supporting American Industry: National Industrial Policy in the United States Nlajor Objective 'Me major objective of the leave is to write a book on the industrial policy of the United States. The proposal enhances my teaching and research responsibilities at Cleveland State University. I teach a graduate course on economic development policy annually. I am also the acaderaic coordinator of the econon-Lic development programs in the Levin College. 'Me proposed research directly pertains to these responsibilities. 2. Supporting American Industry: National Industrial Policy in the United States A. BACKGROUND 'It's the economy, Stupid" was the theme of Clinton campaign staffers during the last presidential election. But the issue is hardly new: The economy has been a major concern in most recent elections -- at least back as far as Carter and Reagan. Coupled with this concern over the economy has been an on-again, off-again interest in national industrial policy. The formal discourse surrounding national industrial policy peaked in the mid-1980s with the debate between the 'preservationists' and the 'modernizers' (Norton, 1986). The preservationists' position was best exemplified by the editors of Business Week (1982), sociologist An-Litai Etzioni (1983), and banker Felix Rohatyn (1983). Their strategy was essentially one of fighting market forces and preserving U.S. industries. The modernizers' position was espoused by Lester Thurow (1980) and Robert Reich (1983). Thurow advocated a redistribution of resources from "sunset' to 'sunrise" industries, while Reich called for policies to speed the shift of capital and labor into high value-added activities. But this debate was short-lived --it made it only to the Reagan-Mondale election. In 1986 econorru'st R.D. Norton noted that 'Industrial policy has turned out to be an idea with a brief career" (1986: 1). But the interest in industrial policy has revived. This interest is evident not only by the number of recent books in the popular press on the subject (e.g., Harrison, 1994; Tyson, 1992; Reich, 1992; Krugman, 1994), but by a number of new policy initiatives undertaken by the Clinton administration. These initiatives include a ' joint research program between the federal government and the Big Three auto makers to triple the fuel efficiency of U.S. autos over the next decade, aid to American companies making advanced flat-panel computer display screens, the AmeriCorps national service initiative, vocational academies, and managed trade initiatives with Japan, to name a few. This research will examine the evolution of national industrial policy over the Reagan/Bush/Clinton adn-Linistrations. The importance of the project is clear given the current concern and debate over U.S. competitiveness (Krugman, 1994) and productivity (Baily and Chakrabarti, 1988). The policy questions at issue are: VIhat dimensions constitute U.S. industrial policy, why is it structured the way it is, and can U.S. industrial policy actually affect competitiveness? B. BASIC I]DEAS AND HYPOTHESES The goal of the research effort is to produce a book manuscript, Supl?ortin2 American Industrv: National Industrial Policy in the United States. Industrial policy can be placed within two dominant paradigms concerning the role of government in society: individualistic and communitarian (Galbraith, 1989). (Of the developed nations, the United States is one of the most individualistic while Japan is one of the most communitarian.) It is hypothesized that cornerstones of national industrial policy have changed as the dominant paradigm has shifted from the Reagan to Bush to Clinton administration. The eight i-naj'or components of U.S. industrial policy are conceptualized as follows: (1) functional problem solving, (2) global steering, (3) defense spending, (4) foreign trade, (5) downtown development, (6) human resource development, (7) technology-based development, and (8) the 'entrepreneurial" states. All eight of these dimensions (described below) are hypothesized to constitute the heart of U.S. industrial policy. All eight are policy components that have been in place under all three administrations, but with differing degrees of emphasis. The research is hypothesized to show that Presidents Reagan and Bush operated under the individualistic paradigm. It is thus expected that their industrial policies were based on the foundations of global steering, free trade, functional problem solving, defense spending, and real estate development. President Clinton is believed to pursue policies under a communitarian philosophy. Thus the cornerstones of industrial policy are expected to have shifted to technology development, defense downsizing, managed trade, and human resource development. Functional Problem Solving Functional problem solving is the first component of modern industrial policy. Functional problem solving views every industrial problem in isolation from all others. It is standard practice to define a problem facing a specific firm or industry and then take the appropriate governmental action to alleviate it. The functional problem-