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Global value chains and state support in the aircraft industry

Published online by Cambridge University Press:  20 January 2017

Steven McGuire
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Abstract

The commercial aircraft industry is no stranger to trade friction, which has brought bitter international disputes over industrial policy to the World Trade Organization (WTO). Yet despite the fact that several countries, notably China, Japan and Russia have stated their intentions to develop aircraft that can compete with other countries, these efforts have not led to a trade dispute. What explains this pattern? Drawing on sources such as the Global Trade Alert database, this paper argues that that the complexity of the aircraft industry generates considerable barriers to entry. Moreover, emerging aerospace states have not repeated earlier efforts of direct subsidy, but rather, they have sought to position themselves in the global aerospace value chain, with selective government interventions designed to help national champions accumulate the necessary technical experience though collaboration with incumbent firms. However, the very diversity of government supports may make protectionist measures more difficult to identify.

Type
Research articles
Information
Business and Politics , Volume 16 , Issue 4: Special Issue: Industrial Policy in the Post-Crisis Era: Guest Editor: Vinod K. Aggarwal , December 2014 , pp. 615 - 639
Copyright
Copyright © V.K. Aggarwal 2014 and published under exclusive license to Cambridge University Press 

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