Strategic intervention by government in technology capacity-building

In the developed economies, industrial growth and international competitiveness usually depend on access to new technologies and the capacity of different countries to sustain their lead in innovation and technological development. Since the early 1950s much of the discussion on technological capacity-building and competitiveness has therefore centred around the impact of policy, namely whether or not an active policy is necessary to achieve technological leadership and improve the competitiveness of national companies.
Although many developed countries have used industrial policy at one point or another, either to protect/preserve old industries or as a response to new industrial problems, only a few have used it consistently. In recent years, however, the loss of competitiveness arising from new technologies has forced most developed countries to focus on to a set of principles that broadly favour strategic policy intervention in key sectors. In the case of developing countries, on the other hand, the industrial policy debate has revolved around the infant-industry argument and in particular the question of how and for how long emerging industries should be protected.
Those who see a role for policy intervention argue that progress can be made through selective or strategic intervention in key industries, despite lack of clarity on how the selection is to be undertaken or when intervention should cease.
Counter Claim:
Orthodox neoclassical economists either do not accept a role for strategic intervention, or conceding the rare occurrence of market failure, they insist that government failure inherent in remedial actions will be even more damaging. For non-interventionists the type of industries and technologies developed should be determined not by government policy but by the market. The role of government should then be confined to creating the right conditions for competition and the market to function properly. Such competition is believe to be highly desirable because it leads to efficient production at a minimum cost and creates an environment conducive to technological change and innovation. Anything which interferes with such competition is therefore undesirable.
Type Classification:
D: Detailed strategies
Related UN Sustainable Development Goals:
GOAL 4: Quality EducationGOAL 9: Industry, Innovation and InfrastructureGOAL 16: Peace and Justice Strong Institutions