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Abstract

The United States under the Trump administration shifted federal policy toward greater state intervention in the technology innovation economy in response to perceived advances in this space by the People’s Republic of China (PRC). This shift is noteworthy given the free-market orthodoxy that traditionally defines US politics and has persisted despite similar perceptions of competition from more state-driven economies in the past (e.g., Japan in the 1980s). This paper seeks to understand why this shift in American economic orthodoxy appears to be occurring now, in reaction to Chinese technological innovation. It does so by beginning to investigate the motivations for shifting US federal 5G policy. It evaluates two explanations for the shift: that the economic relationship with China and broader domestic backlash to globalization have initiated a genuine shift in economic thinking toward industrial policy, or that perceptions of great power competition with the PRC create a national security impetus for intervention in the technology space that supersedes economic orthodoxy. While both trends likely play a role in the shift in federal innovation strategy, I find that the national security dimension of the US-China relationship plays the most significant role in shaping this federal policy change.

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