INDUSTRIAL STRATEGY: A THIRD VIEW

During the early 1970s, Allied‐Signal of New Jersey developed high tech materials referred to as amorphous metals. These metals have exceptional electrical and magnetic properties and are used in recording heads in video and audio recorders. Additionally, they are used extensively by the electric‐power industry. Japanese power companies have always been interested in amorphous metals. In fact, if these companies had used amorphous metals, they would have saved one billion dollars per year in electricity cost alone (The Economist, 1990). However, these businesses were cajoled by Japanese officials into waiting for the American patents to expire so they could use a homemade version. As the end of the patents approached in 1993, the Ministry of International Trade and Industry (MITI) announced a catch up program involving thirty‐four Japanese companies to develop the know‐how for making amorphous metals themselves. The Japanese ministry used its influence to persuade Japanese power companies not to order amorphous transformers until Japanese manufacturers were ready to supply them. Thus, the market for American high‐tech products estimated at $100 million per year has been practically eliminated (The Economist, 1990).