Industrial policy, technology advances and industry development

The idea that government should steer economic development by strategically picking and managing certain industries is controversial but appealing to many developing countries that are eager to upgrade their industries. I investigate the impact of activist industrial policy on the development of the industry it targets by studying the case of the Chinese software industry. To keep the problem tractable, I focus on the government sponsored science and technology (S&T) programs that recruit all organizations in the software industry, regardless of the ownership type and profit orientation, to develop cutting edge technology. I evaluate the effectiveness of these programs in terms of the performance of the affiliated software development efforts, the building of collaboration networks among the software producers, and finally the strategic responses of these organizations to program participation. From the data archive of China's Ministry of Science and Technology, I gather a unique dataset of 3437 software development projects which were completed between 2000 and 2004. I supplement the dataset with substantial follow-ups, including semantic analysis of the project description texts