Jeffrey A. Hart, Stefanie A. Lenway and Thomas P. Murtha
Can government technology programs promote the successful commercialization of innovations without leveraging experience and learning accessible only outside the United States? We investigate this question in the context of US government efforts to jump-start a domestic flat-panel display industry from 1988 to 1998. Flat-panel displays (FPDs) are thin screens used predominantly in laptop and notebook computers. As FPD prices decline, they have migrated to the desktop and begun to replace CRTs as monitors for computers.
FPDs are produced predominantly in Asia with current production divided between Japan (about 80 percent of displays used in notebook computers) and Korea, which has the remaining 20 percent of the market. While the annual value of production of all types of FPDs was about $14 billion in 1998 (Stanford Resources, 1998), by 2002 analysts expect that the FPD market will exceed $30 billion. A significant proportion of the increase in production capacity to meet the new demand may come from Taiwanese firms, which are planning to make major investments in anticipation of a shortfall in supply resulting from the Asian financial crisis.
Because of the centrality of the technology to many high-tech and high-value-added products and many kinds of electronic systems essential to military preparedness, policymakers in several countries have expressed concern about the strategic importance of the FPD industry to their national economies. The conventional view is that firms in Europe and the United States have been unable or unwilling, for the most part, to make the large and risky investments needed to compete in this particular market. Governments and firms in those two regions are concerned that they may be ceding too much technological leadership to Asia by not participating more directly in the design and manufacturing of advanced displays. 2 In Korea, policymakers fear the possible economic weakness that could result