7 - Your government is here to help

Summary

Steel, textiles, clothing, and consumer electronics: one after another, manufacturing industries in the US and other developed countries have buckled under the pressure of low-cost foreign competition. It's happened so often over the last half-century that it no longer generates much political heat.

That doesn't mean governments won't enact protectionist measures to shield their basic industries. In 2002, for example, the US imposed tariffs on imported steel. But tariffs are often little more than rearguard holding actions. The basic industries (always excepting agriculture and big employers like automobile manufacturing) no longer seem to be regarded as central to the economic future of their countries.

Let foreign competition threaten the growth engines of a developed nation's economy, however, and this attitude suddenly changes. The government will muster an arsenal of legal and economic countermeasures to thwart the challenge.

Most of these measures target the protection of intellectual property (IP), the foundation of electronics-related industries. They include tactics such as embargoes and policing. Unfortunately, these tactics are not much more effective than import tariffs.

Other approaches, such as patents, trade secrets, and copyrights, may have more staying power. We will consider each of them.

From embargoes to patent protection

The promotion of industrial development has never been a gentleman's game. Countries building their industrial bases always seek to acquire valuable technologies by fair means or foul, and attract investment capital with government subsidies.