High-speed rail and barriers to innovation: The Budd Company and the limits of US indirect industrial policy in the 1960s and 1970s

Abstract

This study examines the Metroliner passenger rail trains manufactured by the Budd Company in the 1960s and 1970s. I show that while transportation companies and the government facilitated the development of a high(er) speed rail line and trains, this procurement process was not sufficient for sustaining Budd as a national rail producer. This case study is based on government documents, interviews, news reports, published studies and archival work. The limits to the Metroliner program as industrial policy were based on: (a) company innovative lags; (b) weakness in Budd's industrial profile and endogenous capacities; (c) failures in systems integration and (d) the contradictions of an indirect industrial policy, where companies gain capacities from the state indirectly or insufficiently.