The gap in productivity between the best and worst companies within industries is large. For instance, economists measured the productivity of U.S. manufacturing plants and found that the output at the 90th percentile was nearly double that of those at the 10th percentile. Economists do not fully understand why that difference is so large, but they commonly attribute it to management talent. Organizations do not always identify and implement best practices. Superstar firms substantially outspend their competitors on intangible assets. They are spending big on “ideas”: software, training, and research and development (R&D). James Bessen documents that spending for proprietary software has grown substantially faster than that for R&D, acquisitions, advertising, and lobbying. U.S. firms spend more than $200 billion per year on proprietary software and the big firms represent the bulk of that outlay. They are investing heavily in nonrival goods. Bessen then makes the case that proprietary software enables superstar firms to capture classic economies of scale and to offer differentiated products.
- Date Posted:
- January 30, 2024
Later this year, the European Commission is set to conclude an anti-subsidy investigation into Chinese EV production that could lead to higher tariffs for Chinese imports. Brussels is also considering emergency support measures for its solar panel manufacturing industry, including an anti-dumping investigation. The US, meanwhile, has slapped export controls on high-technology shipments to China. Beijing has attacked the EU anti-subsidy investigation into EVs as “naked protectionism” and has criticised “de-risking”. But western critics argue China’s policymaking has been mercantilist for decades, with the methodical setting of targets to increase domestic supply chain self-reliance. Foreign companies complain they are facing growing obstacles to accessing the Chinese market.