Trade and Investment

BRIE’s early path breaking work on trade and investment has demonstrated how conventional economic understandings often fail to grasp the central dynamics of industrial competition in the advanced economies. Among other contentious positions, BRIE research has strongly supported the propositions that national competitive advantage is created not revealed, that high-tech trade patterns are massively influenced by domestic policies, that what a nation produces and trades – the composition of domestic production- matters mightily to long-tern growth and prosperity.

BRIE work demonstrated how the importance of foreign direct investment and enduring differences between national political economies challenged the traditional goals and structure of the international trading system. The economic transformation is not about soft landings, smooth growth, permanently rising stock prices, government surpluses, and low rates of interest and inflation. It is about structural transformation and developments that carry disruption and change. The policy issues are moving rapidly from the narrowly technical through the narrowly legal into fundamental questions of how to organize our markets and society.

Current research looks at new frameworks for growth and models of financing in a global and digital economy. Two issues in particular: growth in Europe and evolution of funding for research and development in the US . In Europe , much will depend on business’ ability to obtain the necessary investment and risk capital, highlighting the critical importance of deep, integrated financial markets and robust corporate governance. In the US , the changing character of the research system is critical. There are two dimensions to this change. The first is the new security dilemma and the evolution of research and technology. American choices about technology investment, both what to invest in and how to organize the process, are affected by the security debate. The second dimension concerns investments in higher education and research. In the postwar era, that US government underwrote the relevant basic science research at universities and labs, direct R&D contracts accelerated the development of the technology, and defense procurement at premium prices constituted a highly effective initial launch market. The spending model was premised on the belief that pouring in investments in science at the front end of the development pipeline would produce technology out the other end. The evolution of industry-university relationships are central and a constant focus of attention, but the changing character of the very core of the research university system is potentially at risk in the United States.