Dan Breznitz

The Revolutionary Power of Peripheral Agencies: Explaining Radical Policy Innovation in Finland and Israel

This article challenges the long-standing emphasis in the developmental state literature on the powerful pilot agency as an essential component of industrialization. Although a pilot agency may be able to facilitate growth in mature industries, we argue that policy makers seeking to promote rapid innovation-based competition must instead rely on continuous, radical policy innovation. We argue that this kind of experimentation is more likely to occur at the periphery of the public sector, in agencies with few hard resources and limited political prestige. In addition to providing a novel interpretation of how states enter new, high-technology markets, we explain why some successful countries become less innovative over time. As agencies successfully introduce radical policy innovations, their higher profile exposes them to greater political interference and reduces their entrepreneurial capacity. The argument is supported by within-case analysis of two historically low-technology economies that successfully promoted rapid innovation-based growth, Finland and Israel.

Innovation-Based Industrial Policy in Emerging Economies? The Case of Israel's IT industry

In the last decade, few countries have figured prominently as cases of late-late developers that achieved worldwide success with their Information Technology (IT) industries. This paper focuses on the Israeli case and argues that uniquely in that group, and in contradiction to the model proposed by late development theories, Israels competitive advantage in the IT industries, is in Research and Development (RD (b) however, these policies, focused on diffusion and not on creation of capabilities, were successful only because of the existence of an already sophisticated and extensive R&D capability in the universities markedly different from other Newly Industrialized Countries. Looking at the present the paper concludes that the same operational model that led Israels IT industry to success might now be undermining its future growth.

Innovation and the State--Development Strategies for High Technology Industries in a World of Fragmented Production: Israel, Ireland, and Taiwan

This dissertation seeks to explain the puzzling phenomenon of “technological leapfrogging.” One of the most unexpected developments of the 1990s is that firms in a number of newly created states with agriculturally based economies and mixed histories of industrial success were able, in the time span of one generation, to move to the forefront of new Information Technologies (IT). Even more surprising, the IT industries of these countries encompass a wide range of organizational models and carve out different positions within the global IT industry production networks. These developments challenge two key assumptions underlying much of current development theory: i) that economies must necessarily travel through a defined path

Ideas, Structure, State Action and Economic Growth: Rethinking the Irish Miracle

ABSTRACT This paper advances an argument about the need to take into account two components of state-industry relations if we are to fully understand economic development and policy trajectory, as well as industry-state co-evolution. The first component, the specific structure of the bureaucracy and state-industry relations, has been the focus of intense research. However, the second, the particular industrial economic ideology defining the correct role of the state in industry and industry in a state, is at least as important, if under-researched. In order to do empirically advance the argument the paper merges a cognitive-based constructivist argument with a neo-developmental state structuralist one, to present a new understanding of the role of the state in the Irish miracle that explains not only its success and failures but its internal dissonances, such as the continuous discrimination of the local, Irish-owned, industry in favor of foreign-owned MNCs. The paper illustrates how a particular industrial economic ideology has been formed and crystallized in Ireland. Focusing on the IT industry and using a multimethod research strategy, it traces the influence and evolution of this ideology at five critical decision points over a fifty-year period.

Slippery Paths of (Mis)Understanding? Historically Based Explanations in Social Science

This chapter explores why and how — path dependence explanations offers us a useful way to analyze the role of history in social change. However for path dependence, to help us to achieve better understanding we must clearly specify it. For these reasons the emphasis in this chapter lies in differentiating and defining the many approaches all which are now confusingly called path dependence, even when each is based on a different set of assumptions about how the world works, and hence, embody different ontology and give us different ways in which to understand social change and conditions for change (Hall, 2003). In so doing this chapter is taking the challenge issued by Paul Pierson, Kathleen Thelen, John L. Campbell, and Colin Crouch to encourage such a debate (Campbell, 2004; Crouch, 2005; Pierson, 2000a; Pierson, 2000b; Thelen, 2004).

Ubiquitous Data Collection: Rethinking Privacy Debates

A discussion about the ubiquitous collection, dissemination, and processing of data requires a comprehensive perspective of the risks involved.

An Iron Cage or the Final Stage? Intensive Product R&D and the Evolution of the Israeli Software Industry

The Israeli software industry has been an indisputable success since the 1990s. This paper micro-analyzes the industry and compares its unique historical development pattern with those of other emerging countries. It explains: (1) the rise of the industry as a part of the development of the entire IT industry in Israel; (2) the reasons behind the industrys ability to conduct and focus on intensive RD and (3) the industrys capability to become an integral part of the American financial and IT industrial sector. It argues that the state played a critical role in the development of the industry, that the state is one of the main reasons why the industry has focused almost entirely on product R&D activities and one of the reasons why the Israeli IT industry in general has developed a competitive advantage in R&D. In addition, it has been the states policy that propelled the industry to its intimate relationship with the American financial sector. It further argues that this development model has also led to the industrys main weakness from a national policy point of view.

Policies for financing entrepreneurship through venture capital: learning from the successes of Israel and Taiwan

The success of Silicon Valley as a hub for rapid-innovation growth has motivated policy-makers around the world to initiate policies trying to mimic it. These policy initiatives raise the question of whether globalisation should encourage innovation policy-makers to aim for institutional convergence and close imitation, or for institutional hybridisation and local experimentation. This paper explores this question by focusing on venture capital creation policy. Using two national cases, Israel and Taiwan, we show that policy effectiveness is not the result of simple imitation. Instead, policy performance is determined by degree of fit with local financial conditions and the position of the local ICT industry within global production networks. We then consider the implications of our study for understanding the development of national VC industries and the industries they fund. The primary message being that there is no singular model for venture capital market development. Instead, policy-makers need to understand the local context with its assets and liabilities. Of particular importance are local financing conditions, firm capabilities, and the existing position of local firms within the global production networks of the ICT industry.

What Does Politics Have to Do with Innovation? Economic Distribution and Innovation Policy in OECD Countries

Despite the fact that the distributional impact of innovation has been recognized in the social science literature, hardly any work has been done on the distributional politics of innovation policy. This study offers a first step in this direction as well as asking whether a government’s ideology affects innovation policy from a distributional viewpoint. The paper uses both qualitative case study method and a statistical analysis of government R&D outlays for social purposes in twenty-six countries. In terms of innovation policy, neo-corporatist interest group representation is linked to relatively equitable public R&D investment and left-oriented governments are more likely to invest in social innovation than their rightist counterparts. Nevertheless, governments rarely consider innovation policy in distributive terms. Despite the significant distributional implications of innovation, it remains depoliticized in policy making.

Coopetition Regimes and State-Led Creation of New High Technology Industries

Over the last decade, a new business strategy has become widespread - coopetition. Unlike the binary notions of pure competition versus true collaboration, coopetition recognizes that firms need to simultaneously collaborate and compete. However, in spite of the fact that coopetition has been shown to be highly contextual, there has been little research on how particular institutional environments affect the evolution of specific coopetition regimes. This paper addresses this gap by focusing on the role of public policy in the creation of coopetition regimes, that is, particular consultations of coopeatitive institutional paradigms, which are more or less conducive to particular industrial clusters in new high-technology industries. This approach sheds light on the role these regimes play in the successful evolution of certain industries. The paper shows that with the increasing fragmentation of production and the specialization around specific stages of production, different economies need to develop different coopetition regimes that create and maintain very different competitive advantages, skills, and management capabilities. By analyzing the hardware IT industry, the biggest and most global of the high-technology industries, this paper illustrates the particular role of public policy in the development of very different strategies by offering a general theoretical model and elucidating it using Israel and Taiwan.