ABSTRACT
This chapter deals with issues related to innovation and the international diffusion of technology. It focuses on one particular type of basic innovation, i.e., microelectronics, which is widely perceived to be of crucial importance for future growth and structural transformation. The chapter reviews some major research findings concerning the impact of microelectronics on the restructuring of the world economy. It suggests that the proliferation of neo-mercantilist policies and some policy implications drawn from a European perspective. Microelectronics indeed opens up vast new possibilities for rationalizing economic activities, not only within firms, but also in terms of a radical restructuring of whole sectors and geographic allocation patterns. The chapter examines the vast new possibilities, opened up by microelectronics, for rationalizing economic activities, irrespective of spatial boundaries. It explores the instrumentalization of technology for global competition; and the widely exaggerated expectations concerning the role of technology.
