The Biden administration plans on using around $40 billion in order to aid domestic production of semiconductors in Arizona. This policy is meant to turn manufacturing away from China and to begin beefing up our own manufacturing industry. This policy by the Biden administration will work in cohesion with the CHIPS act of 2022. This semiconductors are extremely valuable to the tech industry so not only will domestic production of semiconductors decrease our imports of semiconductors, the US will probably export many as well. So, obviously, a semiconductor factory would be a win-win. This policy is aimed to assist firms in bringing semiconductor manufacturing onto our own soil. However, it's not a free ride, the companies must still do their own part. The aid is just aid, meant to get companies onto their own feet. It's quite perfect timing since we just talked about industrial policy in class and on homework. This (as well as the CHIPS act) is a perfect example of how the US is using industrial policy today in order to aid the economy. Sure there could be tradeoffs for this government aid. In a perfect world, government intervention would just reduce efficiency. However, we don't live in a perfect world and industrial policies like these will help our economy stay strong especially in light of potential future conflicts.
Source: Biden Is Betting on Government Aid to Change Corporate Behavior -New York Times
4 comments:
I have a positive outlook on this industrial policy put forth by the Biden administration, even despite considering the opportunity costs of the aid, and possible welfare loss generated by this policy in the short run, due to the geopolitical implications of moving semiconductor production from nations such as Taiwan, which are under threat of Chinese territorial expansion, to the US, which would allow the US to have continued access to semiconductor technology in the event of China disrupting trade in the APAC region, as China continues to grow into a much stronger maritime power.
Hello Kory,
This is very interesting given we were just talking about industrial planning in class and in the assigned article! There are many benefits to this industrial planning and it will be interesting to see how this actually pans out. I have little knowledge of semiconductor manufacturing and I am interested in researching more.
Overall, I think this is good for manufacturers and government involvement is essential for projects this large.
Great post Kory! Really like how you connected it back to our lessons from class. I was reading about this story the other day and I think it is interesting. I think this could be super successful and have great effects on our economy in the long-run. I am curious what the firms have to say about this topic and if they are also in support. I don't see why they wouldn't but you never know these companies policies and their own relations with abroad manufacturing.
I think that this move from the Biden administration could significantly benefit our economy. It will be interesting to see how well these new semiconductor companies will perform in the long run. I think this could have a significant impact on our economy in the long run as we will become less reliant on importing semiconductors. Nice job including information that we learned in class.
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