The information society

National policies

Lecture 10

Ewan Sutherland

Issues

development of European ‘national’ computer industries:
1. United Kingdom
2. France
rise of the Pacific Rim countries:
1. Japan
2. South Korea
government-industry links
encouragement of collaborative research and development

Typical state actions

tariff protection
officially sanctioned cartels
state subsidy

Infant industries

import tariffs and quotas
export subsidies
tax incentives
infrastructural development
preferential loans
preferential government procurement
'technopoles'

United Kingdom

Colossus

Alan Turing FRS and a group at Bletchley Park
cracking German Wehrmacht Enigma codes
electro-mechanical technologies
although secret, the work spread to:
1. National Physical Laboratory
2. Birkbeck College, University of London
3. Manchester University
4. Cambridge University

Lord Halsbury:

... felt, with some reason, that the NRDC had done all it could to stimulate the British computer industry, but that it had no answer to the chronic indecision and conservatism of British industry as a whole when it came to ordering new equipment. Even the computer manufacturers had often been slow to become computer users.
Hendry (1989) page 152.

NRDC = National Research and Development Corporation.

International Computers Limited (ICL)

the UK’s national champion
financial troubles in 1970s and 1980s
supported by UK government
guaranteed by Mrs Thatcher and the then Sir Keith Joseph
sold to STC plc (UK)
sold on to Fujitsu (Japan)

Start-ups

Sir Clive Sinclair
ACT/Apricot
Acorn
Amstrad
Elonex

Post-1979 government

privatisation
1. British Telecom (BT)
2. Cable and Wireless
assertion that government cannot pick winners
encouragement of inward investment for regions and latterly for UK as a whole

Software

left to free market
substantial foreign ownership
foreign companies allowed to acquire UK-based firms

The current view is that:

Telecommunications is increasingly key [sic] to innovation and efficiency, not only in research and development, but to all phases of production and marketing. It offers major opportunities for growth and employment, particularly for small and medium sized firms and in the knowledge-based industries.
The UK is up with the best of its international competitors in the construction of these competing high capacity networks.
HMG (1994) Cm 2563

France

long history of étatisme

le défi americain (Jean-Jacques Servan-Schreiber, 1969)

la société bloquée (Michel Crozier)

changes with the political cycle

Parisian control

De Colbert à de Gaulle en passant par Napoléon III, la conjunction de la centralisme et du dirigisme a conduit l’Etat à se comporter tout à la fois en entrepreneur et en guide de l’economie. Saloman, 1987, page 13.

Post-war change

insulation of government policy-making from the direct influence of parliament and pressure groups
establishment of a broad nationalist-conservative coalition
participation in the European Community
provision of subsidies in response to demand, at the same time as investing in modernisation

Protectionism

The weight of evidence leads this observer to conclude that in competitive conditions, without state support, many French firms would have lost their own domestic markets to imports long before they had adjusted to international competition. The central political executive manipulated foreign competition to generate pressure for domestic economic modernization, but since the capacity of French firms to adjust was limited, the pressure itself had to be modulated.
Zysman, 1983, page 145.

Government direction

As a result, they indiscriminately encouraged business state links that were appropriate for government procurement but that were ill-suited to help firms competing in international markets. They also insisted on products that were better fitted to the choices of mature firms with established markets than to the needs of the new and often weak entrants to international competition.
Zysman (1983) page 148.

Globalisation

At least in electronics, the French, whether they like it or not, are indeed part of an international industry, facing foreign competitors at home and fighting for markets outside of France, and therefore unable to escape the need for efficiency in the continuous product development that rapid innovation requires.
Zysman (1977) page 3.

Le complexe Astérix

Concorde
Train a Grande Vitesse
SECAM (television system)

There are three ways to ruin yourself: women, gambling and technology. Women are the most pleasurable, gambling the fastest and technology the most certain.
Georges Pompidou

French electronics

tariff protection
state subsidy
officially sanctioned cartels
get part of European and world markets

Bull

an inordinately long and complicated saga
acquired in 1966 by General Electric
transferred to Honeywell in 1970
re-acquired by Mitterrand in mid-1980s
early 1990s link to IBM
currently a chunk is up for sale

Alcatel

created from Compagnie Générale d’Electicité (CGE)
acquisition of telecommunication manufacturing arm of ITT
registered in Netherlands
recognition of international dimension

Minitel

to replace the telephone directory
planning on large scale
aimed to popularise informatique
scaled back in face of resistance
development of wide diversity of services
notorious messagerie rose
over 4,000,000 sets in French homes
sadly a technological impasse

Smart cards

an earlier innovation in France
a chip on a card
perseverance by the French
now becoming commonplace in the face of security problems

Sophia Antipolis

a technopole or science park
pseudo-Californian setting on the Mediterranean coast between Cannes and Nice
scattered buildings amidst pine trees with a view of the sea
includes French research institutions and business schools
leading US-based computer manufacturers

European Union

creation of the Single Market
collaborative pre-competitive R&D
training programmes
competition policy

Eastern Europe

previously very little investment in new technology
little capacity to generate or to cope with innovation
need to move into these technologies now
considerable strangths in software

Japan

industrialisation since the Meiji restoration in 1868 without westernisation
Keiretsu (formerly Zaibatsu) industrial combines
government-industry coordination through the Ministry for International Trade and Industry (MITI)
Total Quality Management (TQM)
incremental product and process improvement

Activities of MITI

Ministry of International Trade and Industry

consensus building and development of long-term visions
setting sectoral priorities
allocation of subsidies and facilitation of financing for priority sectors
adjustments of the industrial structure
protection of infant industries
regulation of excessive competition
export promotion
mediation of trade conflicts

Failings in other countries

massive and detailed interference by politicians
defence procurement and R&D
state ownership
state involvement in new ventures
sponsorship of national champions
rival bureaucracies
government-industry disputes

Other Asian countries

originally cheap labour used by multi-national countries (e.g., chip manufacture)
increasingly skilled labour allowing more work and greater autonomy and flexibility of manufacturing plants
rapidly growing markets
factories built to meet local demand

India

English speaking
low labour costs
but other costs are the same or higher
awful infrastructure
few computers
for many years it was strongly against foreign involvement
“offshore” software development centres

Conclusions

considerable variations in national/cultural approaches
not just the size of the national market, but also its willingness to buy and be innovative with computers
labour skills more than costs
swings in European politics do not seem to help