The Effects of State–Societal Arrangements on International Competitiveness: Steel, Motor Vehicles and Semiconductors in the United States, Japan and Western Europe

Changes in international competitiveness since the Second World War have favoured Germany and Japan over France, the United States and Britain. This applies to competitiveness in general, but is examined here in three specific industries: steel, motor vehicles and semiconductors. Explanations of changes in competitiveness often focus on economic and cultural variables, but an examination of the three industries shows that a better explanation can be found in the way in which each country organizes its state and its society. State-societal arrangements influence competitiveness mainly through their impact on the speed of diffusion of new technologies. The disparate cases of Germany (strong business and labour, weak government) and Japan (strong business and government, weak labour) suggest that there is more than one path to competitiveness. The literature on competitiveness has focused too much on Japan, and therefore on state industrial policies, as the key to increasing competitiveness. The German case shows that increased competitiveness is possible with a relatively weak state, but only if there is a major commitment to upgrading the skill levels of the work force.