National policies for technical change: Where are the increasing returns to economic research?

Improvements over the past 30 years in statistical data, analysis, and related theory have strengthened the basis for science and technology policy by confirming the importance of technical change in national economic performance. But two important features of scientific and technological activities in the Organization for Economic Cooperation and Development countries are still not addressed adequately in mainstream economics: (i) the justification of public funding for basic research and (ii) persistent international differences in investment in research and development and related activities. In addition, one major gap is now emerging in our systems of empirical measurement—the development of software technology, especially in the service sector. There are therefore dangers of diminishing returns to the usefulness of economic research, which continues to rely completely on established theory and established statistical sources. Alternative propositions that deserve serious consideration are: (i) the economic usefulness of basic research is in the provision of (mainly tacit) skills rather than codified and applicable information; (ii) in developing and exploiting technological opportunities, institutional competencies are just as important as the incentive structures that they face; and (iii) software technology developed in traditional service sectors may now be a more important locus of technical change than software technology developed in “high-tech” manufacturing.

Voice-processing technologies--their application in telecommunications.

As the telecommunications industry evolves over the next decade to provide the products and services that people will desire, several key technologies will become commonplace. Two of these, automatic speech recognition and text-to-speech synthesis, will provide users with more freedom on when, where, and how they access information. While these technologies are currently in their infancy, their capabilities are rapidly increasing and their deployment in today's telephone network is expanding. The economic impact of just one application, the automation of operator services, is well over $100 million per year. Yet there still are many technical challenges that must be resolved before these technologies can be deployed ubiquitously in products and services throughout the worldwide telephone network. These challenges include: (i) High level of accuracy. The technology must be perceived by the user as highly accurate, robust, and reliable. (ii) Easy to use. Speech is only one of several possible input/output modalities for conveying information between a human and a machine, much like a computer terminal or Touch-Tone pad on a telephone. It is not the final product. Therefore, speech technologies must be hidden from the user. That is, the burden of using the technology must be on the technology itself. (iii) Quick prototyping and development of new products and services. The technology must support the creation of new products and services based on speech in an efficient and timely fashion. In this paper I present a vision of the voice-processing industry with a focus on the areas with the broadest base of user penetration: speech recognition, text-to-speech synthesis, natural language processing, and speaker recognition technologies. The current and future applications of these technologies in the telecommunications industry will be examined in terms of their strengths, limitations, and the degree to which user needs have been or have yet to be met. Although noteworthy gains have been made in areas with potentially small user bases and in the more mature speech-coding technologies, these subjects are outside the scope of this paper.