useful to consider how innovations differ—in the complexity of the infrastructure and capabilities required to foster and implement them. Furthermore, the demands of innovation policy differ, depending on the nature and the intensity of innovation barriers that constrain the deployment of new ideas, inventions, and discoveries into commercially successful products, services, and business models.

Today, the effects of globalization extend across all stages of the value chain, including engineering, product development, and applied and basic research. This has resulted in an increase in the organizational and geographic mobility of knowledge.4 However, the new geography of knowledge is not a flatter world where technical change and liberalization spread the benefits of globalization rapidly and equally. Instead, even mature and established technology and manufacturing leaders now face competition from a handful of new—yet very diverse and intensely competitive—manufacturing and research and development hubs around the world.5 Therefore, the United States can learn a great deal by looking at the strengths and weaknesses of alternative information technology (IT) innovation policies in other nations.6 An analysis of these diverse approaches to innovation policy is shaped by issues such as: the range of policy options that have been pursued, how policy approaches differ, how these differences affect innovation capacities, and how innovation policies pursued elsewhere affect the global supply chain.

This chapter examines the strengths and weaknesses of different innovation strategies, policy tools, and institutional arrangements implemented in countries that are potentially important players in the development of computing devices, technologies, and products. While U.S. innovation strategies have primarily relied on market forces and the private sector, it is important to understand the varied and complex factors that drive the evolution of different national innovation ecosystems. For example, countries such as China and Taiwan have relied on top-down government leadership to define strategic objectives and key parameters of innovation programs. Another variant of innovation policy can be found in the European Union’s recent push toward new forms of cross-border coordination of innovation markets and infrastructures.

Section 3.1 provides a history of the U.S. semiconductor industry and examines how America’s decentralized market-driven innovation system has led to where the United States is today. Section 3.2 looks at China’s indigenous innovation policy, especially its recent Strategic Emerging Industries (SEI) Program. Section 3.3 examines the evolving role of Taiwanese innovation policies to support low-cost and fast innovation through domestic and global innovation networks. Section 3.4 looks at Korea’s coevolution of international and domestic knowledge linkages. Section 3.5 examines the European Union’s recent efforts to develop an integrated innovation strategy and its recent Key Enabling Technologies (KETs) Program. Section 3.6 provides concluding remarks and policy implications.

3.1 Development of the U.S. Computer and Semiconductor Industry

3.1.1 Historical Context

Several factors influence the range and type of policy options available to nations to promote and manage development and competitiveness in the semiconductor, computer architecture, and software programming arenas. Among those factors historically dominating U.S. policy considerations are

  • The economic importance of semiconductors and computing in the U.S. national economy;
  • The economic importance of closely related U.S. industries (e.g., telecommunications, consumer electronics, military and aerospace);
  • The outlook on the U.S. federal budget, the climate for public and private investment, the employment picture, and predictions on economic growth;
  • Political perceptions about the health of these industries relative to others;
  • Public perceptions about the United State’s competitive commercial position, as well as leadership of the United States vs. other nations, in these industries;
  • Both real and perceived dependence of U.S. intelligence and national security on leadership in these industries, and U.S. reliance on foreign technologies and assistance in areas related to intelligence and national security; and
  • Prevailing political philosophies regarding industrial policy.

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4D. Ernst, 2005, “The New Mobility of Knowledge: Digital Information Systems and Global Flagship Networks,” in R. Latham and S. Sassen (eds.), Digital Formations: IT and New Architectures in the Global Realm, Princeton University Press, Princeton and Oxford.

5D. Ernst, A New Geography of Knowledge in the Electronics Industry? Asia’s Role in Global Innovation Networks, Policy Studies, No. 54, August 2009, East-West Center, Honolulu, HI, 65

6This is in line with Jacques Gansler’s argument for a “global strategy” made for the U.S. defense industry (J. Gansler, 2011, Democracy’s Arsenal: Creating a Twenty-First-Century Defense Industry, The MIT Press, Cambridge, MA).



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