State Strength, Industry Structure, and Industrial Policy: American and Japanese Experiences in Microelectronics

Abstract

Increasing attention has been devoted to public and private sector capacities to maneuver in a global political economy of heightened industrial competition and persistent economic dislocation. In policy terms, debate has raged over the role and capabilities of governments in supporting industries and over the need for private enterprises to undergo restructuring to gain or maintain competitiveness.' Scholarly inquiries have investigated the differential capacities of national political economies. Comparative analysis points to certain countries whose public and private institutions enjoy relative advantages in competing in the world economy.2 This article offers case studies of two technology programs that provide revealing insight into public and private sector capabilities for government-industry collaboration, industrial policymaking,3 and multiform cooperation in Japan and the United States. One case study is the Very High Speed Integrated Circuit (VHSIC) program sponsored by the U.S. department of defense. This program was established in 1979 to infuse research and development funds into the electronics industry and advance the state of the art in integrated circuitry. Some twenty-five companies ranging from major computer manufacturers to merchant semiconductor firms were on the receiving end of VHSIC contracts. The program was budgeted at nearly $1 billion through 1988 and constituted the U.S. government's largest, most ambitious effort in microelectronics since the 1960s. The second case study is Japan's Very Large Scale Integration (VLSI) project. Established by the ministry of international trade and industry (MITI) in 1976, the VLSI project represents another government-industry effort to develop leading edge semiconductor technology. Some $300 million was invested in this program through 1980, and five of Japan's leading electronics manufacturers participated in the effort. The project has been singled out as being centrally critical to Japan's current technology thrust and export drive in microelectronics.