Can governments really manage the technological risk?

The 5G is coming and many countries are preparing themselves for it. One major concerns of many countries which need to rely on other countries' hardware to build 5G network is the security. The companies which have the technology for 5G network all want to win the contracts from governments; therefore, they will cooperate with governments to ease their security concerns, including unveiling codes to governments. Then here comes a question that if governments have the ability to manage the technological risk and detect firms' cheating behavior.

Governments are often believed to be powerful even in the field of innovation and invention. However, this may be only true during war time or in a highly centralized government, when the resources are highly concentrated in governments. However, when the economy is running in the market's invisible hands, the resources will be allocated based on the rule of profit maximization that resources will be used to generate profits, especially private profits. The technological risk is a source of negative externality that it does not create substantially high costs for any individual or firm. Under such circumstance, governments have to step in and reduce or eliminate the negative externality. However, unlike some other externalities, governments cannot solve the issue by simply placing taxes or providing subsidies, but instead governments have to identify the risk and then eliminate the risk. Because the technology market is very concentrated and even sometimes monopolistic, governments sometimes have to make some compromise and choose to work with companies which may have potential risk. Then the next step for governments is to identify the risk. In the Boeing scandal, we can see that companies often have better experts than governments because companies can pay experts better.

To compete with firms, governments can spend more on hiring the best experts or they can outsource the checking job to a third party firm which has the resources; however, either way will cost governments a lot more. We can see the increased costs for governments are the negative externalities.