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6 - Dynamics of Comparative Advantage in the Chemical Industry
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- By Ashish Arora, Carnegie Mellon University, Ralph Landau, Stanford University, Nathan Rosenberg, Stanford University
- Edited by David C. Mowery, University of California, Berkeley, Richard R. Nelson, Columbia University, New York
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- Book:
- Sources of Industrial Leadership
- Published online:
- 05 June 2012
- Print publication:
- 13 October 1999, pp 217-266
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Summary
Introduction
The chemical industry is one the largest manufacturing industries in the world. In 1995, the sales of the U.S. chemical industry amounted to $372 billion, while those of Western Europe taken together amounted to $495 billion and the Japanese chemical industry, $252 billion. In terms of value added, chemicals and allied products account for about 10.4% of U.S. manufacturing output and 1.9% of the U.S. gross domestic product (GDP). Not only is the chemical industry very large, it is also very complex. In fact, the chemical processing industries (CPIs) group has been called the most miscellaneous of industries and the description is apt. The chemicals and allied products group (SIC 28) can be divided into three major subgroups: (1) basic chemicals such as acids, alkalis, salts, and organic chemicals; (2) intermediate chemical products such as synthetic fibers, plastic materials, and colors and pigments; (3) consumer chemical products such as drugs, cosmetics, soaps, as well as paint, fertilizers, and explosives. Even if one excludes closely related sectors such as refining, and paper and pulp, the CPI produce somewhere on the order of 50,000–70,000 products. Many of the products are new, the results of product innovation, but many older products survive, even if their relative importance has declined.
The most important class of chemicals are the organic compounds, which are much more pervasive and varied than the inorganic compounds, such as salt and minerals and products derived from them such as chlorine, bleach, caustic soda, and sulfuric acid.
10 - Innovation in the chemical processing industries
- Nathan Rosenberg, Stanford University, California
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- Book:
- Exploring the Black Box
- Published online:
- 12 November 2009
- Print publication:
- 10 March 1994, pp 190-202
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Summary
Chemicals and allied products (Standard Industrial Classification 28) is the high-tech sector about which the general public probably has the least knowledge. Yet, judged by criteria that are generally regarded as socially and economically worthwhile, this sector should be ranked at the top of the high-tech scale. A common criterion for “high tech” is an industry's expenditure upon research and development (R&D). Chemicals and allied products are at the very top when industries are ranked in terms of the share of total R&D that is actually financed by private funds. With respect to the composition of R&D expenditures, a far larger share of such expenditures in this sector consists of basic research, and basic research and applied research together represent a much greater share of total R&D than is the case in any other industrial sector (see table 10.1). It is tempting to say that this sector has received so little public attention because its performance has, in certain respects at least, been so exemplary.
Clearly, chemicals and allied products have been heavily dependent upon the performance of scientific research. Having said that, it must be emphasized that such research is only the very beginning of the innovation process, and not the end of it. A laboratory breakthrough is, typically, very far from the availability of a commercializable product. Commercial success or failure in this industry, as in other industries, is largely a matter of what happens after a laboratory discovery. However significant the contribution of science to human welfare in general, the question of who will benefit most from specific innovations generated by science will depend on factors far removed from scientific research capability.