Government programs and the growth of high-technology industries

Abstract

The research reported in this article was carried out as part of a larger prefect investigating the impact of the US Space Program on the American economy. The author describes the influence of governmental programs in space and defense on the growth of the computer and semiconductor industries. Three types of economic impacts are analyzed: the role of the federal government in financing research and development; the importance of the government as a market, particularly in the early stages of an industry's growth; and the extent to which government policy encouraged the entrance of new firms and permitted the survival of companies that might otherwise have failed. The paper also deals with the contribution of Defense and NASA to the acceleration of technological changes and the development of specialized manpower on which the progress of the industry largely depended. The author concludes that large government programs can play an essential role in the growth of high technology industries. The significance of space-defense programs for US semiconductor and computer firms can only be perceived by reviewing each type of impact-economic, technological and manpower. The government's early R & D support, assured demand during startup periods, encouragement of competition, acceleration of technological progress and its facilitating of professional mobility, are the separate impacts which together greatly aided US firms in their rise to a dominant position in the world semiconductor and computer industries.