Abstract

For over 150 years, governments around the world have adopted various types of policy measures to influence not only the level but also the nature of economic activity within their jurisdictions. These measures have commonly been referred to as "industrial policy". Since the end of WW II, governments in most developed and some developing countries have oriented their industrial policy programs to promote the growth of high technology industries within their borders. Such industries are seen to offer benefits which spread throughout the national economy. Using the Quebec aerospace sector as a case study, and drawing on both secondary research and interviews with firms and government officials active in the sector, the research addresses several questions. First, why do some areas develop successful and ongoing clusters of innovative, high technology industries? Second, what has been the role of public policy, if any, in the inception and ongoing success of these clusters? Third, how has public policy in this area evolved over time, and why? The research will describe and explain the evolution of industrial policy initiatives as they have been implemented in Quebec towards the aerospace sector. In order to provide a baseline to evaluate the degree of public sector involvement, the research will also examine the province's successful pharmaceutical sector Drawing on the concept of the multi-firm production network characterized by extensive inter-firm learning, the research will describe the types of industrial clusters which can exist, and the benefits which accrue to participating firms. It will then show that the Quebec aerospace sector is indeed a successful and self-sustaining agglomeration of firms. Further, this research will suggest that public policy initiatives have had a degree of impact, if only indirect, on both the inception of and the ongoing development of the sector. Finally, the research will identify several factors, notably the ascendancy of conservative fiscal policy and the increasing importance of multilateral trade agreements, which have led to the changes in the way the public sector supports and encourages the sector.