Government Intervention

During the inception stage of the aerospace industry, the lion share of technological developments took place in just four countries: the U.K., France, Germany, and the U.S.A. The role of the state in economic and technological affairs in these countries differs and differed substantially over the last two centuries. Hall and Soskice (2001) propose different varieties of capitalism and different roles of government therein. Firstly, there is the liberal market economy (e.g. the U.S.A. and the U.K.) in which government seeks to safeguard undistorted functioning of market mechanisms through anti-trust laws and deregulation. Also in above mentioned market economies, government is generally considered responsible for law enforcement & defense, infrastructure, services with natural monopolies, health care, education, etc. Secondly, there is the coordinated market economy (e.g. Germany and Japan) in which government actively stimulates formation of strategic firm relationships and directs technological and economic developments. Thirdly, there is a rest category of ‘Mediterranean’ market economics (e.g. France, Italy, Spain). Note that, also in market economies, governments lead and have led system formations and industry mobilization, albeit possibly out of national military interests and matters of prestige.

For our historical analysis, we discern two main objectives for government intervention: fixing (financial) market failures and industry development (out of national interests). Both are discussed in detail below.

 
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