Trade-offs between Industrial policies and MNE strategies: the example of the JESSI initiative

Governments in the United States and the European Union are currently pursing ambitious industrial policy programs to increase capacities in ‘strategic’ industries. This paper studies the Joint European Submicron Silicon Initiative (JESSI), a policy initiative by the Commission of the European Communities (predecessor of today’s European Commission) in 1989. JESSI funded large-scale R&D with the aim of increasing the competitiveness of the European microelectronics industry against its competitors in the United States and Japan and move the industry towards more R&D co-operation between its main actors. JESSI did not meet its original objectives but came up with some unintended positive long-term effects JESSI. From a policy perspective, the example of JESSI illustrates the importance of flexibility for policy programmes to react to unforeseen changes, as well as the difficulties that emerge when directionality and ‘mercantilist’ goals of policy collide with global strategies of participating companies.