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The Computer Software Industry in East and West: Do Eastern European Countries Need a Specific Science and Technology Policy?

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  • Jürgen Bitzer

Abstract

National science and technology (S&T) systems are often mentioned as a condition for competitiveness of high technology sectors. Therefore, public S&T policies should actively support the development of national S&T systems. In particular in Eastern Europe an active S&T policy is often demanded to support the development of the supposed domestic "high technology potential". This paper shows that this hypothesis is ill-founded in the case of the software sector. With an industrial economic analysis of the software sector it is shown, that a S&T policy is widely not able to fulfil this expectation. The analysis of the different market segments: standard and individual software, shows that the competition is carried out on axes which can widely not be influenced by a S&T policy. The links between software enterprises and the S&T systems are very weak, which is the result of the conditions of software development and the competition axes used in the software industry. Therefore, only few, and very general, starting points remain for an active S&T policy. Main starting points are: the improvement of the education in modern software technology, improvement of patent protecting laws and their enforcement, and introduction of standardisation procedures and quality standards.

Suggested Citation

  • Jürgen Bitzer, 1997. "The Computer Software Industry in East and West: Do Eastern European Countries Need a Specific Science and Technology Policy?," Discussion Papers of DIW Berlin 149, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp149
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    References listed on IDEAS

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    1. Swann, Peter & Shurmer, Mark, 1994. "The emergence of standards in PC software: who would benefit from institutional intervention?," Information Economics and Policy, Elsevier, vol. 6(3-4), pages 295-318, December.
    2. Prusa, Thomas J & Schmitz, James A, Jr, 1994. "Can Companies Maintain Their Initial Innovation Thrust? A Study of the PC Software Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 523-540, August.
    3. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 85-103, March.
    4. Shurmer, M & Swann, P, 1995. "An Analysis of the Process Generating De Facto Standards in the PC Spreadsheet Software Market," Journal of Evolutionary Economics, Springer, vol. 5(2), pages 119-132, June.
    5. Gandal, Neil, 1995. "Competing Compatibility Standards and Network Externalities in the PC Software Market," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 599-608, November.
    6. Cottrell, Tom, 1994. "Fragmented standards and the development of Japan's microcomputer software industry," Research Policy, Elsevier, vol. 23(2), pages 143-174, March.
    7. Kende, Michael, 1994. "A note on backward compatibility," Economics Letters, Elsevier, vol. 45(3), pages 385-389.
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    Cited by:

    1. Kesidou, Effie & Romijn, Henny, 2008. "Do Local Knowledge Spillovers Matter for Development? An Empirical Study of Uruguay's Software Cluster," World Development, Elsevier, vol. 36(10), pages 2004-2028, October.

    More about this item

    JEL classification:

    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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