The Role of Science and Technology in the Development of World Economy

CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 3
CHAPTER I. THEORETICAL ASPECTS RELATING TO THE ROLE OF SCIENCE AND TECHNOLOGY IN THE DEVELOPMENT OF WORLD ECONOMY............................6 1. The concept and evolution of the world economy ...............................................6 2. Science and technology as a step in the formation of the world economy...........10
CHAPTER II. ANALYSIS THE IMPACT OF SCIENCE AND TECHNOLOGY IN THE DEVELOPMENT OF WORLD ECONOMY ........................................................................19 1. The effects of the industrial revolution on the progress of world economy........19 2. The role of science and technology on the growth of the world economy..........26
CHAPTER III. SCIENCE AND INNOVATION - TWO MAJOR FACTORS FOR DEVELOPMENT ECONOMY OF REPUBLIC OF MOLDOVA........................................32 3.1. General aspects regarding the science and technology in the development of Republic of Moldova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...32 3.2. Strategies and programs for improving the future of Republic of Moldova . . . . . . .37
CONCLUSION ............................................................................................................................45
BIBLIOGRAFY ...........................................................................................................................47
ANNEXES
ANNOTATION
ABBREVIATIONS

INTRODUCTION The relevance of the investigated theme. The evolution noted in the international economic relations, in the beginning of the XXI century, make deep evidence on the significant changes in comparison with the regard to last period, in the area of the interpretations on the value concepts about the development of the world economy. In this way are many implications and penetrations from the past to present, more events and discoveries in the innovation domain. Science and technology represent one main step in the development of world economy. Industrial Revolution has big effects on the formation of the world economy as relating that these multiple events represent a step in creation of a new better life, which influenced to the beginning of a new era. This constituted one fundamental base in the elaborations of new innovations in the view to improve the industries, agriculture and infrastructure, also the relations between states by improvement of transports. The impacts and influences of science and technology on the growth of the economy consist of many factors which determine the development of the economy at international, regional and national level. The present interest is consisted of the problematical settlements in the international economic relations which are reflected on the big interest studied and researched by many international institutions. These organizations try to increase the economic growth and the life standards. Science and technology can be applied with success for sustaining and developing the world economy, being in this way an important factor which has a significant impact on the evolution of global economy. In nowadays the discoveries in this domain represent a useful thing for the future development of world economy, as growth of industry and infrastructure. In this way can be mentioned the raising of the life standards, high-skilled labor, big productivity, high quality of products, transports and services. Engineers are often involve in technology generating activities, but are sometimes unable to identify the benefits resulted from the new technology and science. The present theme represents a big interest also for promoting the investments in research and development. The scope and objectives of the thesis are represented by the theoretical and methodological studies of science and technology which have an important role in the development of world economy, in analyze of the present and the future perspectives. The aim of research was constituted by the identification of possibilities to analyze the role of science and technology in the development of world economy. The issues of the paper work are the examinations of the general principles which influenced the development of world economy by two factors as science and technology, this representing the base for the future growth, the identification of the arguments and opportunities, the evidences of particularities on the science and technology in the Republic of Moldova, also the Industrial revolution and its effects on the creation of world economy. Object of the theme is the science, technology and the development of world economy on international level and in the Republic of Moldova. Theoretical and methodological support of the thesis represent the scientific books and paper works which were analyzed and studied of the specialists in the domain of the researched theme as: Bal Ana, Buşcăneanu S, Gilpin R, Gwartney J, Usunier Jean-C, Balan Carmen, Stutz Frederick P, Balassa Bela, Forsyth T., Leontief W., Moulaert F., Mureşan M., Mureşan D. Norton S., Perkmann M., Prohniţchi V., Popescu N., Postu V., Ravenhill J., Rideanu P., Rogowski, R., Kajtár E., Stone M., Bond A., Suciu M.C., Şută N., Voinea L., Waele J.M., Willard T., Wilson A.G., Woolcock S., Yankov N., etc, also many of normative acts referred in the thesis. The structure of the thesis. The aim and objectives are investigated in 3 chapters which contain analyze about the role of science and technology in the development of world economy. Chapter I. Theoretical aspects relating to the role of science and technology in the development of world economy with the paragraphs: The formation and the evolution of the concept of world economy and Science and technology as a step in the developing of the world economy characterize the theoretical and methodological aspect of the theme. The first paragraph presents theoretical events about the development of the world economy, starting with the beginning and finishing with the situation of the world economy in the present. The second paragraph Science and technology as a step in the development of world economy are presented the importance of these two factors in the history and in present. In contemporary economies business firms are a fundamental locus of technology and scientifically accumulation. Research and development express the significance of science and technology in our world. Chapter II. Analysis the impact of science and technology in the development of world economy with the first paragraph The effects of the industrial revolution on the progress of world economy which explain the starting point of the beginning in a new era. The Industrial Revolution was a period in the late 18th and early 19th centuries when major changes in agriculture, manufacturing, mining and transportation had a profound effect on the economy of Britain. The second paragraph The role of science and technology on the growth of world economy communicate that the science and technology playing a prominent part in the development of world economy. Technology and science have such immense benefits in every phase of our lives, that it has not only made our life easier but also has raised the standard of living of every individual. Innovation has made the economy of the world climb the highest peaks. Chapter III Science and technology – two major factors for development economy of Republic of Moldova is structured in two paragraphs as: General aspects regarding to the science and technology in the development of national economy and Strategies and programs for improving the future of Republic of Moldova. The first paragraph relate about the importance of science and technology in Republic of Moldova. The major condition being the pass to a new economy, based on knowledge is innovations model, economic development, also transforming innovations and innovation activities into the major development factor of Republic of Moldova. The second paragraph explain and show how national government participate on the creation of a condition based on knowledge and innovation through elaboration different programs and strategies issuing the principles, objectives and the goals of these.

CHAPTER I. THEORETICAL ASPECTS RELATING TO THE ROLE OF SCIENCE AND TECHNOLOGY IN THE DEVELOPMENT OF WORLD ECONOMY 1. The formation and the evolution of the concept of world economy The world economy is defined as that level in an exchange of activities when are implicated all the economic clerks on the Earth. The concept of the world economy is a theoretic expression in a big range of economic relations. The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways (for example, in 2006 US dollars). It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind. World economy is about how nations interact through trade of goods and services, through flows of money and through investment. This is an old subject, but it continues to grow in importance as countries become tied to the international economy. Nations are more closely linked through trade in goods and services, through flows of money, and through investment than ever before [6, p.54]. International trade as a fraction of the national economy has tripled for the US in the past 40 years. Compared to the US, other countries are even more tied to international trade. Several ideas underlie the gains from trade: a) when a buyer and a seller engage in a voluntary transaction, both receive something that they want and both can be made better off. Norwegian consumers could buy oranges through international trade that they otherwise would have a difficult time producing. The producer of the oranges receives income that it can use to buy the things that it desires. b) How could a country that is the most (least) efficient producer of everything gain from trade?
With a finite amount of resources, countries can use those resources to produce what they are most productive at (compared to their other production choices), then trade those products for goods and services that they want to consume. Countries can specialize in production, while consuming many goods and services through trade.
c) Trade is predicted to benefit a country by making it more efficient when it exports goods which use abundant resources and imports goods which use scarce resources.
d) When countries specialize, they may also be more efficient due to large scale production.
e) Countries may also gain by trading current resources for future resources (lending and borrowing). Trade is predicted to benefit countries as a whole in several ways, but trade may harm particular groups within a country. International trade can adversely affect the owners of resources that are used intensively in industries that compete with imports [7, p.102].Trade may therefore have effects on the distribution of income within a country. Conflicts about trade should occur between groups within countries rather than between countries. Patterns of Trade are: differences in climate and resources can explain why Brazil exports coffee and Australia exports iron ore. But why does Japan export automobiles, while the US exports aircraft? Differences in labor productivity may explain why some countries export certain products. How relative supplies of capital, labor and land are used in the production of different goods may also explain why some countries export certain products. Policy makers affect the amount of trade through: tariffs: a tax on imports or exports, quotas: a quantity restriction on imports or exports, export subsidies: payments to producers that export, or through other regulations (e.g., product specifications) that exclude foreign products from the market, but still allow domestic products. What are the costs and benefits of these policies? Governments measure the value of exports and imports, as well as the value of international financial capital that flows into and out of their countries. Related to these two measures is the measure of official settlements balance, or the balance of payments: the balance of funds that central banks use for official international payments. All three values are measured in the government’s national income accounts. Besides international financial capital flows and the official settlements balance, exchange rates are also an important financial issue for most governments. Exchange rates measure how much domestic currency can be exchanged for foreign currency. They also affect how much goods that are denominated in foreign currency (imports) cost. And they affect how much goods denominated in domestic currency (exports) cost in foreign markets. International trade focuses on transactions of real goods and services across nations. These transactions usually involve a physical movement of goods or a commitment of tangible resources like labor services. International finance focuses on financial or monetary transactions across nations. For example, purchases of US dollars or financial assets by Europeans. However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect world-wide value, for example in cases where the volume or price of transactions is closely regulated by the government. Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars. However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world 's 6.6 billion people have most of their economic activity reflected in these valuations [13, p.57]. The evolution and formation of the world economy The first and the most important reason of the world economy is the private property domination. The right to the private property is situated at the base of the freedom of people and the freedom of the firms. The history of this type is lost in the past. The explication can be found in the few factors of production, the numbers of people were very low, and science and technology were low developed. The fight for existence were very intensive, that is explained the apparition of the common property. Is not know exactly when were formed the private property. The appearance of the private property was unequally and has the roots from the oldest periods. The first labor division was the separation between the tribes which have as an effect the plus production. The plus production would constitute the material basis for the private property development, and its motivation. The private property were developed and improved in a hard linked with the production factors process. The formation of the private domain begun to be form when the people started to be capable in producing more than the necessities. Through the evolution would be shown the adequate aria of the creation a prosperity economy. The second division of labor was the separation of the manufactures of the agriculture. This will mean a new way on the productivity area. From this moment will appear the production designated for exchange. The third division of labor was designated as the period when the clerks became the first capitalists. At that moment was started the new spirit of an entrepreneur and the economy knew a new develops. The trade was diversified. Many deals were made at the long distances. In this activity participated only some parts of the world. At the end of the XV-th century were announced the apparition of a new period in the economic activity. The facts in that time, the geographical discoveries, the important colonial conquering, permitted the penetration in the economic cycle of the huge regions on the world, and the first was that two Americas. This impulse gave an considerable importance to the economic life. At that time was started an exchange of goods between America and Europe. The XVI-th century were characterized as the period of the apparition of the global markets. The activity at the microeconomic level were considerable stimulated. The country which dominated the international market was Oland. During the creation of big manufactures the open economy begins to be noticeable. The open economy became more dominant than closed economy. The XVII century is marked by the important facts in the international economy. This period is determined by the industrial revolution. This influenced the productivity which has a big increase [9, p. 14]. Since the Industrial Revolution a highly skewed international distribution of innovative activities has emerged, starting from rather homogeneous conditions at least between Europe, China and the Arab world. Table 1 [annexes 1] provides a highly impressionistic but revealing picture of the international distribution of innovations from 1750. Although there is probably some Anglo-American bias in the data, a similar pattern is revealed by long-term patenting activities: Innovation appears to be highly concentrated in a small group of industrialized countries. The club of major innovators has been quite small over the whole period of around two centuries and half with both restricted entry (with Japan as the only major entrant in the 20th century) and a secular pace of change in relative rankings. At the same time, since the Industrial Revolution one observes the explosion of diverging income patterns, starting from quite similar pre-industrial per capita levels presents estimates showing that before the Industrial Revolution the income gap between the poorest and the richest countries was certainly smaller than the ratio 1 to 2 and probably of the order of only 1 to 1.5. Conversely, the dominant tendency after the Industrial Revolution is one with fast increasing differentiation among countries and overall divergence. Even in the post World War II period, commonly regarded as an era of growing uniformity, the hypothesis of global convergence (that is convergence of the whole population of countries toward increasingly similar income levels) does not find support from the evidence. Rather, one finds some - although not overwhelming - evidence of local convergence, i.e. within subsets of countries grouped according to some initial characteristics such as income levels or geographical locations. Still, across-groups differences in growth performances appear to be striking high. A delicate but crucial issue concerns the relation between patterns of technical change and patterns of economic growth. Of course, technological learning involves many more elements than simply inventive discovery and patenting: equally important activities are imitation, reverse engineering, adoption of capital-embodied innovations, learning by doing and learning by using. Moreover, technological change goes often together with organizational innovation. Still, it is important to notice the existence of significant links between innovative activities (measured in a rather narrow sense, i.e. in terms of patenting and R&D activities) and GDP per capita. As discussed in Klein R.L. evidence concerning OECD countries appears to suggest that the relationship between innovative activities and levels of GDP has become closer over time, and is highly significant after World War II [15, p. 377]. Moreover, innovative dynamism, expressed by the growth of patenting by different countries in USA always appears positively correlated with per capita GDP growth. The link is particularly robust between 1913 and 1970. In general, at least since World War II, the rates of growth of GDP appear to depend on domestic innovative activities, the rates of investment in capital equipment and international technological diffusion. In turn, capability of innovating and quickly adopting new technologies are strongly correlated with successful trade performance. Moreover, despite technological diffusion is taking place at a rather high rate, at least among OECD countries, important specificities in "national systems of innovation" persist related to the characteristics of the scientific and technical infrastructure, local user-producer relationships and other institutional and policy features of each country [16, p.154]. 1. 2. Science and technology as a step in the developing of the world economy In contemporary economies business firms are a fundamental locus of technological and scientifically accumulation. This is revealed also by the (high and growing) shares of the total domestic Research and Development they undertake, in this way influencing the development of the world economy. However the directions and the rates at which they learn vary a lot depending the sectors in which they operate and, relate, on the technologies they access. In any case, neither the secularly growing importance innovative search internalized within firms, nor the more recent ability by the latter to utilize "artificial" exploration and design technologies - has eliminated the intrinsic uncertainty associated with the innovation process which contributes to the development of world economy [14, p.244]. Trials and errors, unpredictable failures and unexpected successes continue to be a general feature of technological innovation in contemporary economies. And so continue to be the persistence of systematic differences across firms, even within the same lines of activities, in innovative abilities, production efficiencies, profitability: i.e. what in a short hand are called elsewhere asymmetries across firms. A striking illustration of a much wider phenomenon is the dispersion of labor productivities even within the same sectors of activity and under roughly the same relative prices which influence the international economy. Industrial structures and industrial change present a few remarkable regularities, too, shared by most industrialized countries. Variables like capital intensity, advertising expenditures, R&D and patent intensities, concentration, profitability, firms’ entry exit and survival rates remarkably differ across sectors while presenting high cross country similarities. Moreover, specific industries display rather similar characteristics, in terms of industrial dynamics in different countries. Finally, both industrial structures and dynamics appear to be profoundly shaped by the nature of the technologies upon which individual industries draw. How does one interpret the bulk of the foregoing evidence? For example, why technological learning appears, at least at a first look, to be both a driver of economic growth but also a factor of divergence across countries and even across firms? More generally, how does one link any story primarily focused upon the dynamics of knowledge with another one wherein the primary actors are business firms, products, markets, etc. and with yet another one primarily featuring non- market institutions? In order to begin to address these questions, in making a characterize the nature of technology and science and technological innovation will deduce that technology and science represent an important factors in the development of world economy. A variety of concepts have been put forward over the last couple of decades to define the nature of innovative activities: technological and scientifically regimes, paradigms, trajectories, salient, guidepost, dominant design and so on [16, p306]. More crucially, these concepts are important in that way in finding common features of the procedures and direction of technical change. It is considered some of them. The notion of technological and scientifically paradigm which shall be for the time being our yardstick is based on a view of technology and scientific grounded on the following three fundamental ideas. First, it suggests that any satisfactory description of ’what is technology and science’ and how it changes must also embody the representation of the specific forms of knowledge on which a particular activity is based and can not be reduced to a set of well-defined blueprints. It primarily concerns problem-solving activities involving - to varying degrees - also tacit forms of knowledge embodied in individuals and organizational procedures. Second, paradigms entail specific heuristic and visions on "how to do things" and how to improve them, often shared by the community of practitioners in each particular activity (engineers, firms, technical society, etc.), i.e. they entail collectively shared cognitive frames. Third, paradigms often also define basic templates of artifacts and systems, which over time are progressively modified and improved. These basic artifacts can also be described in terms of some fundamental technological and economic characteristics. For example, in the case of an airplane, their basic attributes are described not only and obviously in terms of inputs and production costs, but also on the basis of some salient technological and scientifically features such as wing-load, take-off weight, speed, distance it can cover, etc. What is interesting here is that technical progress seems to display patterns and invariance in terms of these product characteristics. Similar examples of technological invariance can be found e.g. in semiconductors, agricultural equipment, automobiles and a few other micro technological studies which demonstrate their direct influence on the development of international economy. Hence the notion of technological trajectories associated with the progressive realization of the innovative opportunities underlying each paradigm - which can in principle be measured in terms of the changes in the fundamental techno-economic characteristics of artifacts and production processes. The core ideas involved in this notion of trajectories are the following. First, each particular body of knowledge (each paradigm) shapes and constraints the rates and direction of technical and scientifically change, in a first rough approximation, irrespectively of market inducements. Second, technical change is partly driven by repeated attempts to cope with technological imbalances which it creates. Third, as a consequence, one should be able to observe regularities and invariance in the pattern of technical and scientifically change which hold under different market conditions (e.g. under different relative prices) and whose disruption is mainly correlated with radical changes in knowledge-bases (in paradigms). Moreover a rather general property, by now widely acknowledged in the innovation literature, is that learning is local and cumulative. "Locality" means that the exploration and development of new techniques and product architectures is likely to occur in the neighborhood of the techniques and architectures already in use. "Cumulativeness" stands for the property that current technological developments often build upon past experiences of production and innovation, proceed via sequences of specific problem solving junctures and in a few circumstances also lead to microeconomic serial correlations in successes and failures. This is what Paul David citing Robert Merton citing The New Testament calls the Matthew Effect: "For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath" [14, p 478]. Note that "cumulativeness" at micro level provides robust support for those interfirm asymmetries mentioned earlier, while industry-wide, region wide and country-wide factors of cumulativeness in learning dynamics are good candidates to the explanation of why industries, region and countries tend to systematically differ in both technological and economic performances. The robustness of notions such as technological trajectories or similar ones is of course a primarily empirical question. Come as it may, fundamental issues regard the carriers, the fine grained processes and the driving factors underlying the observed patterns of technological and scientifically change .However, a good deal of "economically useful" technological knowledge is nowadays mastered by business firms, which even undertake in some countries - such as the USA, Nordic European countries, Germany and few others - a small but not negligible portion of the effects aimed at a more speculative understandings of physical, chemical, biological properties of our world (i.e. they also undertake "basic science"). How does all that relate with the structure and behaviors of firms themselves? Possibly one of the most exciting, far from over, intellectual enterprises developed over the last decade has involved the interbreeding between the evolutionary economics research program, (largely evolutionary inspired) technological and scientifically innovation studies and an emerging competence-/capability-based theory of the firm. Distinctive organizational competences/capabilities bear their importance also in that they persistently shape the destiny of individual firms - in terms of e.g. profitability, growth, probability of survival - and, at least equally important, their distribution across firms shapes the patterns of change of broader aggregates such as particular sectors or whole countries. The general conjecture of many evolutionary economists is indeed that by opening up, together, the "technological black box" and the "organizational black box" one is likely to find robust mappings between the patterns in the collective distributions of technological knowledge and the properties of organizational structures and behaviors. We shall come back below to some historical examples. Here, in any case, notice a major domain of interaction between (evolutionary) economics, organization theory and economic sociology - largely waiting to be explored. Another largely unexplored field of inquiry is the exploration of technology and scientific specific patterns of knowledge accumulation- attempting to study the diversity of innovation patterns across industrial sectors and identify taxonomies of technological and scientifically regimes. Such regimes are based on industry-specific properties of search for technological and scientifically improvements and on specific natures and sources of knowledge-bases. In line with taxonomic exercise such as the inquiry builds on three basic conjectures, namely that, first, notwithstanding the importance of country-wide institutional factors, the properties of innovation processes are, to a significant extent, invariant across countries and specific to technologies or industrial sectors; second, some general properties of innovation processes shared by populations of firms might be identified independently of a variety of idiosyncratic behaviors identifiable at firm-level; and third, diverse regimes entail different technological entry barriers, stemming from diverse mode of access to novel opportunities by entrants as opposed to (cumulatively learning) incumbents . That there is more to technology, science and innovation than sheer "information" is not likely to be big news to social scientists (except possibly economists!) and practitioners alike. However, one can go already a long way be rigorously exploring the economic properties of information as such (and in any case technological activities involve rich information content).
Moreover, its generation is subject to: • sunk, upfront, costs of production and basically zero cost of reproduction (in an illustrative caricatures, the "cost of production" of Pytagoras. Theorem has been fully born by Pytagoras himself, while we can infinitely re-use it at our will; near to our concerns the same applies to e.g. software) [10, p. 201]. • if anything, there are increasing returns to its use, in the sense that the more we use it the easier it is, and, dynamically, the higher is the likelihood of learning and producing ourselves "better", "novel", in some sense "innovative" further pieces of information. As already mentioned far reaching conclusions can be reached by just seriously exploring the economic implications of different distributions and processes of generation of information. Consider for example the path-breaking works by Masahiko Aoki on the properties of different distributions of information in the comparison between archetypical "Japanese" and "American" firms. Another example are the painstaking investigations of the conditions for the existence of "markets for sciences and technologies". More generally, note that the very properties of information mentioned above most often entail phenomena of market failures (as marginal prices are of no guidance to efficient market allocation and equilibrium might even fail to exist). Moreover, knowledge includes tacit and rather automatic skills like operating a particular machine or correctly driving a car to overtake another one (without stopping first in order to solve the appropriate system of differential equations!). On the base of knowledge I can concluded that the science and technology remain some of the most important factors in the development of the economy at national level, even at regional and at international level. And, finally it includes "visions" and ill-defined rules of search, like those involved in most activities of scientific discovery and in technological and organizational innovation. In this definition, knowledge is to varying degree tacit at the very least in the sense that the agent itself, and even a very sophisticated observer, would find it very hard to explicitly state the sequence of procedures by which information is coded, behavioral patterns are formed, problems are solved, etc. Incidentally note also that even in scientific activities tacit knowledge plays an important role: , the "knowledge" used and diffused cannot be reduced to fully explicit codified statements (i.e. information) but involves personal interactions, observation and practical experience in specific contexts. There is little question that science plays a crucial role in opening up new possibilities of major technological advances. The linkages between science and technology have been tight ever since the rise of modern science but, especially in this century, the emergence of major new technological paradigms has frequently been directly linked with major scientific breakthroughs. Until the end of the nineteenth century, technological innovations were typically introduced by imaginative craftsmen - typical examples being the development of engines by practical-minded inventors well before the works of Carnot on thermodynamics or the invention of the chronograph for measuring longitude by the watchmaker John Harrison in 1730 against the opinion of the astronomers including Halley. Conversely, in this century, as far as major innovations are concerned, one moves closer to a science-based model of technological innovation. Important instances in this respect are the origin of synthetic chemistry and the transistor. For example, in the latter case the discovery of certain quantum mechanics properties of semiconductors, yielding a Nobel Prize for physics, and the technological development of the first microelectronics device have been one and the same thing. In more recent years, one finds many further examples, the extreme one being probably biotechnology and more generally life sciences [17, p.146]. Other instances include computational chemistry and speech-recognition, just to name a few. The increasing role of scientific knowledge in technological advances as gone together with major changes in the overall organization of innovative activities. The conventional way of representing the impact of science on technological innovation has been often captured by some version of the (improperly called!) "Arrow- Nelson model, whereby (exogenously determined) science provides the pool of notional opportunities upon which industrial R&D, and more generally "technologically useful" knowledge, draws. It is indeed a useful first approximation, but we cannot stop there and must thereafter acknowledge that the relationship between science and technology goes both ways. Factors of influence of scientific knowledge on technology include: • of course, the knowledge new "properties of nature" upon which technologies can build upon; • the development of new design tools and instruments initially aimed at scientific research which are thereafter applied to commercial uses - examples among many being the Scanning Electron microscope, the laser and many others • Training of applied researchers mastering state-of-the-art scientific knowledge.
Conversely, technology has contributed to science: • as a source of new scientific challenges ; • with new instrumentation and measurement technologies needed to address novel scientific question more efficiently.
Indeed the accumulation of technical knowledge has provided for centuries a base of observations that subsequently stimulated and focused scientific research. Similarly, the development of instrumentation has exerted a major impact on subsequent scientific progress: just think of the microscope, the telescope, x-ray crystallography and obviously the computer. More generally, the allocation of resources to specific scientific fields is often strongly influenced by prior expectations on technological payoffs as well as by the nature and the interests of the "bridging institutions" that are instrumental in applying theoretical advances to the development of practical devices even under remote or nonexistent direct economic incentive. Incidentally note also that in recent years, the increased closeness of scientific research and technological innovation in fields like biotechnology and information technology, jointly with an increasing involvement of scientific institutions in commercial activities is leading to the concern that scientific research runs the risk of becoming too dependent and hostage of immediate and direct economic interests, thereby compromising the ethos of science that has proved so beneficial to the society and the economy. In most contemporary developed economies, one typically observes quite a few institutions, together with a multitude of profit-seeking firms, sharing in different combinations the tasks of scientific explorations and search for would-be technological applications [21, p.188]. However the relevance of scientific knowledge and the mechanisms through which such knowledge is transmitted vary greatly across scientific disciplines, technologies and industries. Science is directly relevant to industrial R&D only in a small number of industries - typically, agriculture, chemicals and pharmaceuticals, electronics, precision instruments). Some scientific disciplines – like mathematics and physics - are relevant for an very large variety of industries, but mostly in an indirect way. Others - e.g. biology - have a more immediate practical impact, which is however concentrated in a small spectrum of industries. In general, however, the evidence seems to support the notion that science is indeed a crucial component of industrial innovation as an ingredient that increases the "general and generic" ability to solve complex technical problems. Historically, the contemporary symbiotic relationship between activities of scientific and technological came about through two converging processes. A first one involved the progressive incorporation of R&D activities within business firms, beginning in the late 19th centuries in few countries - like Germany, Switzerland, and a bit later the USA - and few sectors - notably chemicals and heavy electrical engineering. Along with the institutionalization of industrial R&D within "Chandlerian" firms, second, the institutionalization of academic research proceeded too, albeit at a very different pace and with large differences across countries. In the USA, as Rosenberg and Nelson have pointed out, before War Word II, the linkages between academic and industrial research were frequent but not always systematically organized [21, p.152]. Despite some debate among historians, it is usually recognized that the quality of American academic science was by and large lagging behind Europe, with some important exceptions like chemistry and biology. However, universities developed quickly relatively strong interactions with industry, especially at the local level in response to practical concerns and particularly in practically oriented disciplines - like engineering, medicine, agricultural sciences, etc. Until World War II, this was actually the main function that - jointly with teaching - universities performed in favor of business firms. Similarly, Mowery and Rosenberg have argued that the contributions of American University research to economic growth were not only the product of a few elite universities, but involved many universities, many of them providing local service to local industry and agriculture [21, p.153]. The explosive growth of investment in scientific research - mainly coming from public sources and mainly directed to universities and other public research institutions - marks a distinct feature of the economic development of most industrial countries in the post War World II era. And it also marks the quick emergence of a long lasting American leadership regarding both quite a few scientific disciplines and most "frontier" technologies. In a nutshell, all developed contemporary economies – not with standing important national specificities - share mechanisms of generation and exploitation of innovative opportunities involving the interaction between: • The continuous accumulation of scientific knowledge (to a good extent exogenous to business firms, but not entirely: to repeat, firms do undertake a significant amount of basic research. • Multiple learning processes endogenous to individual firms and networks of them entailing: formal R&D activity, but also more informal processes of learning from design, production and marketing; learning-by-interacting with customers and suppliers. As already mentioned the balance between these diverse learning procedures vary across technologies and industrial sectors highlighting a variegated "anatomy" of the capitalistic innovation engine. Having saying that, crucial issues regard the underlying forces driving technological accumulation throughout such a system and in particular the role of economic and social factors. It is useful to separate the genesis of new paradigms from the processes leading to the dominance of some of them. Let us first consider the emergence of new potential paradigms; that is generation of notional opportunities of radical innovations involving new knowledge bases, new search heuristics, new dominant designs. Indeed, there are good reasons to believe that one will not be able to find anything like a general theory of the emergence of new technological paradigms. However, what might be possible is a) an analysis of the necessary conditions for such emergence; b)historical taxonomies and also appreciative models of the processes by which it occurs; and c) taxonomies and models of the processes of competition amongst different paradigms and their diffusions. Regarding the first heading, one is like to find that the existence of some unexploited technological opportunities, together with the relevant knowledge base and some minimal appropriability conditions, define only the boundaries of the set of potential new paradigms: those which are actually explored within this set might crucially depend on particular organizational and social dynamics. So for example there is good evidence that the microelectronic paradigm as we know it (silicon-based, etc.) was shaped in its early stages by military requirements. David Noble argues that the NC machine-tools paradigm - although he does not use that expression - has been influenced by power consideration regarding labor management. In the history of technologies one finds several examples of this kind [14, p.351]. The general point is that various institutions (ranging from incumbent firms to government agencies), social groups and also individual agents (including of course individual inventors and entrepreneurs) perform as ex ante selectors of the avenues of research that are pursued, the techno-economic dimensions upon which research ought to focus, the knowledge base one calls upon. Thus, they ultimately select the new paradigms that are actually explored. Economic factors do influence also the rates and direction of "normal" technical change although within some boundaries set by the nature of each paradigm. Each body of knowledge specific to particular technologies determines in the short term the notional opportunities of "normal" technical advance and also the scope of possible variation in input coefficients, production processes and characteristics of the artifacts in response to changing economic conditions. So, for example the semiconductor-based paradigm in microelectronics or the oil-based paradigm in organic chemistry broadly shape the scope and directions of technical progress - i.e. the "trajectories" - in both product and process technologies (for example, miniaturization and increasing chip density in semiconductors, polymerization techniques in organic chemicals, etc.). In turn, inducement effects can work basically in four ways, operating through changes in search/problem solving heuristics induced by relative prices change and supply/demand conditions; effects of demand patterns upon the allocation of search efforts across diverse production activities; the effects of appropriability conditions, again, upon search efforts; and selection dynamics weeding-out ever-changing "populations" of technologies, artifacts, behavioral traits and firm.

CHAPTER II. ANALYSIS THE IMPACT OF SCIENCE AND TECHNOLOGY IN THE DEVELOPMENT OF WORLD ECONOMY

2.1. The effects of the industrial revolution on the progress of world economy

The Industrial Revolution was a period in the late 18th and early 19th centuries when major changes in agriculture, manufacturing, mining, and transportation had a profound effect on the socioeconomic and cultural conditions in Britain. The changes subsequently spread throughout Europe, North America, and eventually the world. The onset of the Industrial Revolution marked a major turning point in human society; almost every aspect of daily life was eventually influenced in some way [26, p.32]. Starting in the latter part of the 18th century there began a transition in parts of Great Britain 's previously manual labor and draft animal–based economy towards machine-based manufacturing. It started with the mechanization of the textile industries, the development of iron-making techniques and the increased use of refined coal. Trade expansion was enabled by the introduction of canals, improved roads and railways. The introduction of steam power fuelled primarily by coal, wider utilization of water wheels and powered machinery (mainly in textile manufacturing) underpinned the dramatic increases in production capacity. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. The effects spread throughout Western Europe and North America during the 19th century, eventually affecting most of the world. The First Industrial Revolution, which began in the 18th century, merged into the Second Industrial Revolution around 1850, when technological and economic progress gained momentum with the development of steam-powered ships, railways, and later in the 19th century with the internal combustion engine and electrical power generation.
[pic]
Figure 1. World GDP per capita 1- 2003 A.D.
Source: www.wikipedia.org
Figure 1 show that GDP per capita was broadly stable before the Industrial Revolution and the emergence of the modern capitalist economy, compared with the actual economic growth in the world [annexes 6] is shown the impact of the Industrial Revolution on the economy development. The Industrial Revolution began an era of per-capita economic growth in capitalist economies. Historians agree that the Industrial Revolution was one of the most important events in history. The most significant inventions had their origins in the Western world, primarily Europe and the United States. The term Industrial Revolution applied to technological change was common in the 1830s. Louis-Auguste Blanqui in 1837 spoke of la révolution industrielle [32, p.90]. Friedrich Engels in The Condition of the Working Class in England in 1844 spoke of "an industrial revolution, a revolution which at the same time changed the whole of civil society" [32, p.91]. Innovations The commencement of the Industrial Revolution is closely linked to a small number of innovations, made in the second half of the 18th century. Textiles - cotton spinning using Richard Arkwright 's water frame, James Hargreaves 's Spinning Jenny, and Samuel Crompton 's Spinning Mule (a combination of the Spinning Jenny and the Water Frame). This was patented in 1769 and so came out of patent in 1783 [14, p.159]. The end of the patent was rapidly followed by the erection of many cotton mills. Similar technology was subsequently applied to spinning worsted yarn for various textiles and flax for linen. Steam power - the improved steam engine invented by James Watt was initially mainly used for pumping out mines, but from the 1780s was applied to power machines. This enabled rapid development of efficient semi-automated factories on a previously unimaginable scale in places where waterpower was not available. Iron founding - In the Iron industry, coke was finally applied to all stages of iron smelting, replacing charcoal. This had been achieved much earlier for lead and copper as well as for producing pig iron in a blast furnace, but the second stage in the production of bar iron depended on the use of potting and stamping (for which a patent expired in 1786) or puddling (patented by Henry Cort in 1783 and 1784)[ 14, p.171]. These represent three 'leading sectors ', in which there were key innovations, which allowed the economic take off by which the Industrial Revolution is usually defined. This is not to belittle many other inventions, particularly in the textile industry. Without some earlier ones, such as spinning jenny and flying shuttle in the textile industry and the smelting of pig iron with coke, these achievements might have been impossible. Later inventions such as the power loom and Richard Trevithick 's high pressure steam engine were also important in the growing industrialization of Britain. The application of steam engines to powering cotton mills and ironworks enabled these to be built in places that were most convenient because other resources were available, rather than where there was water to power a watermill.
Transfer of knowledge Knowledge of new innovation was spread by several means. Workers who were trained in the technique might move to another employer or might be poached. A common method was for someone to make a study tour, gathering information where he could. During the whole of the Industrial Revolution and for the century before, all European countries and America engaged in study-touring; some nations, like Sweden and France, even trained civil servants or technicians to undertake it as a matter of state policy. In other countries, notably Britain and America, this practice was carried out by individual manufacturers anxious to improve their own methods. Study tours were common then, as now, as was the keeping of travel diaries. Records made by industrialists and technicians of the period are an incomparable source of information about their methods. Another means for the spread of innovation was by the network of informal philosophical societies, like the Lunar Society of Birmingham, in which members met to discuss 'natural philosophy ' (i.e. science) and often its application to manufacturing. The Lunar Society flourished from 1765 to 1809, and it has been said of them, "They were, if you like, the revolutionary committee of that most far reaching of all the eighteenth century revolutions, the Industrial Revolution" Other such societies published volumes of proceedings and transactions. For example, the London-based Royal Society of Arts published an illustrated volume of new inventions, as well as papers about them in its annual Transactions. In the early 18th century, British textile manufacture was based on wool which was processed by individual artisans, doing the spinning and weaving on their own premises. This system is called a cottage industry. Flax and cotton were also used for fine materials, but the processing was difficult because of the pre-processing needed, and thus goods in these materials made only a small proportion of the output. Use of the spinning wheel and hand loom restricted the production capacity of the industry, but incremental advances increased productivity to the extent that manufactured cotton goods became the dominant British export by the early decades of the 19th century. India was displaced as the premier supplier of cotton goods. Lewis Paul patented the Roller Spinning machine and the flyer-and-bobbin system for drawing wool to a more even thickness, developed with the help of John Wyatt in Birmingham [41, p.11]. Paul and Wyatt opened a mill in Birmingham which used their new rolling machine powered by a donkey. In 1743, a factory was opened in Northampton with fifty spindles on each of five of Paul and Wyatt 's machines. This operated until about 1764. A similar mill was built by Daniel Bourn in Leominster, but this burnt down. Both Lewis Paul and Daniel Bourn patented carding machines in 1748. Using two sets of rollers that travelled at different speeds, it was later used in the first cotton spinning mill. Lewis 's invention was later developed and improved by Richard Arkwright in his water frame and Samuel Crompton in his spinning mule. Other inventors increased the efficiency of the individual steps of spinning (carding, twisting and spinning, and rolling) so that the supply of yarn increased greatly, which fed a weaving industry that was advancing with improvements to shuttles and the loom or 'frame '. The output of an individual laborer increased dramatically, with the effect that the new machines were seen as a threat to employment, and early innovators were attacked and their inventions destroyed. To capitalize upon these advances, it took a class of entrepreneurs, of which the most famous is Richard Arkwright [36, p.7]. He is credited with a list of inventions, but these were actually developed by people such as Thomas Highs and John Kay; Arkwright nurtured the inventors, patented the ideas, financed the initiatives, and protected the machines. He created the cotton mill which brought the production processes together in a factory, and he developed the use of power — first horse power and then water power — which made cotton manufacture a mechanized industry. Before long steam power was applied to drive textile machinery. The major change in the metal industries during the era of the Industrial Revolution was the replacement of organic fuels based on wood with fossil fuel based on coal. Much of this happened somewhat before the Industrial Revolution, based on innovations by Sir Clement Clarke and others from 1678, using coal reverberate furnaces known as cupolas. These were operated by the flames, which contained carbon monoxide, playing on the ore and reducing the oxide to metal. This has the advantage that impurities (such as sulphur) in the coal do not migrate into the metal. This technology was applied to lead from 1678 and to copper from 1687. It was also applied to iron foundry work in the 1690s, but in this case the reverberate furnace was known as an air furnace. The foundry cupola is a different (and later) innovation. This was followed by Abraham Darby, who made great strides using coke to fuel his blast furnaces at Coalbrookdale in 1709. However, the coke pig iron he made was used mostly for the production of cast iron goods such as pots and kettles. He had the advantage over his rivals in that his pots, cast by his patented process, were thinner and cheaper than theirs. Coke pig iron was hardly used to produce bar iron in forges until the mid 1750s, when his son Abraham Darby II built Horsehay and Ketley furnaces (not far from Coalbrookdale). By then, coke pig iron was cheaper than charcoal pig iron. Bar iron for smiths to forge into consumer goods was still made in finery forges, as it long had been. However, new processes were adopted in the ensuing years. The first is referred to today as potting and stamping, but this was superseded by Henry Cort 's puddling process. From 1785, perhaps because the improved version of potting and stamping was about to come out of patent, a great expansion in the output of the British iron industry began. The new processes did not depend on the use of charcoal at all and were therefore not limited by charcoal sources. Up to that time, British iron manufacturers had used considerable amounts of imported iron to supplement native supplies. This came principally from Sweden from the mid 17th century and later also from Russia from the end of the 1720s. However, from 1785, imports decreased because of the new iron making technology, and Britain became an exporter of bar iron as well as manufactured wrought iron consumer goods. Since iron was becoming cheaper and more plentiful, it also became a major structural material following the building of the innovative. An improvement was made in the production of steel, which was an expensive commodity and used only where iron would not do, such as for the cutting edge of tools and for springs. Benjamin Huntsman developed his crucible steel technique in the 1740s. The raw material for this was blister steel, made by the cementation process. The supply of cheaper iron and steel aided the development of boilers and steam engines, and eventually railways. Improvements in machine tools allowed better working of iron and steel and further boosted the industrial growth of Britain. The development of the stationary steam engine was an essential early element of the Industrial Revolution; however, for most of the period of the Industrial Revolution, the majority of industries still relied on wind and water power as well as horse and man-power for driving small machines. A fundamental change in working principles was brought about by James Watt. With the close collaboration Matthew Boulton, he had succeeded by 1778 in perfecting his steam engine, which incorporated a series of radical improvements, notably the closing off of the upper part of the cylinder thereby making the low pressure steam drive the top of the piston instead of the atmosphere, use of a steam jacket and the celebrated separate steam condenser chamber. All this meant that a more constant temperature could be maintained in the cylinder and that engine efficiency no longer varied according to atmospheric conditions. These improvements increased engine efficiency by a factor of about five, saving 75% on coal costs. The development of machine tools, such as the lathe, planing and shaping machines powered by these engines, enabled all the metal parts of the engines to be easily and accurately cut and in turn made it possible to build larger and more powerful engines. Until about 1800, the most common pattern of steam engine was the beam engine, built as an integral part of a stone or brick engine-house, but soon various patterns of self-contained portative engines (readily removable, but not on wheels) were developed, such as the table engine. Towards the turn of the 19th century, the Cornish engineer Richard Trevithick, and the American, Oliver Evans began to construct higher pressure non-condensing steam engines, exhausting against the atmosphere. This allowed an engine and boiler to be combined into a single unit compact enough to be used on mobile road and rail The large scale production of chemicals was an important development during the Industrial Revolution. The first of these was the production of sulphuric acid by the lead chamber process invented by the Englishman John Roebuck (James Watt 's first partner) in 1746. He was able to greatly increase the scale of the manufacture by replacing the relatively expensive glass vessels formerly used with larger, less expensive chambers made of riveted sheets of lead. The Industrial Revolution could not have developed without machine tools, for they enabled manufacturing machines to be made. They have their origins in the tools developed in the 18th century by makers of clocks and watches and scientific instrument makers to enable them to batch-produce small mechanisms. The mechanical parts of early textile machines were sometimes called 'clock work ' because of the metal spindles and gears they incorporated. The manufacture of textile machines drew craftsmen from these trades and is the origin of the modern engineering industry. Machines were built by various craftsmen—carpenters made wooden framings, and smiths and turners made metal parts. A good example of how machine tools changed manufacturing took place in Birmingham, England, in 1830. The invention of a new machine by Joseph Gillott, William Mitchell and James Stephen Perry allowed mass manufacture of robust, cheap steel pen nibs; the process had been laborious and expensive. Because of the difficulty of manipulating metal and the lack of machine tools, the use of metal was kept to a minimum. Wood framing had the disadvantage of changing dimensions with temperature and humidity, and the various joints tended to rack (work loose) over time. As the Industrial Revolution progressed, machines with metal frames became more common, but they required machine tools to make them economically. Before the advent of machine tools, metal was worked manually using the basic hand tools of hammers, files, scrapers, saws and chisels. Small metal parts were readily made by this means, but for large machine parts, production was very laborious and costly. Apart from workshop lathes used by craftsmen, the first large machine tool was the cylinder boring machine used for boring the large-diameter cylinders on early steam engines. The planing machine, the slotting machine and the shaping machine were developed in the first decades of the 19th century. Although the milling machine was invented at this time, it was not developed as a serious workshop tool until during the Second Industrial Revolution. A new method of producing glass, known as the cylinder process, was developed in Europe during the early 19th century. In 1832, this process was used by the Chance Brothers to create sheet glass. At the beginning of the Industrial Revolution, inland transport was by navigable rivers and roads, with coastal vessels employed to move heavy goods by sea. Railways or wagon ways were used for conveying coal to rivers for further shipment, but canals had not yet been constructed. Animals supplied all of the motive power on land, with sails providing the motive power on the sea. The Industrial Revolution improved Britain 's transport infrastructure with a turnpike road network, a canal, and waterway network, and a railway network. Raw materials and finished products could be moved more quickly and cheaply than before. Improved transportation also allowed new ideas to spread quickly. The Severn, in particular, was used for the movement of goods to the Midlands which had been imported into Bristol from abroad, and for the export of goods from centers of production in Shropshire (such as iron goods from Coalbrookdale) and the Black Country. Transport was by way of trows—small sailing vessels which could pass the various shallows and bridges in the river. The trows could navigate the Bristol Channel to the South Wales ports and Somerset ports, such as Bridgwater and even as far as France. Canals began to be built in the late eighteenth century to link the major manufacturing centres in the Midlands and north with seaports and with London, at that time itself the largest manufacturing centre in the country. Canals were the first technology to allow bulk materials to be easily transported across country. A single canal horse could pull a load dozens of times larger than a cart at a faster pace. By the 1820s, a national network was in existence. Canal construction served as a model for the organization and methods later used to construct the railways. They were eventually largely superseded as profitable commercial enterprises by the spread of the railways from the 1840s on. Construction of major railways connecting the larger cities and towns began in the 1830s but only gained momentum at the very end of the first Industrial Revolution. After many of the workers had completed the railways, they did not return to their rural lifestyles but instead remained in the cities, providing additional workers for the factories. Railways helped Britain 's trade enormously, providing a quick and easy way of transport and an easy way to transport mail and news. [pic]
Figure 2. Relative share of World Manufacturing Output, 1750- 1900
Source: www.wikipedia.org As shown in figure nr.2 we can analyse that the factory system was largely responsible for the rise of the modern economy, especially in the manufacturing development.city, Nowhere was this better illustrated than the mills and associated industries of Manchester, nicknamed "Cottonopolis", and arguably the world 's first industrial city. The transition to industrialization was not without difficulty. In other industries the transition to factory production was not so divisive. Some industrialists themselves tried to improve factory and living conditions for their workers. One of the earliest such reformers was Robert Owen, known for his pioneering efforts in improving conditions for workers at the New Lanark mills, and often regarded as one of the key thinkers of the early socialist movement [ 38, p.10]. By 1746, an integrated brass mill was working at Warmley near Bristol. Raw material went in at one end, was smelted into brass and was turned into pans, pins, wire, and other goods. Housing was provided for workers on site. Josiah Wedgwood and Matthew Boulton were other prominent early industrialists, who employed the factory system. Living conditions during the Industrial Revolution varied from the splendor of the homes of the owners to the squalor of the lives of the workers.

2.2. The role of science and technology on the growth of the world economy

Technology and science have such immense benefits in every phase of our lives, that it has not only made our life easier but also has raised the standard of living of every individual. One such department of everyday life related to the business sector is economy. Science and technology has made the economy of the world climb its highest peaks, which would have been completely disoriented with increasing population and work load over the time. The increasing science and technology on the e-commerce and internet business has made the business and shopping very easy over the internet, and this has given a real boost to the world 's economy. There have been some extraordinary productivity gains in various nations due to the increase in the use of technology an example is USA. There have been several reports out of Washington D.C. underscoring the importance of economy and how not only the businesses as a whole but also the individuals have been successful [24, p. 391]. It is worth mentioning that due to the use of latest technologies, everything in a working environment is handled very efficiently. Management of the employees to the inventories everything is very systematically handled. The most important advantage of science and technology which helps in boosting the economy of the world is that technology makes everything go in ease. Science and technology eliminates the unnecessary tedious, production processes done manually, which speeds up the delivery of the goods to the market. This has many advantages in itself to the company. It keeps the prices of the goods low which also enables the companies to meet their individual customer 's demands very well. May it be any country 's profile and past record it is very evident that the implementation of the technology has magnificently shot up the opportunities for individuals and also the economic levels in general? Science and technology advances have long been accepted as significant contributors to productivity growth [annexes 2]. In the United States technological and scientifically advances has been responsible for as much as two-thirds of productivity growth since the Depression” Clearly, the value of technology to the national economy has been accepted at high levels of government [30, p.204]. However, obtaining hard numbers for productivity improvements that can be tied to specific technological and scientifically advances has proved more difficult. A prime example of science and technology based increases in productivity comes from the field of agriculture [annexes 3]. Until at least the 17th century, about 90% of the population was directly involved in agriculture. Local weather conditions resulted in famines which typically occurred every 3 to 10 years. In the United States, the farm population was 44% of the total population as recently as 1880. Currently, the US farm population is about 2 % of the total population [22, p.131]. Total production from farms over the same period has increased by factor of at least 5. The increase in agriculture is correlated with several technological innovations in the field of farming. The innovations include the widespread use of Hybrid seeds, farm chemicals (fertilizers, herbicides, pesticides, ect) and farming equipment such as combines. Thus, the tremendous increase in farm productivity is seen as a direct result of the technological and scientifically advances that were made in the field. In the manufacturing sector similar increases of productivity are evident. However, assigning the productivity increases to technological advances has proven to be more difficult. Several authors have shown that investments in Research and Development are strongly correlated with productivity increases in a firm [23, p.12]. The implicit assumption is that Research and Development investment is analogous to scientifically and technological advancement. Though this statement remains unproven, it seems to be a reasonable interpretation. The properties of innovation and knowledge discussed above also entail a fundamental tradeoff powerfully. Were technological advances (or for that matter technological knowledge) a sheer public good, no incentive would be there for profit-seeking agents to strive for it. Conversely, some expected appropriation of some economic benefit from successful technological implies also systematic departures from the mythical "pure competition" yardstick of which economists are so fond of. In fact, a few appropriability devices are often at work in contemporary economies including (a) patents, (b) secrecy, (c) lead times, (d) costs and time required for duplication, (e) learning-curve effects, (f) superior sales and service efforts. To these one should add more obvious forms of appropriation of differential technical efficiency related to scale economies and more generally the control of complementary assets and technologies that are not directly ingredients of the innovation, but allow inventors to extract the profits from it. For most industries, ’’lead times and learning curve advantages, combined with complementary marketing efforts, appear to be the principle mechanisms of appropriating returns for product innovations". Learning curves, secrecy and lead times are also the major appropriation mechanisms for process innovations. Patenting often appears to be a complementary mechanism which, however, does not seem to be the central one, with some exceptions (e. g., c effective ways of protecting process innovations, while patents are a relatively better protection for product innovations. Moreover, there appears to be quite significant inter industrial variance in the chemicals and pharmaceutical products). Moreover, by comparing the protection of processes and products, one tends to observe that lead times and learning curves are relatively more importance of the various ways of protecting innovations and in the overall degrees of appropriability: Some three-quarters of the industries surveyed by the study reported the existence of at least one effective means of protecting process innovation, and more than 90 percent of’ the industries reported the same regarding product innovations, these results have been confirmed by a series of other subsequent studies conducted for other countries suggesting that appropriability conditions are rather similar across advanced industrialized countries). Granted that, highly controversial issues concern the relation between degrees of appropriability, above some minimal threshold, and search efforts by private self-seeking agents. Do innovative efforts grow monotonically in the expectations of rents stemming from would-be innovation? And, more specifically, what is the influence of different patenting regimes and other forms of enforcement of Intellectual Property Right (IPR) upon innovation rates? One cannot review here a rapidly growing literature whose striking bottom line is however the very little evidence supporting the (misplaced) common wisdom that tighter appropriability regimes unambiguously foster innovative activities. The whole history of Humanity shows that if we put aside military occupation of foreign territories and/or exploitation of foreign economies, the wealth of a country depends on its natural resources (i.e. Kuwait and oil), on its labor force, and its capital. Additionally, extra wealth may be created by local inventive and innovative efforts. Switzerland has no natural resources, and a population of less than 7 million, and yet Switzerland is one of the leading industrialized countries in the world. Why? Because of its grey matter, because its inventors are prolific. "Invention and innovation are the lifeblood of new economic activity" [19, p.289]. That is why it is essential to promote local invention and innovation. It can be concluded that invention knows no frontiers. Even though it might appear to some that the gift of inventing is the sole privilege of some rich countries, it is not. Here are chosen to tackle three aspects concerning the role of innovation trapped in a transitional period where the traditional economy has to coexist, sometimes with difficulty, with the so-called "connected” economy of today. A question was put forward in the introductory remarks to this panel: do large and/or global organizations have advantages in the capacity to innovate? They certainly do! This can be observed when looking at the number of inventions multinationals and large industries patent worldwide. Statistics published by the World Intellectual Property Organization (WIPO) concerning inventions filed through its PCT system show that in the year 2000, 155 multinationals and large industries accounted for 28.7% (22,931) of the 79,947 international applications published, each of the 155 enterprises with 50 or more applications published [ 15, p.307]. Of these 155 companies,
[pic]
Figure 3. Inventions and patent worldwide by countries
Source: World Intellectual Property Organization
[pic]
Figure 4. Inventions and multinational companies
Source: World Intellectual Property Organization As was the case the year before, we find on top of the list: Siemens (Germany) with 1,259 inventions filled in the year 2000, followed by: Philips (Netherlands) with 1,009 inventions, Ericsson (Sweden) with 883 inventions, Procter & Gamble (USA) with 822 inventions, Bosch (Germany) with 678 inventions, Matsushita (Japan) with 550 inventions, BASF (Germany) with 464 inventions, and Nokia (Finland) with 411 inventions [15, p.308]. However, this impressive picture based on patent statistics, needs to be corrected. It is well known that multinationals and big industry often use the international patent system simply to "block" the innovations developed by their competitors, keeping their own patented inventions in their drawers. These are not produced. No additional wealth is brought to humanity. Further don 't forget that independent inventors constitute a very large sector of local inventive activity in any country. This appears clearly when looking at national patent statistics. In many developing countries local industry might be relatively important, and yet it has no inventive activity at all, producing again and again the same products or processes. This system does not add any new wealth to the economy of the country. In fact the only creators of invention and innovation in these developing countries are independent inventors. Even in one of the most advanced developing countries like Brazil, a recent official enquiry shows that 66% of the applications for inventions and industrial designs by residents in Brazil are the work of independent inventors. As to the USA, the official statistics of its Patent Office concerning US residents shows that the percentage of patent applications filed by independent inventors is also high. It varies from 36.4 % in 1987 to 26.8% in 1999 [17, p.140].The independent inventors constitute a large sector of the inventors’ community in most countries. Also we must not forget how many discoveries and important inventions are the brainchildren of independent inventors. We must not forget that a great number of today 's big industrial enterprises, and the thousands and thousands of jobs involved, originate from independent inventors, who, more often than not, gave their names to those enterprises. Normally independent inventors should therefore represent a vital element in the creation of wealth. Unfortunately this is not the case. The sad reality is that very few inventions of independent inventors eventually reach the market. Because innovative people are potential creators of wealth, it is urgent that we adjust the unfair gap created by the market economy between the big industry and the independent inventors. For many inventors, the marketing stage often starts with a prototype to prove that the product works satisfactorily, and what 's more, works safely. The greater a model 's perfection, the greater the chances of selling a license to a manufacturer. But a professional prototype, as close to the final product as possible, can rapidly become extremely expensive. One fantastic and inexpensive alternative to a physical prototype is a computerized model. Basically, it amounts to modeling the invention from all angles on a computer, with self-running commentary, demonstrations and animation of all the invention 's functions. The diskette or ZIP disk can be duplicated in as many copies as necessary, and sent via regular mail. The second aspect concerning the role of Internet in the innovation process which I would like to share with you is the following. Online marketplaces for technology were created very few years ago. The idea is to link through Internet the creativity of inventors with entrepreneurs, investors and marketers who have the financial and human resources to further develop innovation for market introduction. This new kind of business model has become a dynamic and rapid growing industry where one can already see mergers, acquisitions, but also crashes and exits. Some virtual markets of technology work for profit, others not. Some are very small with a handful of offers, others large or very large; some specialize in certain fields of technology, others are open to all. The quantity and quality of the information posted on the computer screen, as well as the conditions to access them, varies from one website to another.

CHAPTER III. SCIENCE AND INNOVATION - TWO MAJOR FACTORS FOR DEVELOPMENT ECONOMY OF REPUBLIC OF MOLDOVA

3.1. General aspects regarding to the science and technology in the development of Republic of Moldova
Table 1
Moldovan Real GDP Growth and CPI Inflation, 2006–09 (Percent)

| % |2006 |2007 |2008 |2009 |
|Total of which: |76 |59 |13 |4 |
|Scientific-research institutions |48 |42 |4 |2 |
|Design-investigation organizations and design |17 |7 |8 |2 |
|offices for construction works | | | | |
|Higher education institutions |11 |10 |1 |- |

Table 3
Distribution of organizations conducting R&D activity of ownership, in 2007

Source: www.statistica.md
The major condition for RM to pass to the new economy, based on knowledge is innovations model economic development: transforming innovations and innovation activity into the major social-economic development factor of Republic of Moldova European integration is the main concern for the development of the countries, as for the scientific and innovation policy convoluted for RM is considered the situation of EU member states innovation policy, stated in "Lisbon strategy", approved by the European Council in March 2000 and reconsidered in 2005 year under the name of "Lisbon Strategy of Economic Growth and Employment" Economic aim of innovation policy is to fulfill internal market with high technological products for the international level with very new elements for the products global standards [ 25, p.107]. Final purpose of innovation activity development on RM territory creation of a entire national innovation system (mechanism) for innovation directing – correlated combinations of the innovation creation field, its trade distributions, duplications within the production sphere that will be based on: the establishment of an adequate economic and law environment; the construction of entire innovation infrastructure; the performance of state mechanisms for the scientific ideas and co-acting for its trading. The Code of Republic Moldova on sciences and innovations No. 259-XV, July, 15th, 2004; the program of social-economic development of RM for a medium-term period (2008–2011 years); the National Strategy project of Innovative Development of Moldova for the period 2008-2011 years, chapter „Innovation policy”; The National Strategy of Innovative Development of Moldova for the period 2008-2011 years. In the basic documents of strategic planning at a national level, additional clauses have been entered: Strategy of economic growth and poverty reduction (SCERS) (2004 – 2006, 2007) – clause „6.7. Science and Innovations”; National Program „Moldavian Village” (PNSM) (2005 – 2015) – clause „3.14. Scientific and innovative support for the realization of the PNSM”; Plan of Actions ЕU – RМ (2005 – 2007) – clause „2.6. Transport, energy, telecommunications, environment and science and innovations”, Strategy of industrial development till 2015 year – clauses „4.4. Scientific and innovation potential”, 7.4. Development of the innovation process ant technology transfers” and „7.7. Increase of production quality [42, p.87]. Perfection of the standardization system and certification of production” [annexes 4]. Necessity for the development of The National Strategy of Innovative Development of Moldova for the period 2008-2011 has been caused by: the increase of the role of innovations as factor of stability of social and economic development and growth of well-being; the formation in RM of the effective socially-focused market economy which will be based on modern technological customs; the inadequate development of the legislation of Republic Moldova in innovative sphere and absence of the concept of innovative policy of RM; updating the old-fashioned industrial equipment, increase the demand of skillful personnel; the lack of necessary conditions for active attraction of the saved up scientific and technical potential of Republic Moldova in the processes of modernization of manufacture and development of hi-tech sector of economy. Introduction of the National Strategy of Innovative Development of Moldova will pass through 2 stages: At the first stage (period of 2008-2009) is supposed to create the structure and bases of the national innovative system mechanisms and the beginning of its activity. The purpose of the second stage (2009-2011) is strengthening national innovative system. The Republic of Moldova possesses rather developed scientific and technical base which is presented by following structures: 67 organizations, carrying out researches and development, (42 research and 12 design offices of the organizations, 9 higher educational institutions in which scientific work is organized, 4 scientific and technical divisions in the industrial enterprises). Besides this there are 49 colleges for preparation of experts on different specialties function, in RM; 6 free economic zones, technological parks. On a rating the most popular among investors free enterprise zones are "Expo-Business-Chisinau" (1995 - the leader on manufacture of the goods), industrial park "Taraclia" (1998), free enterprise zones software "Valkanesti" (1998), "Tvardita" (1998), "Otaci-Business" (1998), " Ungheni-Business". (2000). 75 % from production in the given zones is planned for export. Moldova possesses developed scientific and technical base which is presented by: The Academy of sciences of Moldova (ASM), a number of departmental and interbranch information centre. For interaction of the chapter of RM with the scientific organizations and scientists, development of offers by definition of priority directions of development of science, innovative activity and technical policy of RM was created the Supreme Council of Science and Technological Development of the ASM, The expert Innovative group of leading experts in the field of an innovation Is created at Ministry of Economics RM; Agency of Innovations and Technology Transfer (АIТТ) of Academy of Sciences of RМ which has been created for assistance of modernization of RM economy, on the basis of innovative technologies and formation of organizational-economic mechanisms of the transfer and commerce of technologies. Perspectives of science and innovations field development are reflected in the National Plan of RM development for the 2008-2011 periods, where it is mentioned that: “Steady development of the RM economy, based on science and innovations, can be successful only at maintenance of scientific support in realization of national priorities. It assumes creation of favorable conditions in expansion of scientific researches for the covering of economy needs in science and innovations, and also increases the level of their efficiency.” Moldova National Innovative SWOT analysis, Strengths: the state research potential, the quality of higher education. Weaknesses: budget expenses on scientific and technical field, expenses the industries on scientific researches, the usage of patents, the usage of budgetary scientific researches results in SMB, the low level of participation in the research programs financed by EU, highly technological export part, the lack of venture capital, funds of the "sowing" capital, entrepreneurial (innovative culture) development Moldova National Innovative SWOT Analyses [5,p.431]. Favorable opportunities: understanding and support of the government necessity of innovative development of RM, growth of interest to network interaction, it’s state (private partnership) promotion, access to the Internet, use of IT, potential for increase in a role of the financial markets, geographical affinity to EU and large commodity markets, presence of foreign bank establishments within the domestic capital market, offers of the international financial organizations and the countries-donors to render the technical and financial help in development of the country Dangers: ageing personnel potential, ageing of researchers, inflexibility of scientific researches system, regional disbalance, concentration of scientific potential in capital of RM, political uncertainty political determination to innovations, brain drain; low appeal to scientific career, a low level of internationalization, corruption . The basic programs and actions in the field of innovative potential and technological progress maintenance of Moldova include following directions: creation and promotion of effective attraction mechanisms of high technologies; optimization of science and innovations sphere by creating scientific clusters, platforms, and also attraction of intellectual and techno-practical potential for the decision of corresponding problems of national economy and researches in sphere of small and average business; improvement of scientific institutes techno-material resources; improvement of national system scientific researches by stimulating participation in the main European and international programs research activity of the organizations from the field of science and innovations (FP7, EUREKA, COST, GEANT, CRDF, STCU); science and innovations promotion by creation of scientifically-technological parks and innovative incubators, and also applications national and foreign researches in economic activities results; The basic programs and actions in the field of innovative potential and technological progress maintenance of Moldova include following directions: the effective organization of science centre and laboratories; introduction in national statistics system of innovative incubators; promotion of financial resources access within the limits of intensive technological development, especially with the use of alternative financial tools („angels investors”, „capital seminal”, micro-credite etc.); reforming and development of scientifically-innovative system in all areas; investments attraction into development of universities which are more successful in research activity than ASM of RM; cooperation of universities and business; iimprovements of statistics by inclusion of real and concrete parameters of business sphere; creation of regional ideas incubators, with attraction of youth there; creation of uniform information system with databases about innovative projects, subjects of innovative activity, condition of supply and demand in the markets of innovative production; development of system ventures financing, creation and functioning.
Approaches to innovative process in the various countries are unified; however, there are certain features. Thus, obligatory NIS components for Republic of Moldova should become: national Strategy of innovative development, the state innovative policy, organizational forms of innovative process, system of innovations distribution, mechanisms of innovative activity financing.

3.2. Strategies and programs for improving the future of Republic of Moldova The Government of the Republic of Moldova has elaborated the Strategy of Economic Growth and Reduction of Poverty (2004-2006). Special attention was given to science and innovation. The Strategy aims to achieve the following objectives: to increase the R&D level; efficient utilization of the R&D activity in the national economy; the development of science and innovation due to commercialization of R&D results; application and increasing of the existent intellectual potential in science and innovation in this way can be analyzed the following table.

Table 4
Number of personnel employed in R&D activity, by personnel categories and level of education, in 2007
| |total |higher |Secondary |other |
| | | |specialized | |
|Employees who executed R&D, of them: |4587 |3252 |514 |821 |
|researchers |2592 |2552 |28 |12 |
|technicians |417 |189 |177 |51 |
|auxiliary personnel |919 |324 |190 |405 |
|other employees |659 |187 |119 |353 |

Source: www.statistica.md The priority measures for the development in science and innovation are: alignment of the national legislation on copyright with international agreements and conventions to which Moldova has adhered; elaboration of juridical and organizational measures regarding transmitting of the intellectual property rights; elaboration of the normative and juridical criteria for the attestation of state R&D institutions and their reorganization; elaboration of legislation for functioning of the modern infrastructure in science and innovation including special founds and agencies, innovation parks and business incubators; extinction and modernization of the indicators system for statistical evidence of the investigation and innovation activity, and taking into account the intellectual property products, programs and innovation projects; implementation of the mechanisms of risk assurance connected to the elaboration and implementation of the innovations; elaboration of juridical-organizational measures for leasing of specific modern equipment for scientific work and implementation of innovation programs and projects; creation of a single electronic database for registration of innovations, objects of intellectual property, as well as for efficient expertise of the technologies and “know-how” for their patenting; training of specialists in innovation, the state support of these activities in the institutions of high education; educational programs on the European and world levels for the specialists in science and innovation. Special attention will be devoted to the development of small and medium enterprises (SMEs), which have the necessary flexibility for the innovation activity in the modern market conditions: creation of favorable conditions for the innovation activities of SMEs; implementation of a special regime for taxing the SMEs engaged in the innovation activity. There are several important documents guiding R&D activity. The most important are the Code of the Republic of Moldova on Science and Innovations and the Moldova-European Union Action Plan. The legislative basis for the R&D reforms was the ratification by the Parliament of the Republic of Moldova of the Code on Science and Innovations (Nr. 259-XV from July 15, 2004) [annexes 4]. This code regulates legal relations for the elaboration and implementation of the state policy in the field of science and innovations. It covers all the activity related to: scientific research; innovations and transfer of technologies; scientific-technological information; accreditation of organizations in the field of science and innovations; attestation of the scientific and scientific-pedagogical personnel of highest qualification; protection of the intellectual property; the legal status of entities in the field of science and innovations. The implementation of the Code on Science and Innovation has created favorable conditions for the realization of the Action Plan Moldova-EU in R&D.
The Action Plan Moldova-European Union The Action Plan Moldova-European Union was adopted on February 22, 2005[annexes 5]. It covers a wide array of issues, including science. It sets out the following priorities for research, development and innovation: a) Moldova’s preparations for integration into the European Research Area (ERA) and into the Community R&D Framework Programs on the basis of scientific excellence: to implement the appropriate information strategy for facilitating the adequate participation of Moldovan scientists in the framework of the Community R&D Framework Programs; to undertake an assessment of the capacity of research structures in Moldova with a view to their integration in the European Research Area. b) development of Moldova’s capacity in the field of technological R&D to support the economy and the society: consolidation of human, material and institutional resources in order to improve the capacities of technological R&D and innovation, including through INTAS, EUREKA and COST actions. c) Supporting Moldova’s integration at the level of scientific exchanges: consolidation of Moldova’s participation in the international Program Marie Curie, including the assistance of the appropriate return mechanisms, promotion of Moldova’s participation in international scientific debates and forums. In order to implement the Moldova-EU Action Plan and the Code on Science and Innovation (from July 15, 2004) drastic reforms were carried out. These reforms dealt with the reorganization of the structure and the management of science and innovation activity in Moldova. As a result of the reorganization, the Academy of Sciences of Moldova became the only public institution on science and innovation of national interest and the primary coordinator of the research and innovation activities in the country. A Partnership Agreement was signed between the Government and the Academy of Sciences of Moldova. It governs the relationship between the scientific community and the Government and sets out the strategic priorities for science and innovation for 2005-2008. It defines both the rights and the responsibilities of the parties in order to promote and implement the state policy, and the parties’ responsibilities and conditions regarding the financial assistance from the state budget in the field of science and innovation. The Agreement stipulates that the government provides a stable and progressive financing from the state budget up to 1% of GDP in 2008. Another important change took place regarding the evaluation and accreditation of the scientific research institutions: By Decree of the President of the Republic of Moldova (Nr. 2075-3 from November 03, 2004) the National Council for Accreditation and Attestation was created. All public organizations became subject to the new evaluation and accreditation process. Evaluation and accreditation services were also available to private and non-governmental organizations upon request. During the first half of 2005 (January through June) the institutions from the science and innovation sphere prepared and delivered reports on self-evaluation. These reports were used for the evaluation and accreditation process. Following this process, all public organizations operating in the science and innovation sphere obtained a new status of either institutional member, profile member or affiliated member of the Academy of Sciences of Moldova. Depending on the new status the degree of financing from the state budget for these institutions was established: Institutional members of the Academy of Sciences would receive full financing from the state budget; Profile members of the Academy of Sciences would receive full financing “on competitive basis” from the state budget for its fundamental research and partial financing “on competitive basis” from the state budget for its applied research. Priority would be given to projects which also have additional financing from extra-budgetary resources; affiliated members of the Academy of Sciences would have the right to participate in contests for the projects and programs of the Academy of Sciences and receive a 40% financing [8, p. 11]. The financing of science and innovation in 2005 increased approximately twice. Special funds for purchasing of the equipment and literature were allocated, for scientific visits (travel), for editing of scientific journals. As a result of the accreditation policy the number of public organizations in science and innovation was reduced to 33 Research Institutes and 6 Research Centers. According to the Moldova-EU Action Plan the evaluation and accreditation of organizations from the science and innovation sphere will have a positive impact on the qualitative level of research on the national and international levels. The Academy of Sciences of Moldova has elaborated a new set of strategic Directions of the Activity in Science and Innovation for 2006-2010. The document was approved by the Parliament of the Republic of Moldova (Decision Nr.160-XVI from August 21, 2005). The top strategic directions of the sphere of science and innovation development in the Republic of Moldova for 2006-2010, as set in the document, are: edification of the state of law and optimal use of the cultural and historical patrimony of the Republic of Moldova in the context of European integration; utilization of the human, natural and informational resources for developing the national economy; biomedicine, pharmaceutics, maintenance and strengthening of the health sector; agriculture biotechnologies, soil fertilization and food safety; nanotechnologies, industrial engineering, new products and materials; efficiency and security in the energetic complex, including utilization of renewable resources. The major changes in the funding of scientific research are reflected by: gradual increase in the budget funds allocated to scientific research; extension of the finance sources by implementation of co-financing. In order to implement the funding mechanism of science and innovation, beginning with 2006 the funding of the research institutions is conducted only based on competition principles. Thus, an array of various projects and programs would compete for financing: projects in frame of the state programs; institutional projects; innovation and technological programs; projects of grants of the Supreme Council of Science and Technological Development (independent projects). The evaluation of the projects is based on the following European criteria: the fundamental character of the investigations; capacity for solving the problems of the national economy; research competitiveness; collaboration between the scientific and economic agents; intensification of the international collaboration and integration in the European Research Area; training of the scientists of high qualification and collaboration with Higher Education Institutions; support and development of the human potential. The budget allocations for science slightly increased, from 0.18% (2001) and 0.26% (2004) of GDP up to 0.35% of GDP in 2005, thus accounting for 114 mln. lei. In 2006 the funds where distributed in the following manner: 30% were allocated to fundamental research, 50% to applicative research, and 20% to technological transfer [8, p.7]. The implementation of the scientific research results in the national economy and creation of the innovation infrastructure: The Code on Science and Innovation stipulates the to give fiscal and custom incentives, as well as the allocations of profit, preferable bank credits, convenient for all participants to the process of implementation of the scientific results in the economy; The Agency for Innovation and Technological Transfer was created for the implementation of science and innovation results; 61 projects of innovation and technological transfer were presented, for which 10 mln. lei (20% from total allocations) will be allocated from the budget in 2006 and another 8 mln. lei will be allocated by the economic agents; The Center for Graduate, Post-graduate and Advanced Training was created within the Academy of Sciences of Moldova. At present 239 Post-Graduate students study at the center [8, p 21]. The creation of favorable conditions for active participation of the scientists and specialists in the international scientific projects On November 17, 2005 the Parliament of the Republic of Moldova ratified the Agreement of Scientific Collaboration between the Government of the Republic of Moldova and INTAS (The International Association for promotion of the Cooperation between the Scientists from the New Independent States of the Former Soviet Union). The Agreement provided the necessary conditions for realization of 12 joint projects and 9 fellowships for young scientists, obtained as a result of collaborative calls Moldova - INTAS 2005. Currently, several State Programs for 2005-2009 are being implemented: the state and the living standard of the population in the Republic of Moldova; achieving competitiveness of industrial products in machine construction in the base of Know-How innovations, new materials and advanced technologies; creation of a new crime prevention and warning system; elaboration and implementation of advanced technological methods and modern equipment for the production of raw aromatic and medicinal material; elaboration, multiplication and service of local medical equipment; elaboration of new methods of directional treatment of the medico-biological objects with electromagnetic waves of extra high frequencies and production of the respective equipment; elaboration of the technology of production and utilization of renewable energetic sources on the base of initial agriculture material; elaboration of modern viticulture technologies on the base of utilization of agro-biodiversity of the genetic fund of the vineyard; implementation of valorous medicinal plants (autochthones) and obtaining of biological active principles, necessary for the production of the vegetal medicinal compounds; increasing of the functional efficiency of the energetic complex; nanotechnologies and new multifunctional materials and electronic micro-systems; new technologies for the production and guarantee of the food inoffensively; elaboration of the ecopedological framework for implementation of the organic production system in the Republic of Moldova; principles and technological methods for diminution of the natural disasters consequences (droughts, freezing, etc) for the culture plants; treatment and usage of waste products from the wine industry of the Republic of Moldova and obtaining of new products.
International cooperation After the collapse of the Soviet Union the Academy of Sciences of Moldova had to find new modalities in order to make the best use of the experience gathered over the years of its existence and to preserve the contacts already established with the international scientific community. During the last 15 years a new legal framework was created in order to maintain, deepen and extend the international scientific cooperation. Agreements on scientific cooperation were signed between the Academy of Sciences of Moldova and the Academies of Sciences of other countries as well as with different international organizations. These agreements facilitate the exchange of information in the field of science and innovation and the participation of Moldova’s researchers at international scientific events as well as the organization of such events in Moldova. Furthermore, a considerable number of international projects and scholarships were awarded with international assistance. In 1993 the Agreement regarding the establishing of the International Association of the Academies of Sciences was signed. The Agreement facilitates the re-establishing of the scientific relations on the basis of partnership between the academies from NIS and other states in the world, as well as the participation to the settlement of global challenges concerning the development of the civilization, and the coordination of scientific and academic policies. The scientific cooperation between the Academies of Sciences of Moldova, Ukraine and Belarus has started in 1973 with the signing of the Agreement on Scientific Cooperation. Joint scientific-technical programs were conducted in the fields of high technologies, the use and the protection of natural resources, the problems of selections and genetics, history and culture. The Conventions of Scientific Cooperation were signed in the 1990–1996 as well as the Agreement of Scientific Cooperation was signed in 2005 between the Romanian Academy and the Academy of Sciences of Moldova. These conventions created the background for the exchange of the researchers working in fundamental research and for the creation of joint scientific research projects, as well as for the exchange of experience and information. Relations of good cooperation were established between research institutes of the Academy of Sciences of Moldova and Romanian Academy, Romanian universities and other research centers of Romania. As a result of the Agreement between the Academy of Sciences of Moldova and the Russian Foundation of Basic Research and the Russian Foundation of Humanitarian Research in 2005 there were 49 joint projects. Starting with 1992 the Academy of Sciences of Moldova has an Agreement of scientific and technical collaboration with the National Technical University of Athena. According to this Agreement, visits of scientific researchers were carried out in the field of solid-state physics. The Academy of Sciences of Moldova has signed 16 Agreements of scientific cooperation with the Academies of Sciences from both the West and the East and with a huge number of scientific international organizations. In 1993 the Academy of Sciences of Moldova joined the International Council of Scientific Unions (ICSU). As a member of ICSU Moldova has the opportunity to get involved in the international information space and to pursue integration into the international scientific bodies. Lately the scientific community of Moldova has developed collaboration relations with scientific partners from different countries within various programs announced by international foundations like CRDF-MRDA, UNESCO, NATO, INTAS and Framework 6 Program of the European Union for R&TD. In the field of environmental sciences the Republic of Moldova participates in 14 International joint projects supported by the World Bank, United Nation Ecological Program (UNEP), Global Environmental Foundation (GEF), TASIS and EU. Beginning with 1999 the Academy of Sciences of Moldova and some Moldovan Universities have received financial support from the NATO Science Program Committee in order to create the infrastructure of its own National Research and Educational Network (NREN) with access to the global Internet. As a result of this, the scientific and educational computer network RENAM (Research and Educational Networking Association of Moldova) was established. The main purpose of RENAM is to unite separate networking segments of the universities and research institutions of Moldova into a single network with Internet access, as well as to establish closer contacts among neighboring NRENS. The creation of the regional networking segment uniting the scientific and educational networks RoEduNet (Romania) and RENAM (Moldova), as well as URAN (Ukraine) was possible thanks to the support of European Commission and other international European organizations. The scientists from Moldova have participated in 18 INCO-COPERNICUS projects of the EU Programs [8, p.19]. The Moldova Research and Development Association (MRDA) is an independent, nonprofit organization, established in 2000 with support of the U.S. Civilian Research & Development Foundation (CRDF) in cooperation with the Government of Moldova. MRDA is part of a U.S. Department of State program with the objective to offer civilian research and development opportunities to Moldovan scientists and to improve the general state of science and technology in Moldova. During 2000-2006 CRDF has committed over 6 million dollars for the support of more than 200 projects. Around 1,200 scientists have participated in 20 CRDF Programs. To encourage greater collaboration between science and business the first Scientific Business Venture Conference (November 3, 2005) funded through the CRDF Sciences & Technology Entrepreneurship Program (STEP) awarded grants to the competition winners to pursue their projects with their company partners. CRDF has supported (about 6,0 mln USD) the scientific research projects and the creation of 4 Centers under the aegis of the Regional Experimental Support Center Program: the National Center for Material Study and Testing in Mechanics, Optoelectronics and Non-Conventional Energy; the Center of Advanced Biological Technologies; the Center of Research and Development of Electronic Instruments for Civil Use based on New Materials and Technologies; and the Research and Education Center. Since 1992 the International Association for promoting cooperation with scientists from the New Independent States of the former Soviet Union (INTAS, Brussels, Belgium) has supported 100 projects in the amount of more than 2.2 mln EURO. In addition to the Agreement of Scientific Cooperation between INTAS and the Republic of Moldova (signed on May 16, 1995 and its prolongation until the end of 2007) there were two new Conventions signed on June 09, 2005: The Convention of Scientific Cooperation between INTAS and the Academy of Sciences of Moldova on Joint Collaborative Call for Research Projects and the Convention of Scientific Cooperation between INTAS and ASM on Joint Collaborative Call for Young Scientific Fellowships (YSF). In the framework of these calls the scientific community of the Republic of Moldova has submitted 60 Research Projects and 15 YSF, from which 12 Research Projects and 9 YSF are currently funded. The National Information Points of the 6-th EU Framework Program for R&TD (FP6) established in September 2003 with support of INTAS organizes seminars and info-days for promoting integration of the scientific community of Moldova towards a European Research Area by participation in the FP6 joint research projects. The World Federation of Scientists (Switzerland) supported 58 postgraduate students from Moldova (2000-2006). Starting with 2003 good relations of cooperation in joint projects were established with the support of the National Research Foundation (Switzerland). For the period 2005-2008 the Foundation is supporting 10 projects SCOPES. The Association of Young Scientists from Moldova „PRO-Science” was accepted in the European Organization.

CONCLUSION Science and technology have such immense benefits in every area of a nation life; especially these factors determine the social well-being. Since the Industrial Revolution a highly skewed international distribution of innovative activities has emerged, starting from rather homogeneous conditions at least between Europe, China and the Arab world. This provides a highly impressionistic but revealing picture of the international distribution of innovations. The dominant tendency after the Industrial Revolution is one with fast increasing differentiation among countries and overall divergence. Knowledge of new innovations spread show to the industries new techniques and mechanisms, which induced to the development of the economy branches: agriculture, industry, and infrastructure. Living conditions during the Industrial Revolution varied from owners of businesses to the workers. So can be concluded that the Industrial Revolution had different effects and it considered a step in the development of global economy. In this way can be analyzed the significance of science and technology in the formation of world economy. Science and technology represent an engine of economic growth, so here can be determined the huge influence of these on the progress. There are great advantages of science and technology because these help in raising the economy actually influence the level of GDP. In promoting the innovation is seen an increase in productivity, quality, high-skilled labor and life standards. The technology and science have been assumed to influence the branches of economy, note simply to create a new market, so the evidence is that through these can be created a strong relationship between the international market and global economy. These highlight the consequences in the research and development domain, because through this mechanism everything goes to an improvement and leads to the progress. It seems clearly, that science and technology advances produce different results in the development of world economy. Another theme analyzed is the situation in Republic of Moldova. The major condition for RM to pass to the new economy, based on knowledge is innovations model economic development: transforming innovations and innovation activity into the major social-economic development factor of Republic of Moldova. European integration is the main concern for the development of the countries, as for the scientific and innovation policy convoluted for RM is considered the situation of EU member states innovation policy, stated in "Lisbon strategy". Economic aim of innovation policy is to fulfill internal market with high technological products for the international level with very new elements for the products global standards. Necessity for the development of The National Strategy of Innovative Development of Moldova for the period 2008-2011 has been caused by: the increase of the role of innovations as factor of stability of social and economic development and growth of well-being; the formation in RM of the effective socially-focused market economy which will be based on modern technological customs; the inadequate development of the legislation of Republic Moldova in innovative sphere and absence of the concept of innovative policy of RM; updating the old-fashioned industrial equipment, increase the demand of skillful personnel; the lack of necessary conditions for active attraction of the saved up scientific and technical potential of Republic Moldova in the processes of modernization of manufacture and development of hi-tech sector of economy. However, in order to reduce this existing gap, new major projects must be undertaken. These imply ensuring a higher financial investment into scientific research, at national level, and a more intensive collaboration in scientific research throughout Europe, in which the European Union will play a key role. The national economy has also influenced by the science and technology, because through different strategies and programs can be improved the situation in industries, agriculture, infrastructure. In conclusion remain that the science and technology play a huge role in the development of world economy. Since industrial revolution which is considered the main step in the formation of new era. Also is considered the purchasing of new techniques and mechanisms in the formation of world economy, started in the history and induced till present.

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The European Social Model and coordination of Social Policy An overview of policies, competences and new challenges at the EU level Paper delivered at the TLM.NET Conference, Quality in Labour Market Transitions: A European Challenge, Amsterdam 25-26 November 2004, Workpackage 8: The Sustainability of Employment Insurance. – UK: University of Warwich, 2004, 47 p. 30. Science, Technology and Innovation in a changing world. – Paris:OECD, 2007, 307 p. 31. Science and Technology and Industry Outlook 2006. –Paris: OECD, 2007, 250 p. 32. Stone, M.; Bond, A. Ghidul complet al Marchetingului direct şi interactiv. –Bucureşti: Ed. All, 2006, 460 p. 33. Suciu, M. Politica inovaţională în Uniunea Europeană. –Bucureşti: Economie şi teorie aplicată nr. 9, noiembrie 2006, 32p. 34. Şută, N. Comerţ internaţional şi politici comerciale contemporane, vol.I, II. –Bucureşti: Ed. Editura Economica, 2003, 592 p. 35. 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ANNEXES I
Table 1
Major inventions, Discoveries and Innovations by Country (percentage of total)

|period |total |Britain |France |Germany |USA |Others |
|1750-75 |30 |46.7 |16.7 |3.3 |10 |23.3 |
|1776-1800 |68 |42.6 |32.4 |5.9 |13.2 |5.9 |
|1801-25 |95 |44.2 |22.1 |10.5 |12.6 |10.5 |
|1826-50 |129 |28.7 |22.5 |17.8 |22.5 |8.5 |
|1851-75 |163 |17.8 |20.9 |23.9 |25.2 |12.3 |
|1876-1900 |204 |14.2 |17.2 |19.1 |37 |11.8 |
|1901-25 |139 |13.7 |9.4 |15.1 |52.5 |9.4 |
|1926-50 |113 |11.5 |0.9 |12.4 |61.9 |13.3 |

Source: Dosi et. al 1990

ANNEXES II
[pic] U.S. agricultural output, input, and total factor productivity
Source: ERS, data product, USA

ANNEXES III
[pic]
Figure 1. US Patent Granted by residence of investor
Source: U.S. Patent and Trademark Office

[pic]
Figure Nr. 2 US Patent granted by foreign investors
Source: U.S. Patent and Trademark Office

[pic]
Figure 3. US Patent Application filed by selected foreign investors
Source: U.S. Patent and Trademark Office

[pic]
Figure 4 Patents granted by nonresident investors
Source: World Intellectual Property Organization

ANNEXES IV

National Experts on the Specifics of R&D in Moldova
A series of interviews were conducted with local experts regarding the development of the field of science and innovation. These interviews underlined the specifics of research and technological potential development in Moldova:
1. The new economic growth is based on the development of new innovation dimensions for the modernization of the technical and technological resources and the economy in general. Reduced innovation activity is one of the variables that affect the performance of the national economy. In Moldova the budget allocations for science from the GDP decreased from 0.76 % in 1991 up to 0.2 % in 2002. The innovation infrastructure and the technological transfer were destroyed. In the 90’s the big enterprises were forced to stagnate or completely cease functioning due to insufficient funding. The majority of the economic agents were not interested in long-term investments due to the financial risks involved. Human and intellectual capital in science and innovation were not appreciated. As a former Soviet Republic in Moldova the collaboration on horizontal level between fundamental and brunch research institutes was week.
2. The share of targeted budgetary support for R&D is 7,5 million from the total budget of 114,5 million for science.
3. The Academy of Sciences of Moldova created the National Fund for the Support of Science. The fund provides financial support to scientific researchers and young talents, and mainly for payment of premiums and grants on the base of regulation approved by the Assembly of the Academy of Sciences of Moldova.
4. Moldova actively participates in the international S&T. The Academy of Sciences of Moldova collaborates with the Academies of Sciences from Poland, Romania, Hungary, Bulgaria, Russian Federation, Greece, Germany, UK, France, Ukraine, Belarus, and Czech Republic. The collaboration is through joint research projects supported by CRDF, INTAS, NATO, TACIS, UNESCO, Royal Society, FP6, as well as scientific visits.
5. At present the Academy of Sciences of Moldova is the highest scientific forum in the Republic of Moldova as the performer of basic research, innovation and technological transfer. The contribution of the Academy of Sciences to the increasing of the scientific knowledge makes up to 70% of Moldova’s contribution in total. The other 30% of the contribution to the informational process belongs to Moldova’s Institutions of Higher Education. On the other hand, as a performer of applied research and experimental development, the Academy of Sciences does not have a substantial impact on the local economy. This is explained by the extremely low level of financing, only 0.35% of GDP.
6. The R&D results in the Republic of Moldova are of top European and international standards, unfortunately they are not demanded by the national economy. The main factors hindering the internal demand for R&D in Moldova are the week development of the high technology sector of economy; a week informational system, and the lack of financial resources in the local industry.
7. Recently there were some attempts to create some national and regional techno parks. Four Regional Research Scientific Centers were created in the Republic of Moldova with the financial support of CRDF.
8. The share of foreign sources for R&D sponsorship of the fundamental sciences in Moldova is substantial. It accounted for almost 30-40% of the total amount of budgeting for 2003-2004. The share of commercial contracts for R&D for the Academy of Sciences did not exceed 10%. At the same time, some Research Institutes (e.g. ELIRI) as well as some private enterprises operating in science and technology received commercial contracts for R&D coming from abroad exceeding 50% of the total budgeting.

Source: www.europa.md

ANNEXES V Moldova/EU Action Plan
Research, development and innovation
(72) Prepare Moldova’s integration into the European Research Area and into the Community
R&D Framework Programss on the basis of scientific excellence
– Implement appropriate information strategy to facilitate adequate participation of
Moldovan scientists in the Community R&D Framework Programs.
– Undertake an assessment of the capacity of research structures in Moldova with a view to their integration in the European Research Area.
(73) Develop Moldova’s capacity in technological R&D to support the economy and society
– Reinforce human, material and institutional resources in order to improve the capacities in technological R&D and innovation including through INTAS, EUREKA and COST actions. (74) Support Moldova’s integration in high level scientific exchanges.
– Reinforce Moldavian participation in international Marie Curie fellowships including support of the appropriate return mechanisms.
– Promote participation of Moldavian scientists in international debates.
Source: http://ec.europa.eu/world/enp/pdf/action_plans/moldova_enp_ap_final_en.pd

ANNEXES VI
Nominal GDP list (sortable in billions of US$)
|Country |2009 |2010 |2011 |2012 |2013 |2014 |Estimate as of |
| World |54,863.551 |55,920.570 |58,726.162 |62,320.997 |66,290.370 |70,600.730 |April 2009 |
|European Union |15,342.908 |15,360.346 |15,816.280 |16,446.704 |17,149.622 |17,890.649 |April 2009 |
|United States |14,002.739 |14,050.753 |14,633.091 |15,390.028 |16,203.315 |16,927.843 |April 2009 |
| People 's Republic of |4,832.992 |5,302.660 |5,912.130 |6,635.277 |7,448.481 |8,500.096 |April 2009 |
|China | | | | | | | |
|Japan |4,992.846 |4,724.695 |4,736.624 |4,896.785 |5,114.794 |5,354.406 |April 2009 |
|Germany |3,060.312 |3,008.993 |3,056.879 |3,127.657 |3,207.602 |3,292.870 |April 2009 |
|France |2,499.146 |2,527.606 |2,611.726 |2,716.870 |2,834.040 |2,951.575 |April 2009 |
|United Kingdom |2,007.049 |2,027.927 |2,122.424 |2,244.468 |2,374.894 |2,507.610 |April 2009 |
|Italy |1,987.836 |1,987.445 |2,021.387 |2,078.397 |2,146.044 |2,225.273 |April 2009 |
|Spain |1,397.232 |1,390.760 |1,412.125 |1,447.671 |1,496.690 |1,554.147 |April 2009 |
|Brazil |1,268.508 |1,317.251 |1,391.351 |1,474.174 |1,563.131 |1,666.753 |April 2009 |
|Canada |1,229.367 |1,244.597 |1,291.096 |1,364.068 |1,437.119 |1,502.204 |April 2009 |
| India |1,185.726 |1,234.044 |1,323.243 |1,441.115 |1,582.120 |1,739.984 |April 2009 |
|Russia |1,163.645 |1,329.377 |1,521.881 |1,730.319 |1,962.657 |2,231.786 |April 2009 |
|Mexico |827.189 |863.357 |914.169 |984.294 |1,061.964 |1,139.276 |April 2009 |
| South Korea |727.111 |740.594 |784.799 |825.477 |874.871 |934.401 |April 2009 |
|Australia |755.066 |744.265 |755.562 |780.192 |806.606 |852.705 |April 2009 |
|Netherlands |742.966 |744.088 |765.189 |792.928 |825.554 |858.516 |April 2009 |
|Turkey |552.180 |535.324 |550.449 |579.133 |611.187 |644.823 |April 2009 |
|Indonesia |468.389 |503.819 |540.409 |580.814 |627.105 |679.318 |April 2009 |
|Belgium |433.520 |437.037 |451.966 |469.967 |489.807 |510.035 |April 2009 |
| Switzerland |452.025 |445.829 |444.183 |445.710 |448.666 |451.643 |April 2009 |
| Poland |402.974 |410.632 |428.782 |450.406 |474.214 |499.193 |April 2009 |
|Saudi Arabia |373.995 |423.841 |468.701 |512.527 |556.359 |601.541 |April 2009 |
|Austria |361.791 |366.684 |377.204 |391.860 |407.534 |424.865 |April 2009 |
|Sweden |359.113 |361.393 |382.816 |410.204 |437.748 |463.075 |April 2009 |
|Portugal |209.139 |209.584 |214.248 |221.598 |229.564 |237.198 |April 2009 |
|Israel |204.133 |204.562 |215.355 |227.279 |239.513 |252.588 |April 2009 |
|Moldova |5.113 |5.233 |5.666 |6.147 |6.638 |7.107 |April 2009 |

Source: www.wikipedia.org

ANNOTATION of the thesis for awarding the bachelor degree in economic science on the theme:
“The Role of Science and Technology in the Development of World Economy” The thesis at hand aims at a theoretical and methodological study of the development process of world economy. Through the analysis of the impact this process has had on the science and technology, actual recommendations are about the great importance for the formation of world economy. Likewise, some suggestions have been made for improving the industries, agriculture, and infrastructure at national, regional and international level. By estimating and evaluating the coordination mechanisms, the necessity of the innovation system to interact with other similar systems in other economic domains has been established, thus proving the need to develop a new techniques and mechanisms for improving the progress of the economy. This paper examines the evolution, the forms and the means of science and technology during the periods, the advantages and disadvantages, as well as the possibilities of applying innovation in development the national economy which will induce to the development of world economy. The influence of science and technology has been studied and elaborated, by scientifically discussing by the scientists in this domain. The period of Industrial Revolution has been analyzed and shown how it influenced on the global economy, also the effects which it had. It played a key role in the formation of world economy. According to the established goals, the thesis examines the phases of the elaboration and implementation of the strategies, plans and programs for developing the innovation system in the Republic of Moldova. Only if a global strategy, adequate to the European integration, is pursued, will this phenomenon have a positive effect on the economic growth. Therefore, arguments in favor of applying coordination mechanisms within the innovation systems and of developing adequate implementation will succeed. The thesis also highlights the characteristics of the aspects of science and technology in Republic of Moldova, European Union and in United States, which are exemplified.

ADNOTARE a tezei de licenţa in ştiinţe economice cu tema:
“Rolul Ştiinţei si a Tehnologiei in Dezvoltarea Economiei Mondiale” Prezenta teza are la baza studiul teoretic si metodologic a procesului de dezvoltare a economiei mondiale. In aceasta lucrare este analizat impactul ştiinţei si tehnologiilor in formarea economiei mondiale, cu recomandări actuale referitoare la influenta inovaţiilor asupra progresului economic. Unele sugestii au fost făcut spre îmbunătăţirea industriei, agriculturii si infrastructurii la nivel naţional, regional si internaţional. Prin estimarea si evaluarea unor mecanisme, prin necesitatea sistemului inovaţional se arata interconexiunea acestora cu alte domenii ale economiei care determina necesitatea unor noi tehnici pentru promovarea progresului economic. Aceasta lucrare analizează evoluţia, formele si importanta ştiinţei si a tehnologiilor in diferite perioade, precum avantajele si dezavantajele, astfel demonstrând aplicarea inovaţiilor pentru dezvoltarea economiei naţionale si internaţionale. Perioada revoluţiei industriale a fost analizata si evidenţiata influenta ei majora in economia globala, de asemenea si efectele pe care le-a urmat. Acest eveniment a jucat un rol cheie in formarea economiei mondiale. Conform scopului tezei, in lucrare s-au analizat faze de elaborare si implementare a diferite strategii, planuri si programe pentru dezvoltarea sistemului inovaţional in Republica Moldova. In teza , sunt examinate si aspectele ştiinţei si tehnologiilor in Republica Moldova, Statele Unite ale Americii, Uniunea Europeana, care sunt exemplificate.

ABBREVIATIONS:

АIТТ- Agency of Innovations and Technology Transfer
ASM- Academy of Sciences of Moldova
CRDF- Civilian Research & Development Foundation
ERA - European Research Area
EU- European Union
FP - Framework Program
GEF- Global Environmental Foundation
ICSU- Council of Scientific Unions
INTAS - The International Association for promotion of the Cooperation between the Scientists
IPR- Intellectual Property Right
MRDA- The Moldova Research and Development Association
NREN- National Research and Educational Network
OECD- Organization for Economic Cooperation and Development
RM- Republic of Moldova
R&D- Research and Development
STEP- Technology Entrepreneurship Program
SCERS- Strategy of economic growth and poverty reduction
SMEs- Small and Medium Enterprises
WIPO- World Intellectual Property Organization
YSF- Young Scientific Fellowships

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