addition to comparing new lead industries to one another, we are also examining the ways in which new lead industries interact in order to come to conclusions about the potential for biotechnology to serve as an important contributor to the renewal of U.S. economic hegemony. Much has been made about the interaction between information technology and biotechnology in research, and some commercialization efforts are clearly combinations of the two, e.g., bioelectronics. But information technology has also lowered the cost of long-distance communication so greatly that the “tyranny of distance” has been massively reduced. And this has consequences for any region’s or national society’s efforts to garner technological rents. Scientists communicate with each other so rapidly and effectively by means of Internet collaboratories and email that new discoveries diffuse rapidly to all the corners of the world.  This, and the willingness to pay high salaries for talented migrants, has made it possible for new centers of biotechnology research to rapidly emerge in places like Singapore and Hong Kong. Modelski and Thompson (1996) contend that the information revolution may well prevent any single country from developing a competitive advantage in new lead industries, and so may halt centuries-old process of hegemonic rise and fall.[5]

 

Research Designs

      Our project is employing two different research strategies in order to answer the questions described above.  The first employs a comparative historical analysis of industrial sectors in the core and non-core countries of the modern world-system since 1850, and the second utilizes a more formal and quantitative approach to the study of the new biotechnology in the global system since 1980.

The comparative historical part of the project compares both the old and new biotechnology with the other main new lead industries of the British and U.S. hegemonies. This approach allows us to focus on the patterns of diffusion of new lead industries that occurred during the period of British hegemonic decline after 1870. It was during this period that Britain lost its former ability to concentrate the profits and spin-offs of new lead technologies within its national economy and its colonial empire. Of relevance here were the old biotechnology (plant and animal breeding, fertilizers), steel, telegraph and radio, electrification, petroleum, industrial chemicals, bicycles, automobiles and etc.

 We are also using the comparative historical method to study the post World War II emergence and development of information technology and nuclear energy with an eye to  both comparison with and interaction with the new biotechnology. In practice this means relying on the evidence that has been produced by those business, economic and technology historians and social scientists that have studied these industries. We shall also search for relevant primary data sources, but what we find will probably be too patchy to allow for a systematic quantitative approach.

The second research design employs a quantitative time-mapping approach to the new biotechnology as we have defined it above.  We are using the definitions of new biotechnology and the firms that are commercializing it developed by the OTA (1984). The main strategy is to globally time-map the emergence of biotechnology research, education, commercialization, profitability and the critical discourse about biotechnology issues.

This involves globally geocoding and time referencing the emergence and growth of basic and applied biotechnology-related programs in institutions of higher learning, and government agencies from 1980 to 2005. We are coding the date of foundation of these institutions, as well as their sizes and their headquarters and subsidiary locations. This will allow us to track the rate and locations of diffusion of biotechnology research and development.  Existing studies will be updated and recoded for purposes of testing our hypotheses.  And we are expanding our study to all the countries of the world that have research and development programs in basic and applied biotechnology.

        We are also using a similar approach to the formation of firms that are involved in biotechnology commercialization. We will utilize the definitions of biotechnology-producing firms developed by the OTA (1984). We will code firms according to size, degree of specialization, date of foundation (and termination), and the type biotechnology they are working on. Previous studies are being updated and expanded to include all the countries of the world that have such firms. We are studying the distribution of small and large firms involved in biotechnology research and production in each country, but will not study firms that supply biotechnology-producing firms. One important data-set on biotechnology firms is the Bioscan Database (n.d.), which reports the number of employees, major investors, foundation date of the firm, date of beginning biotech research and development, current products, size of facilities, products in development and stock history.

We want to time-map basic and applied research that is both publicly and privately funded, though, in practice, information about private research funding is usually proprietary. Efforts to gather internationally comparable data on investments in biotechnology research and development were begun by the OTA (1984), and the United Nations Agenda 21 (UN 1995) initiative asserted the desirability of such comparable statistics. But not much has been accomplished, and so it is necessary to use proxy measures in order to build measurement models for estimating the growth and diffusion of biotechnology development.  We are using the structural equations approach to measurement error modeling.

We are studying both large and small biotechnology companies, their products and sources of income and the similarities and differences in the structures of biotechnology industries in different countries, and compared to other industries.  And we are studying trends and international differences in public attitudes toward biotechnology as well as the emergence of government regulations regarding biotechnology. 

        We are also using industry studies and national accounts statistics to estimate changes in the contribution of biotechnology industries to the GDP of all the countries that have biotechnology research, development or commercialization. And we are studying the network of international trade (both imports and exports) since 1980 with attention to the product categories within which biotechnology products are imbedded. It is impossible to distinguish with currently available trade statistics (from the International Monetary Fund Direction of Trade data) that portion of, for example, the trade in seeds that is composed of genetically modified seeds. But analysis of the changing structure of world trade in pharmaceutical products, grains, seeds for planting and specialized and industrial chemicals that are know to be produced through biotechnology will allow us to estimate the changes in the size of the potential markets, the current market shares of the U.S. and competing countries, and to examine the international trade impacts of events such as the Japanese ban on genetically modified soy bean imports. This research will allow us to produce a global time-map of the temporal and geographical expansion of the biotechnology sector.

        The second major focus of our quantitative research will be on public attitudes toward biotechnology research and products. Here we are analyzing articles that have appeared in newspapers and magazines all over the world since 1980 that report on activities in the biotechnology sector and on issues raised about the benefits and costs of biotechnology research and commercialization. We are using the NexisLexis service to locate these articles.[6]  We are coding expressions of opinion that indicate positive, negative or neutral attitudes toward different kinds of biotechnology using the typologies listed above. These articles are being geocoded and time-coded so that we are able to track trends and changes in attitudes in all the countries of the world. We are also paying special attention to protest events, as well as public and private conferences that are relevant for public discourse about biotechnology. We are also studying the emergence of transnational and international NGOs that are involved in issues regarding biotechnology.

        The third major focus of research is a survey of formal public regulation of biotechnology as it has developed since 1980. Local, provincial and national state-level, and international organization regulations are being coded as revealed in news articles and formal reports of governmental and legislative agencies in all the countries of the world. We also track changes in patent laws and their enforcement and disputes about regulation. 

        The results of these three quantitative research efforts will allow us to study the spatio-temporal relationships between the expansion of the biotech sector and the emergence of both support for and resistance to biotechnology. Then we shall use these results to construct alternative scenarios of the future growth and spatial expansion of commercialized biotechnology, its impact on the world economy and on the relative position of the U.S. Submodels will be constructed for each industry in which biotechnology is involved because of important differences between these industries (see OECD 1989: 53-55).

The resulting databases, interoperable project web site and publications will provide learning opportunities for students and will be disseminated to academics, non-governmental institutions and makers of public policy who are interested in biotechnology and its implications for the role of the United States in the larger world-system.

 

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[1] Additional information on public opinion trends regarding genetic engineering, international trade in high tech products, and venture capital investments are contained in the Appendix at http://irows.ucr.edu/research/biotech/biotechapp.htm

[2] The most important of these studies are those of Boswell and Sweat (1991), Modelski and Thompson 1996, Thompson (2000) and Arrighi and Silver (1999).

[3] “Power cycle” is Modelski and Thompson’s term for what Arrighi (1994) calls “systemic cycles of accumulation” and Chase-Dunn (1998) calls the “hegemonic sequence.”

[4] See Chase-Dunn et al 2002.

[5] As political geographer Peter Taylor (1996) so wittily puts it, the U.S. may be the “last of the hegemons.”

[6] NexisLexis will allow us to search the whole text of articles from the Associate Press, BBC, Japan Economic Newswire, Latin American Newsletters, the New York Times, the Washington Post and the Xinhua News Service from 1980 to the present.