I have blogged extensively about the role of benign industrial policy in the promotion of economic growth objectives. China is the best and recent example of such policies.
Economix points to an excellent report by the Breakthrough Institute that uses several case studies to highlight the critical role played by American governments in promoting several seminal technologies. It writes,
"The history of American innovation shows that an active partnership between the public and private sectors has been key to developing breakthrough technologies, which have driven generations of economic prosperity."
Government support, by way of conscious and not so conscious, inducstrial policy has played a major role in the success of almost all the major technologies that are ubiquituous in our daily lives today,
"Driving directions from your iPhone. The cancer treatments that save countless lives. The seed hybrids that have slashed global hunger. A Skype conversation while flying on a Virgin Airlines jet across the continent in just five hours... Our gratitude at being able to video chat with our children from halfway around the world (if we feel gratitude at all) is directed at Apple, not the Defense Department. When our mother's Neupogen works to fight her cancer, we thank Amgen, not NIH or NSF."
It traces two channels through which governments have promoted new technologies,
"First, the government has long acted as an early funder of key basic science and applied research and development. So it was in agriculture, when the government created new land-grant colleges and expanded funding for agricultural science, leading to the development of new and better crops. In medicine, many of today's blockbuster drugs can trace their existence to funding from the National Science Foundation (NSF) and the National Institutes of Health (NIH).
... the government has also routinely helped develop new industries by acting as an early and demanding customer for innovative, high-risk technologies that the private sector was unable or unwilling to fund. Military procurement during and after World War I helped America catch up to its European rivals in aerospace technology and was key to the emergence of the modern aviation industry. Decades later, the modern semiconductor and computer industries were created with the help of government procurement for military and space applications...
The microchips powering the iPhone owe their emergence to the U.S. military and space programs, which constituted almost the entire early market for the breakthrough technology in the 1960s, buying enough of the initially costly chips to drive down their price by a factor of 50 in a few short years."
Update 1 (13/2/2011)
See this and this for the role of Public-Sector Research in the Discovery of Drugs and Vaccines.