The Roles and Impacts of Technical Standards on Economic Growth and Implications for Innovation Policy

Modern technologies are complex systems, which creates demand for an equally complex supporting technical infrastructure that is implemented through a variety of standards affecting all stages of technology-based economic activity. The development, production, and integration of the components of technology-based systems require standards for such disparate functions as materials characterization, equipment calibrations, setting data formats, and consummation of market transactions. These functions of standardization not only increase productivity but assure domestic customers and those in other economies that a component will perform as desired within the broader product system technology. The trend in corporate strategy toward specialization and the resulting networks of firms that develop, disseminate, and integrate these technologies mean a greater distribution of R&D among materials and component suppliers and integrators of product and service systems that now characterize high-tech supply chains. The consequent increase in market transactions requires an additional standards infrastructure to reduce the greatly increased costs involved in consummating these transactions between suppliers and users. The need to be commonly used means standards have publicgood characteristics, which leads to underinvestment in their technological content and in the processes for actually promulgating them and managing their use over a technology’s life cycle. Further, because standards are a heterogeneous infrastructure, having multiple forms and hence economic roles, different combinations of public and private investment in the supporting “infratechnologies†are needed. In response to the need to effectively manage the multiple roles of standards, this monograph assesses their economic nature and impacts over the entire technology life cycle and the consequent implications for public policies required to effectively provide this critical infrastructure.