Global Obstacles to Disruptive Innovation In Sustainable Agriculture and Energy

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Bonvillian, William B.
Weiss, Charles
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The U.S. national innovation system has a dual structure: part suited to rapid innovation, and part stubbornly resistant to change. The complex established “legacy” sectors (CELS) that resist change share common features that obstruct the market launch of innovations, beyond the “valley of death” and other obstacles that have been the traditional focus of innovation policy. Innovations in CELS must penetrate a well-established and well-defended technological/economic/political/social paradigm that favors existing technology, characterized by (1) “perverse” subsidies and price structures that create a mismatch between the incentives of producers and broader social goals, such as environmental sustainability, public health and safety, and geopolitical security; (2) established infrastructure and institutional architecture that imposes regulatory hurdles or other disadvantages to new entrants (3) market imperfections beyond those faced by other innovations: network economies, lumpiness, economies of scale, split incentives, needs for collective action, and transaction costs (4) politically powerful vested interests, reinforced by public support, that defend the paradigm and resist innovations that threaten their business models (5) public habits and expectations attuned to existing technology and (6) an established knowledge and human resources structure adapted to its needs. We have developed a new, integrative analytic framework for categorizing the obstacles to market launch faced by CELS, and earlier applied this method to energy, health delivery, the long-distance electric grid, building, and air transport. In energy especially, the requirement for innovation is sufficiently urgent that large-scale domestic and collaborative international research should take place even at the cost of possible competitive disadvantage and even if it is some time before the U.S. adopts carbon charges and thereby puts pressure on the prevailing paradigm of fossil fuel use. We now extend this method to sustainable agriculture. American paradigms in agriculture and in energy are exported world-wide, delaying the development and spread of needed innovations that are not consistent with them. Foreign manufacturers wishing to enter U.S. markets must suit their products in these sectors to American paradigms, while American exports of technology may be insufficiently cost-conscious or respectful of environmental sustainability. Developing countries are technology takers and suffer from asymmetric innovative capability. They need to choose sources of technology best suited to their situation. India and China constitute new competitive threats, but also represent “innovative developing countries” that have large domestic markets in which to launch innovations aimed at the needs of poor people.
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