« « Plan versus Market Explanations in Computer Industry (2)

Plan versus Market Explanations in Computer Industry (3)

Our view is that both market and plan perspectives offer important insights into the success of the East Asian countries in computers, but neither is sufficient. Much of the East Asian success has been the result of the actions of companies and entrepreneurs acting in a highly competitive environment with limited government intervention.

By contrast, governments outside the region, such as Brazil and India, that tried to develop their own computer industries in isolation from global competition have failed. European governments were not much more successful with their promotion of ‘‘national champions’’ in the computer industry. These failures of industrial policy support the neoclassical argument for limited intervention.

On the other hand, the East Asian countries have employed aggressive industrial policies to develop their own computer industries, as the revisionists point out. The success of these countries has been clearly tied to investments in human resources, technology development and infrastructure, as well as strong incentives for investment (foreign and domestic) in computer production.

In fact, with the exception of Hong Kong (which holds a unique position in the world due to its relationship to China), no country besides the United States has become an important player in the global computer industry without some level of government intervention. And even the United States achieved its early leadership position in large part because of government procurement and research funding.

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