ABSTRACT
This chapter begins by examining factors that influence the birth and competitiveness of businesses, as government policies frequently seek to promote these factors. It then asks, ‘why might a government want to change its industrial base?’ A nation’s competitive advantage reflects the technological trajectory it follows and its place on that trajectory. It is noted that an industry may be on a trajectory which offers little growth. Similarly, a country may not have businesses on a fast-growing trajectory. This is a concern as existing businesses are incubators for future growth. However, successful transition is not assured as many factors restrict a government’s ability to build capabilities. The chapter concludes by considering aspects of the learning process.
