European industrial policy for high technology must be reformulated. First, past support of producers over users has undermined producers by not creating a sophisticated market, the single most powerful industrial policy tool. Second, global trade and investment are regionalizing. Policies aimed at rejuvenating sectors such as electronics must consider that regionalization will make access to technology and markets increasingly asymmetrical. The concepts of supply base and architecture of supply clarify this understanding. Europe must not just refocus domestic support but also secure access to the supply bases of the other two regions, America and Asia.
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References
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Pierre-Henri Laurent , “The European Technology Community, the Meeting of the Elites, and the Creation of the Internal Market,” in Il difficile cammino dell' Europa unita, ed. S. Beretta (Milan: Casa Giuffre, 1989), 125-134.
2.
Laura D'Andrea Tyson , Who's Bashing Whom: Trade Conflict in High-Technology Industries (Washington, DC: Institute for International Economics, 1992).
3.
3. Michel Catinat, “L'informatique et les automatismes” (Paper delivered at “Le Devinir Industriel de La France: Cooperer,” Seminaire International, Paris, 7-9 Sept. 1992), p. 11.
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4. “The Report of the Information and Communications Technologies Review Board” (June 1992). This review board, chaired by Wisse Dekker of Philips, was invited by the European Commission to review the progress of the major programs in information and communications technologies.
5.
5. Ibid.
6.
See also the excellent article by Robin Gaster that discusses European FDI policies, “Protectionism with Purpose: Guiding Foreign Investment,”Foreign Policy (Fall 1992).
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7. Yui Kimura, “Japanese FDI in the European Semiconductor Industry,” in Does Ownership Matter? Japanese Multinationals in Europe, ed. Mark Mason and Dennis Encarnation (New York: Oxford University Press, 1993).
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8. Winifried Ruigrok and Rob van Tulder, “The Ideology of Interdependence” (Diss., University of Amsterdam, 1993).
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9. This argument is widely disputed. For a view parallel to ours, see Lawrence B. Krause, “Trade Policy in the 1990s: Good-Bye Bipolarity, Hello Regions,”World Today, 46(5) (May 1990). In our view, the difference is largely one of vocabulary.
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10. In 1987, Japan alone accounted for 12.4 percent of global GDP, and Japan plus the East Asian newly industrializing countries accounted for 15.8 percent. These figures are based on data in Bureau d'Information et Prevision Economique, Europe in 1992 (Paris: BIPE, 1987). Since these data were published, the Japanese share has risen.
11.
By 1988, intra-Pacific Basin trade had risen to almost 66 percent of the region's total trade, from about 54 percent in 1980. See Lawrence B. Krause, “Pacific Economic Regionalism and the United States” (Paper prepared for the symposium “Impact of Recent Economic Developments on US-Korea Relations and the Pacific Basin,”University of California at San Diego, 9-10 Nov. 1990).
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12. Japan's trade with the rest of Asia in 1989 surpassed its trade with the United States, more than doubling since 1982 to over $126 billion. The Rising Tide: Japan in Asia, special supplement, Japan Economic Journal, p. 4 (1990).
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13. See “Everybody's Favourite Monsters,” a survey of multinational corporations, in Economist, 27 Mar. 1993.
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14. Sylvia Ostry, “Foreign Direct Investment in East Asia” (Paper, Center for International Studies, University of Toronto, and the Berkeley Roundtable on the International Economy, 1992).
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15. Ibid., p. 14.
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16. See Dennis Encarnation, Rivals beyond Trade: America versus Japan in Industrial Policy, 1925-1975 (Tokyo: Charles E. Tuttle, 1982).
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17. Ibid.
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18. See Gerd Junne, “Competitiveness and the Impact of Change: Applications of High Technologies,” in Industry and Politics in West Germany, ed. Peter J. Katzenstein (Ithaca, NY: Cornell University Press, 1989), p. 250.
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19. Michael Borrus, “Re-Organizing Asia: Japan's New Development Trajectory and the Regional Division of Labor” (BRIE Working Paper #53, Berkeley Roundtable on the International Economy, 1992).
20.
20. Paolo Guerrieri, “Technology and International Trade Performance of the Most Advanced Countries” (BRIE Working Paper #49, Berkeley Roundtable on the International Economy, 1991). Seen from the viewpoint of a supply base that underpins final production, it is not surprising that Guerrieri finds that export competitiveness in production equipment is linked to the competitive position of firms in the final goods sector in which the equipment is used.
21.
21. Erik Dahmen, “Development Blocks in Industrial Economics,”Scandinavian Economic History Review, vol. 1 (1988).
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22. Borrus, “Re-Organizing Asia,” p. 26.
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23. Michael Borrus and John Zysman, “Industrial Competitiveness and American National Security,” in The Highest Stakes: The Economic Foundations of the Next Security System, by Wayne Sandholtz et al. (New York: Oxford University Press, 1992).
24.
or see John Zysman with assistance from Laura Tyson, Giovanni Dosi, and Stephen Cohen, “Trade, Technology and National Competition,” in Technology and Investment, ed. Eurico Deiaco, Erik Hornell, and Graham Vickery (Stockholm: Royal Swedish Academy of Engineering Sciences, 1990).
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25. See the interesting paper by Dieter Ernst, “Networks, Market Structure and Technology Diffusion: A Conceptual Framework” (BRIE Working Paper, Berkeley Roundtable on the International Economy, in press).
26.
26. Indeed, these networks may be permanent features that represent mechanisms to manage technological diversity in an era of rapid technological change.
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27. Jay Stowsky, “From Spin-Off to Spin-On: Redefining the Military's Role in Technology Development” (BRIE Working Paper #50, Berkeley Roundtable on the International Economy, May 1991).
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29. Thierry Triomphe, “Electronique grand public” (Paper prepared for the seminar “Les Nouvelles Armes du Defi Industriel,”Paris, 7-9 Sept. 1992).
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30. Panorama of the EC Industry (Lanham, MD: UNIPUB, 1990), sec. 10-17ff.
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31. Triomphe, “Electronique grand public.”
32.
32. Ibid. Indeed, 32 percent is by Asia as a whole.
33.
33. Ibid.
34.
34. Michael Borrus and Jeffrey Hart, “Display's the Thing: The Real Stakes in the Conflict over High-Resolution Display” (BRIE Working Paper #52, Berkeley Roundtable on the International Economy, 1992).
35.
35. Ibid.
36.
36. The European computer market is much smaller than the American market; computers are simply not as widely used. The per capita figures for the installed base of personal computers illustrate this fact: in Europe there is one personal computer for every ten people; in the United States, there is one personal computer for every four. Dataquest, Inc., “PC Europe” (Data report, Dataquest, 1992).
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37. Catinat, “L'informatique et les automatismes,” p. 11.
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38. Ibid.
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39. Dataquest, Inc., “PC Europe.”
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40. Ibid.
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41. Ibid., pp. 7-8.
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idem , Reviews of Innovation Policies France (Note by the Secretariat) (Paris: Organization for Economic Cooperation and Development, 1986).
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43. Catinat, “L'informatique et les automatismes,” p. 8.
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44. Ibid.
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45. Ibid.
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Jay Stowsky, “From Spin-Off to Spin-On: Redefining the Military's Role in American Technology Development,” in ibid.
47.
47. See Borrus and Zysman, “Industrial Competitiveness,” p. 31.
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48. Ibid.
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50. François Bar and Michael Borrus, “The Future of Networking in the U.S.” (BRIE Research Paper #4, Berkeley Roundtable on the International Economy, Sept. 1992).
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51. Ibid.
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53. Jean Philippe Dauvinet al., “Le future de l'industrie europeene des semiconductors” (Paper, Thomson Groupe, May 1991).
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54. Ibid.
55.
55. Ibid.
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Kenneth Flamm , “Semiconductors,” in Europe 1992: An American Perspective, ed. Gary Clyde Hufbauer (Washington, DC: Brookings Institution, 1990).
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57. John Zysman, “Regional Blocs, Corporate Strategies, and the End of Free Trade,” in The Impact of Globalisation on Europe's Firms and Industries, ed. Marc Humbert (London: Pinter, 1993).
58.
58. Pierre Buigues and Alexis Jacquemin, “Foreign Direct Investments and Exports in the Common Market: Theoretical, Empirical, and Policy Issues,” in Does Ownership Matter? ed. Mason and Encarnation.
