Finding high tech policies that work: Firms and competitiveness in the semiconductor industry

For more than a decade, numerous books, journal articles, reports, and bills introduced in Congress have outlined the challenges facing America's economic competitiveness and have proposed a wide mix of measures to address them. A common finding in the literature is that high technology industries are central to U.S. economic growth, and that the pace and pattern of progress in these industries are deteriorating. Lagging productivity and the loss of technological leadership have resulted in slow growth and contributed to seemingly overwhelming national debts and record-breaking foreign trade deficits. America has lost its competitive position in the international economy and the challenge lies in finding and undertaking appropriate measures if this position is to be regained.; The purpose of this research is to provide direction for policy analysis and evaluation. It is argued that informed analyses must address several dynamic factors, and do so in terms of their effect on the choices made by firms regarding strategies aimed at achieving and sustaining competitive advantage. These factors are: changes in industry structure, the diffusion of technology on a global scale, and adaptive behavior by governments. The national focus is the United States, and special emphasis is placed on Japan. The semiconductor industry, which produces computer chips and related electronic devices, serves as the case study.; The hypothesis addressed is that government involvement fails to assist the development of high technology industries. Several recent proposals whose goal is to improve America's competitiveness are evaluated. This research demonstrates a useful approach for understanding the impact of policies on the source of national competitiveness: the firm. This is particularly valuable when dealing with problems characterized by complex relationships, constant change, and uncertainty; and which are marked by structural shifts in markets, changes in the regulatory and international business environment, and an accelerating rate of change in technology itself. It is found that, for the policies evaluated, government policy has both positive and negative impacts on firms in the semiconductor industry. Results are extended to other high technology industries. Implications for policy and for U.S. political economy are addressed.