industrial science and technology policy_intro

8/13/2019 Industrial Science and Technology Policy_intro

1/33

Prepared by Wong Chan-Yuan


2/33

Four developments defined the East Asias

economic miracles.1. Japan

2. Successful catching-up industrialization in

3. Extraordinary episodes of high growth inSEA countries

4. Reform of socialist economy such as China(with recent emerging economy such asVietnam).


3/33

From agriculture and primary commoditiesdependent to manufacturing based and exportdriven economies, and then progressing to post-industrial knowledge-based economies.

Their economy did suffer in the early 1950s.

Many military and political conflicts had hinderedthe potentials for development.

See Kohli, A. (2009), National versus Dependent

capitalist Development: Alternate Pathways ofAsia and Latin America in a Globalized World, St.Comp. Int Dev. 44(4), pp. 386-410.


4/33

In the current stage of development, the

trends are towards growth in high-technology investments, high-technologyindustries and more highly-skilled labour.


5/33

How have these economies managed to

achieve such a phenomenal growth inindustrialization in only a few decades?

How do the states promote industries

indigenous firms as vehicle for effectivetechnological learning and industrialization?


6/33


7/33


8/33


9/33


10/33


11/33


12/33


13/33


14/33


15/33


16/33


17/33

Chang (2003, p.113) defined industrial policy asa policy designed to organize, coordinate and

affect particular industries to achieve outcomesthat are perceived by the state to be efficient forthe economy as a whole.

Industrial policy attempts to change theeconom c s ruc ure over an eyon w a emarket is able to do by inducing the privatesector agents into new activities that they do nothave interest in entering under free marketsituation.

The efforts are directed towards particularindustries, firms, regions, groups in the labormarket.


18/33

These efforts provide an avenue for firms orindustries to capture learning, monitoring and

Schumpeterian rents for their own benefits. In many newly industrialized economies, science andtechnology policies are always integrated withindustrial development plans to favour promising

-

develop industrial science and technology. The development of industrial science and technology

may suffer if the state fails to systematically organizeand plan their industrial policy.

Therefore, science and technology policies withoutthe element of industrial planning will lose theirsense of purpose and will be fragmented from theproduction structure of the economy.


19/33

Justman and Teubal (1991) present an analysis andsurvey of the structural perspective to economic

growth and development. The authors conclude that, at nodes of structuralchange, the growth process may be punctuated byperiods of discrete shifts in resource allocation and

that market failures may be pervasive due toproblems of human capital accumulation, criticalmass and discrete choice among alternative pathsgrowth.

Thus successful growth may require an adequate

industrial and technological policy, particularly atnodes of structural change


20/33

Infant Industry support aims at assisting new firms inless developed countries to acquire production,

management, and other expertise that will enablethem to compete with firms in industries that alreadyexist in developed countries.

Temporary protection of such an infant industry can

be justified by the presence of one out of twopossible market failures: inefficient capital markets,in which young firms find it hard to borrow againstpotential future earnings;

and the existence of positive externalities generatedby early entrants to infant industry, such as externaleconomics of scale, and knowledge spillovers.


21/33

Moreover, other system failures related to theinstitutional setting, market structure, andgovernance issues could become important inthe process of industry emergence.


22/33

Industrial Policy consists of the following four fields: Policies aiming to alter the industrial structure- intervenes

in the pricing of raw materials and manufactured products,thru financial and tax incentives to protect and nurtureinfant and other specified industries

Policies to promote technological development and supplymarket information, thereby preventing the market failures

Policies to improve economic utility by intervening inspecific industrial organizations (regulating industrialstructure) by licensing anti-depression cartels to avoidexcessive competition or to avoid over capacity,organizing mega-mergers to achieve economies of scale,etc.

Policies to promote provincial companies (often SMEs) ortransfer of industries to outlaying regions, introduction ofenergy saving systems etc.


23/33

Legislation or government measures tosupport a particular industry for a specificperiod

Administrative guidance

Special tax measures to targeted industries

Government subsidies

Government financing (such as nationaldevelopment banks)


24/33

Teubals HTP Framework


25/33


26/33


27/33

How about talents (critical mass forec no og ca a e-o


28/33

Key Technological Learning Processes for the Five GenericKey Technological Learning Processes for the Five GenericKey Technological Learning Processes for the Five GenericKey Technological Learning Processes for the Five GenericTechnological Capability Development RoutesTechnological Capability Development RoutesTechnological Capability Development RoutesTechnological Capability Development Routes


29/33

Generic Technological Capability Development Strategies ofLatecomer Firms from Late Industrializing Economies


30/33


31/33


32/33

South Korea: Winner picking cum stage-skipping model

Taiwan: Evolutionary Targeting and path-creating model

- -

Industrializing model

China: Mixed-mode model


33/33

Kim, L. (1998) Crisis Construction and Organizational Learning: Capability Building inCatching-up at Hyundai Motor, Organization Science, Vol. 9, No. 4 (Jul. - Aug., 1998),pp. 506-521

Kim, L.(1999) Building technological Capability for Industrialization: AnalyticalFramework and Korean Experience, Industrial and Corporate Change, 8, 1, 111-136.

industrial science and technology policy_intro

Documents