Trade-offs between Industrial policies and MNE strategies: the example of the JESSI initiative

Governments in the United States and the European Union are currently pursing ambitious industrial policy programs to increase capacities in ‘strategic’ industries. This paper studies the Joint European Submicron Silicon Initiative (JESSI), a policy initiative at European level initiated in 1989. JESSI funded large-scale R&D with the aim of increasing the competitiveness of the European microelectronics industry against its competitors in the United States and Japan. JESSI did not meet its original objectives, not least because the goals of policy collided with the global strategies of participating companies. However, JESSI came up with some unintended positive long-term effects which unfold even today in European semiconductor industry. From a policy perspective, the example of JESSI illustrates the importance of flexibility for policy programmes to react to unforeseen changes, as well as the difficulties that emerge when the strategies of participating multinationals are not taken into account.