"Bringing in the State: Global Competition, Research Consortiums, and the Paradox of High Tech Business, 1978-1988"

This paper looks at the formation and locational choice of the Microelectronics and Computer Corporation, the first federally-sponsored research consortium in the US, during the 1980s. MCC, formed in response to Japan’s growing challenge to US technological dominance as well as the military demands of Reagan’s Cold War initiatives, was designed as a partnership between the federal government and the US’s largest semiconductor and computing companies. Emphasizing cooperation rather than competition would, according to proponents, advance US technological interests.
Broadly the paper argues that MCC can tell us a great deal about the role of the state in high tech economic development. I look at two aspects of MCC within in the context of Reagan-era neoliberalism and the role of the state in subsidizing and promoting business. First, I analyze at how the State of Texas, City of Austin, public universities, and elite Texas businesspeople convinced MCC to locate in Austin. The Texas case demonstrates the importance of public-private partnerships and the use of quasi-public entities, like research universities, to enhance local and regional federal investment. Second, I investigate how high tech as a primary economic sector demands high levels of government involvement because of its unique nature as a product and business. High startup cost, prolonged time to market, and high levels of risk mean that high tech businesses must rely on states for investment capital. In the Reagan era this level of public involvement in business created a paradox of exorbitant public spending and a dismantling of free market practices rhetorically favored by conservatives.