"The semiconductor industry is at the forefront of current tensions over international trade and investment in high technology industries. This book traces the struggle between U.S. and Japanese semiconductor producers from its origins in the 1950s to the novel experiment with ""managed trade"" embodied in the U.S.-Japan Semiconductor Trade Arrangements of 1986, and the current debate over continuation of elements of that agreement. Flamm provides a thorough analysis of this experiment and its consequences for U.S. semiconductor producers and users, and presents extensive discussion of patterns of competition within the semiconductor industry. Using a wealth of new data, he argues that a fundamentally new trade regime for high technology industries is needed to escape from the present impasse. He lays out the alternatives, from laissez-faire to managed trade, and argues strongly for a new set of international ground rules to regulate acceptable behavior by government and firms in high-tech industries. Flamm's detailed analysis of competition within the semiconductor industry will be of great value to those interested in the industrial organization of high-technology industries, as well as those concerned with trade and technology policy, international competition, and Japanese industrial policies. "

Since 1971 competition has begun to replace regulation as a governing force in the telecommunications industry. The breakup of the national telephone monopolies, technological advances, and the worldwide network in telecommunications have brought a revolution in the telecommunications equipment and services industries. These changes have forced legislators and regulators to rethink public policy toward communications. The papers in this book were first presented at a conference organized by Robert Crandall and Kenneth Flamm, pulling together a group of industry professionals and scholars to address the far-reaching implications of the upheaval in the communications industry. The contributors analyze the effects of this increasing competition on standardization, technical innovation, and international rivalry. Changing the Rules offers possible policy options and analyzes their potential effects on the future market structure and the competitive positions of the U.S. computer and communications industries.

Most industrial nations actively support research and development of advanced computer technology. They usually justify public expenditures on the basis of both economic and national security benefits. This heavy government involvement and the international nature of the computer industry have created increasing challenges to accepted principles of international trade and investment.In this detailed analysis of the origins and evolution of government support for computer technology in the United States, Western Europe, and Japan, Kenneth Flamm compares the amounts these countries have invested and how they have organized public and private funding over the past thirty-five years. He challenges popular myths about the size and effectiveness of government programs to support computer technology, and argues that the data suggest a high social rate of return on those investments. Flamm concludes that the United States must reevaluate its policies on research and development. The role of military programs as the primary vehicle for computer technology development should be de-emphasized in favor of support for joint, pre-competitive industrial research. Cooperative research ventures linking universities and industry also ought to be encouraged. Since global markets are vital to American computer firms, Flamm argues that policies to promote orderly international trade and investment in high-technology products are needed to avoid an expanding spiral of protectionism.

Since the early 1960s exports of manufactures from developing countries have grown rapidly. Widening gaps between the wages of rich and poor countries, coupled with dramatic declines in transportation costs and increased technological capabilities, led to this growth. Production of labor-intensive goods in newly industrializing economies became a significant factor in work markets. Industrial country firms responded to this situation by integrating production processes were transferred abroad to countries with an abundance of cheap labor, while technologically advanced components were supplied at home. In this book the authors evaluate the positive and negative aspects of foreign assembly and suggest ways in which it may develop and affect the future of North-South relations. They examine in detail the U.S. semiconductor industry, the first to go abroad on a large scale. They also chart the development of the semiconductor industries of Western Europe and Japan, and show the strengths and weaknesses of the various policy alternatives available in this rapidly growing, highly competitive industry. In other chapters they present case studies of the assembly industries in Mexico, Haiti, and Colombia. Mexico, which shares a 2,000-mile border with the United States, is the most important partner of the United States in assembly activities abroad. Haiti, one of the poorest countries in the world, has received a strong economic stimulus from assembly. The explosive growth of Colombian assembly for the U.S. market came as that country rose to be the fifth largest industrial producer in Latin America. The book concludes with an overview of the domestic political, social, and economic effects of the reorganization of industry abroad and a summary of the policy implications, both for the United States and for the developing countries that are its manufacturing partners.