1 I am using the term disruptive innovation in the general way that it is often used in popular discourse, rather than the precise technical definition that Clayton Christensen had in mind when he coined it. Christensen’s concept applied to new producers who enter markets from the low-cost end with products that are initially of inferior quality but whose quality improves over time, allowing them to take increasing market share from the market leaders. For example, in the American steel industry, mini-mills took market share from the integrated steel mills. In looking at the United States I will use the term disruptive innovation in its more popular sense to refer to new technologies or new business models that transform old orders. In the case of China I will use the term in a broader sense to examine China’s innovative approach to foreign investment and its disruptive consequences.
2 American Investment in the 21st Century, Project for Strong Labor Markets and National Development (May 2019), 12.
3 American Investment in the 21st Century, 30.
4 American Investment in the 21st Century, 24.
5 American Investment in the 21st Century, 38.
6 Clayton Christensen and Derek van Bever, “The Capitalist’s Dilemma,” Harvard Business Review (June 2014).
7 The faangs refer to Facebook, Apple, Amazon, Netflix, and Google. Some prefer the less well-known g-mafia label (Google, Microsoft, Amazon, Facebook, IBM, and Apple).
8 Peter Thiel and Blake Masters, Zero to One: Notes on Startups, or How to Build the Future (New York: Crown, 2014).
9 Gary P. Pisano and Willy C. Shih, Producing Prosperity: Why America Needs a Manufacturing Renaissance (Boston: Harvard Business Review Press, 2012).
10 Jonathan Gruber and Simon Johnson, Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream (New York: Public Affairs, 2019), 85–111.
11 Gruber and Johnson, 8.
12 Julian Baird Gewirtz, Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China (Cambridge: Harvard University Press, 2017), 33.
13 Richard Baldwin has written two books on the subject: The Great Convergence: Information Technology and the New Globalization (Cambridge: Belknap, 2016) and The Globotics Upheaval: Globalization, Robotics, and the Future of Work (New York: Oxford University Press, 2019).
14 Stewart Paterson, China, Trade and Power: Why the West’s Economic Engagement Has Failed (London Publishing Partnership, 2018), 42.
15 Dan Breznitz and Michael Murphee, Run of the Red Queen (New Haven: Yale University Press, 2011).
16 U.S. Library of Congress, Congressional Research Service, U.S. Manufacturing in International Perspective, by Mark Levinson, R42135 (2018), 3.
17 Paterson, China, Trade and Power, 3.
18 Michael Enright, Developing China: The Remarkable Impact of Foreign Direct Investment (Abingdon: Routledge, 2017), 3.
19 Baldwin, The Globotics Upheaval, 65–68.
20 Paterson, China, Trade and Power, 85–86.