ABSTRACT

Growth, employment and welfare depend on the ability of nation states to build and sustain strong industries. Industrial development is characterized by life-cycles: the early process of industry creation is followed by phases of growth, late growth, maturity and decline. For a long time, new industry creation was concentrated in a small group of advanced countries that were rich enough to invest in science, research and development as well as in human capital formation. Based on these knowledge-generating activities, promising new products and newly established industries were created primarily in the most affluent societies. Intensifying competition and imitation later resulted in international technology transfer; more mature industries were gradually built up in less developed countries that were following an active industrialization and catch-up strategy.