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936, Innovation, Technology, and Social Progress Published: Sunday, June 25, 2006 By: Dr. Manuel Ángel Morales

There are not many souls that dare not to recognize the vital role of section 936 of the U.S. Internal Revenue Code for creating jobs and for industrializingPuerto Rico, and for establishing the foundations that are helping us to move toward the high-tech manufacturing in the 21st century knowledge based economy. But there is another perspective which no one mentions and it is the relationship between 936, knowledge-technology transfer and social progress inPuerto Rico.

We can interpret the Operation Bootstrap period as an epoch in which there first emerged the restless, technical industrial inventiveness that so strongly characterized our economic environment in that past century.

Invention is the act of creating a new device, mechanism, or artifact. Innovation is the act of manufacturing a new commercial product or social useful device, process or artifact. We distinguish an invention from an innovation by noting that innovation is the actual manufacturing of products to social use. This is what section 936 allowedPuerto Rico’s industrial operation to become, and that is, a huge knowledge-technology-innovation manufacturing economy, transferring this experience to the whole society at large.

Technological based manufacturing involves the application of reason to techniques that have a spillover and useful effect within the society. Seeking to increase knowledge and to apply it to the problems or needs of the society follows faith in the notion of progress. Sustained material progress is a tenet of the knowledge based-technological society. There are never perfect policies or economic strategies because knowledge at any given point is proportionally inverse to what needs to be done. But at the end of the day one can ponder if any given period has left the society and its people in a better condition that when all started. Optimism and progress underlie the postmodern enthusiasm for technology and its wide application. For example, we believe that the Internet and related innovations will lead to a new burst of material and social progress. Benjamin Franklin wrote in 1780: “It is impossible to imagine the height to which it may be carried, in a thousand years, the power of man over matter”. And this is what 936 contributed to Puerto Rico by experimenting at one point with more that 50 large scale manufacturing organizations in the island, and incrementally educating more than 900,000 people in a 50 year period on manufacturing technologies, management methodologies, quality philosophies, leadership, change and transformation processes for achieving very competitive goals and objectives. 936 created the portfolio of manufacturing companies that executed as universities, for later transferring these knowledge sets to the rest of the society.

Of course, the pessimist can always raise issues of externalities, but nobody can deny that 936 industrial operations brought to reality the idea of professional and social progress as a penetrating business psychology inPuerto Rico.

Our increasing anxiety in terms of what can we do for the future should not give up hope for further improvement and eventual re-conceptualization of a new tax treatment for making Puerto Rico an attractive location for research, development and manufacturing products and other technologies. Puerto Rico has to cultivate the sustained progress mentality or else…

On the one hand we expect sustained progress, and we expect it faster, and on the other the length time between the discovery of a fundamental process and its application is becoming progressively shorter.

939 culture performed a very important knowledge and technological role in Puerto Rico, driving social change and preparing us all for the next society.

We should embrace the idea of political institutions facilitating and promoting technological change, and thus driving toward positive, less harmful, business atmosphere. We now have a global world where time, not only raw material, is a scarce resource and where intellectual capital (as developed by 936 idiosyncrasy) is paramount.


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