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ment activism argue that trade and technology are inextricably linked, and that the federal government should therefore take a "coordinated" approach to both. Opponents of activist policies argue that government intervention in either area—trade or technology—is equally undesirable.

In my view, both sides of the debate have seriously oversimplified the issues, especially with regard to technology development. The simple contrast between government intervention and laissez faire is too crude to capture the key mechanisms by which public agencies promote technological change. Indeed, Professor Scott's contrast between consumer-oriented and producer-oriented economies suggests that a wide range of institutions beyond the central government play an important role in public efforts to promote technological change.

By comparing Germany and France—Europe's two largest economies and the world's third and fourth largest economies—I would like to illuminate some of the institutional arrangements that other countries deploy in the service of technological advance.

My argument is twofold. First—and this may surprise some of our German colleagues—I would like to argue that German public policy makers have learned much more in the last 20 years than their French counterparts about how to promote technological advance in industry. Second, I would like to mention some of the important reasons illuminated by the Franco-German comparison for separating rather than linking government activities in technology and government activities in trade.

France and Germany represent two very different cases of technology promotion. The French model of state-led or deregiste development, which is drawn primarily from the Gaullist projects of the 1960s and 1970s, has often been likened to Japan's efforts to integrate trade and technology policy in a single developmental strategy. Of course, France's diplomatic strategies consistently made self-sufficiency in military technologies a high priority—an objective that was regularly subordinated to other goals in the case of Japan or, for that matter, Germany.

Let me turn to Germany. In the 1980s and 1990s, Germany took over France's role as the European analog for Japan's successful performance in high-technology competition. At least in the eyes of many French (and some American) observers, Germany appeared to have some of the characteristics of the successful Japanese performance.

The reason I want to emphasize Germany is that Germany does not easily fit the categories that we have been using in our discussions so far today. Germany is clearly a producer-oriented economy, probably Europe's clearest example of a producer-oriented economy. Yet it shares very few of the characteristics of the East Asian growth model. Indeed, it is not clear to me that we can speak of a coherent national "strategy" at all when we are discussing Germany. On the contrary, I would argue that German trade performance rests on a series of indirect policies and institutional features that help German firms to adjust quite effectively to changing technologies and markets.



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