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HIGH TECHNOLOGY POLICY AND THE SILICON VALLEY MODEL: AN AUSTRALIAN PERSPECTIVE
Abstract
Australia seeks to emerge from the depths of recession and to break free from the syndrome of giving ever-increasing protection to a decaying manufacturing sector, by encouraging high technology industry. Silicon Valley, the home of much of the world's semiconductor industry, is often seen as the appropriate model for the development of such industry. For those used to dealing with the siting and encouragement of conventional industry, it can seem that high technology industry, with no heavy raw material input or bulky product output and requiring no large labour pool or local market, in fact has no special requirements at all. Others look to the Silicon Valley model and plan science or technology parks to reproduce the factors they believe responsible for that phenomenon. For example, great emphasis is generally placed on proximity to universities, apparently in ignorance of the very minor role universities played in the growth of the semiconductor industry, and of the great practical divide between science and technology. Vital factors, such as the ready information flow achieved by high mobility of those in high technology industry, are ignored. The Australian situation is complicated further by competition among the States to attract high technology industry, a competition that tends to emasculate national policy. Yet this situation is really just a local representation of what is happening internationally among countries and among regions within those countries. This desperation to leap blindly into high technology, whatever it is and whatever the cost, by following a model that is scarcely understood, is unlikely to produce the huge rewards so many policy makers anticipate are so readily available.
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NOTES AND REFERENCES
E.g., Nicholas Rothwell, ‘Parties bet on high-tec to bring new economic dawn’, Australian, 22 February 1983, p. 16.
The last Minister for Science and Technology declared that young high technology firms created 59 times more employment than mature industries. D. Thomson, Hansard, Representatives, 14 December 1982, p. 3395. See also Australian Academy of Technological Sciences, Developing High Technology Enterprises for Australia (Espie Report), Parkville, 1983, pp. 24–5. Both neglect to consider unemployment caused by failed high technology firms: their comparison is of all mature industry with only successful high technology firms.
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Department of Science and Technology, Science and Technology Statement 1981–82, Australian Government Publishing Service, Canberra, 1982, preface.
“Our record of invention is excellent, but unfortunately our history is littered with projects that have not reached fruition or have been lost to other countries”. Thomson, ‘Official opening’, op. cit., p. 3. See also Stuart Macdonald, The Individual Inventor in Australia, Report to Industrial Property Advisory Committee, Department of Economics, University of Queensland, 1982.
The Australian Scientific Industry Association aims “to exploit the undoubted quality of indigenous innovation and manufacture for the benefit of the scientific industry and Australia”, ASIA information leaflet, 1983.
Thomson, ‘Official opening’, op. cit., p. 4. This strange notion seems to have come from Laurence Hartnett, ‘Introduction to the forums’ in Department of Science and Technology, Creating High Technology Enterprises, Australian Government Publishing Service, Canberra, 1981, pp. 1–2.
For example, the last government referred to the proposals of the draft Espie Report as “a most significant catalyst in the revitalisation of Australian industry”. D. Thomson, ‘Development of high technology industry’, Commonwealth Record, 21–27 February 1983, p. 253.
The inability of Australian technology to attract venture capital from overseas, and BHP's purchase of coal resources from GEC to allow the latter to enter high technology in the US suggest the same conclusion. See ‘High technology has corporate predators licking their chops‘, Economist, 19 February 1983, pp. 67–8. The new Labor government's venture capital initiatives and the recommendations of the recent Espie Report, op. cit., are welcome in that they will help overcome imperfections in the venture capital market, but they will not — as the Espie Report came to realise — compensate for Australia's fundamental technological deficiencies. See Denys McCullough, ‘The Australian venture finance scene. A management advisor's view reflecting on the Espie Report’, paper delivered to Hi-Tech 2 Seminar on Venture Finance, Brisbane, 13 April 1983.
See Ken Gannicott, Australia's Technological Comparative Advantage and Research Planning, Report to Policy Evaluation and Analysis Unit, Commonwealth Scientific and Industrial Research Organisation (CSIRO), 1981, p. 29. However, the Minister for Science and Technology has stated, “… in the area of high technology industry, comparative advantage is not bestowed, rather created.” B. Jones, ‘Keynote address', Management Technology Education Conference on Sunrise Industries, Sydney, 31 May 1983, p. 7.
Department of Science and Technology, Creating High Technology Enterprises, op. cit., p. 31.
ibid.
See D.M. Lamberton, S. Macdonald and T.D. Mandeville, ‘Productivity and technological change: towards an alternative to the Myers’ hypothesis', Canberra Bulletin of Public Administration, 9, 2, 1982, pp. 23–30.
More properly uncertainty if risk is taken to be calculable.
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Both programs have recently been reviewed by a Parliamentary Committee, which failed to be impressed. “… the Committee is unable to come to any clear conclusion about the effectiveness of the offsets/A.I.P. progam. In fact, the evidence suggests that no-one is in a position to come to any such conclusions … what technology is transferred depends on the public sector's current needs, which may have little relationship to what technology transfer is desirable for Australia as a whole.” House of Representatives Standing Committee on Expenditure, Commonwealth Government Purchasing, Australian Government Publishing Service, Canberra, 1981, p. 47.
E.g., Australian Computer Equipment Manufacturers’ Association, Submission to IAC Inquiry into Computer Hardware and Software …, Melbourne, April 1983. See also J. Durie, ‘High technology claims government has abandoned it’, Australian Financial Review, 12 August 1981, p. 17.
One Australian high technology entrepreneur expressed the situation succinctly, “…I find it irrational to refuse these debilitating handouts, which are so easily obtained. As a salve to the conscience I use the fact that my taxes contribute to this endless pool of money, and that refusal would be a disadvantage against the competition which accepts”. D. Webster, ‘How an Australian computer systems manufacturer can survive in the face of international competition’, paper delivered to DEC Users Symposium, Sydney, July 1980.
E.g., “The high growth rate and economic success of technology ventures in the U.S. is renowned.” Thomson, op. cit., 5.
On the high risks involved in high technology enterprises in the United States see David Brophy, ‘The venture capital investment market in the U.S.’, paper presented to Hi-Tech 2 Seminar on Venture Finance, Brisbane, April, 1983.
For an assessment of the preserving influence of protection on the Australian electronics industry see G.A. Rattigan, ‘Opening address’ in Australian Academy of Science, Science and Industry Forum, From Stump-Jump Plough to InterScan, Canberra, 1977, p. 11.
For an example of total confusion of key technology policy, sunrise industry policy and high technology policy see Department of Science and Technology, Submission to Industries Assistance Commission Inquiries into Computers etc., Metal Working Machine Tools and Robots, Canberra, May 1983.
See M. Chase, ‘Electronics companies move out of ‘Silicon Valley’ ‘, Australian Financial Review, 25 March 1980, p. 28; ‘Sand in the works for Silicon Valley planners’, Australian Financial Review, 16 April 1980, p. 20; ‘Delicate bonds: the global semiconductor indusry’, Pacific Research, 11, 1, 1980, p. 6.
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Department of Trade and Industry, South Australia, Technology Park Adelaide, Adelaide, April 1981. The project has been referred to as “the first Australian answer to America‘s Silicone [sic] Valley” Australian Stock Exchange Journal, June 1981, p. 230, which glorious example of the failure of the financial community to keep abreast of modern technology says much about the inadequacies of Australia's venture capital market.
‘Silicon Island — tomorrow's world leader?’, Japan Quarterly, 29, 4, 1982.
E.g., ‘The Maryland high-tech phenomenon’, High Technology, September/October 1981, special advertising section. See also, ‘America rushes to high tech for growth’, Business Week, 28 March 1983, pp. 50–6.
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The assumption is very common; see, for example, William Henkin, ‘Silicon Valley: incubator of high technology’, Economic Impact, 41, 1983, pp. 43–9.
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R McKilliam, ‘Opening of new ERA’, Brisbane Courier-Mail, 15 September 1981, p. 22. Queensland itself is said to be peculiarly appropriate for high technology industry because of its “bright people” and “established reputation”. L. Edwards, ‘Keynote address’, paper delivered to Hi-Tech 2 Seminar on Venture Finance, Brisbane, 13 April 1983, p. 5.
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See ‘High technology has corporate predators licking their chops’, Economist, 19 February 1983, pp. 67–8. A high acquisition rate for young firms in Silicon Valley is a major conclusion of A.V. Bruno and A.C. Cooper, ‘Patterns of development and acquisitions for Silicon Valley startups’, Technovation, 1, 4, 1982, pp. 275–90.
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G. A. Rattigan, ‘Comparison of the IAC and Jackson Committee approaches to industrial development’, Australian Economic Papers, 16, 28, 1977, pp. 26–43. The issue is considered in detail in Stuart Macdonald, ‘The relevance of Silicon Valley to Australia’, Australian Electronic Engineering, 15, 3, 1982, pp. 38–46.
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