Reference No.: WP1999-03National Innovation Systems for Rapid Technological
Catch-up: An analytical framework and a comparative analysis
of Korea, Taiwan and Singapore
Poh-Kam Wong
Centre for Management of Innovation &
Technopreneurship
National University of Singapore
Singapore 119260fbawpk@nus.edu.sg
Abstract
Among small, late-industrializing economies in the developing world, three –Korea, Taiwan and Singapore – have achieved remarkably rapid industrial and
technological catch-up. More interestingly, they have done so by evolving distinctlydifferent models of national innovation system. This paper presents an analyticalframework for characterizing the generic evolutionary paths for rapid technologicalcatch-up by late-industrializing countries. The framework seeks to integrate threetheoretical perspectives: the resource-based view of the firm, the network interactionperspective on the technological learning process, and the institutional economicsperspective on the contexts of late-industrialization. The framework is found to beuseful in explaining the divergent evolutionary patterns among these three distinctnational innovation systems. The framework also highlights potential limits of therespective innovation systems as the catch-up process reaches an advanced stage, andsuggests new directions for change. Implications for future research on nationalinnovation system for late-industrializing countries are explored.
Paper to be presented at the DRUID Summer Conference on National InnovationSystems, Industrial Dynamics and Innovation Policy, Rebild, Denmark, June 9-12,1999
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Introduction
Historically, the Asian Newly Industrialized Economies (NIEs) shared acommon characteristics with many other developing countries in that they were allrather late-industrializing countries in the global economy (Hikino and Amsden,1994).Indigenous firms from these countries face two common problems in terms of
developing high-tech industrial capability: firstly, they were typically distant from thelead user markets in North America, Europe and Japan; secondly, they were also faraway from and disconnected to the leading sources of technological innovation inadvanced countries. Despite these disadvantages, however, three of the Asian NIEs –Taiwan, Korea and Singapore -- have managed to achieve significantly faster high-techindustrial growth over the last three decades than all other developing countries (see e.g.Wong(1999b) for a recent review of the empirical evidence). By the late-1990s, manyindigenous firms from these three countries have achieved remarkable technological\advanced OECD countries. How did these firms from the Asian NIEs manage tobecome competitive in a wide range of high-tech industries? More importantly, howmuch of their success has been due to the specific national innovation system
characteristics of their home countries, including in particular the influence of stateinnovation policies and institutions in their respective countries?
There is by now a large literature on the common factors contributing to therapid industrialization of East Asia in general and the three Asian NIEs in particular.Among the most influential of these literature, the \Bank, put much emphasis on such common factors as political stability, prudent
macroeconomic policies, export-orientation, and public policies leading to high savingsrate and heavy investment in human resource development (World Bank(1993)).However, their largely neoclassical explanation stressing \interventions and \substantial state intervention role in these countries (see e.g. Amsden(1995), Wadeet.al.(1994), Wong(1999b)). Moreover, even a cursory review of the recent researchfindings focusing on the industrial and technological development patterns of the threeindividual Asian NIEs will show that they in fact manifest quite different strategicapproaches to industrial technological capability development (see e.g. Amsden(1989)and Kim(1997) for Korea, Dahlman and Sananikone(1993) and Hou and Gee(1993) forTaiwan, and Wong(1995a,1999) for Singapore). In effect, from the perspective oftechnological capability development, there is not one East Asian miracle, but threedifferent ones.
Unfortunately, in the search for a unified explanation of the rapid
industrialization of East Asia, there has been a tendency in much of the recentdevelopment economics literature on East Asia to emphasize the common
characteristics among these economies while downplaying their differences. This ledto much attention being focused on such common fundamentals as export-orientationand openness (see e.g. Leipziger 1997, World Bank 1993), relatively equitable initialdistribution of assets and income (see e.g. Campos and Root 1996), high investmentin education and high savings (see e.g. World Bank 1993, Stiglitz 1996, ADB 1997)or institutional capability and governance (Root 1996, Rowen(ed.) 1998). In so
doing, however, significant differences in their technological innovation patterns tendto be over-looked.
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The few studies that focus more specifically on the innovation systems ofAsian NIEs (see e.g., Hobday 1995, Mathews 1996, Dedrik and Kraemer 1998) doacknowledge significant differences among them, but these studies tend to focus
primarily on the innovation performance of the NIEs in one specific industry cluster –the electronics/IT industry cluster. Possibly because of this sector specific focus,there is a tendency to either prescribe more commonality than exists (e.g.
Hobday(1995)’s emphasis on the “OEM-ODM-OBM migration route” as a commonroute for most Asian firms) or to generalize too broadly across countries that havedistinctly different innovation performance (e.g. Mathews(1996)’s attemptedgeneralization of the “development resource leverage” concept from the
semiconductor industry development experience of Korea and Taiwan to othercountries like Malaysia).
In this paper, we argue that the remarkable technological capability
development performance of Taiwan, Korea and Singapore can be best understoodnot by focusing on their commonality, but by highlighting their differences. In
particular, we present an analytical framework that highlights the alternative genericevolutionary paths for rapid technological catch-up by late-industrializing countries ingeneral. The framework is synthesized from integrating three theoretical
perspectives: The resource-based view of the firm, the innovation network perspectiveon technological learning process, and the institutional economics perspective on thecontexts of late-industrialization. Using this framework, we then show how theKorean, Taiwanese and Singaporean development experience can be understood asrepresenting three different national innovation system models that involve a differentmix of firm strategies, innovation network structure, and state intervention roles. Wefurther suggest that our analytical framework is applicable to explaining thetechnological development experience of other late-industrializing countries,
including the experience of industrialized countries in their earlier industrial catch upphase (e.g. Finland in the 1970s).
The organization of the paper is as follows. In the next section, I present abasic analytical framework for examining the strategic options for rapid industrial andtechnological catch-up by late-industrializing countries. In Section 3, I use theframework to highlight the key differences in the technological capability
development approaches of Taiwan, Korea and Singapore. Section 4 concludes bysummarizing the main contributions of the paper to the existing literature andproviding some tentative suggestions on the implications for future research onnational innovation system for late-industrializing countries.2.
Generic Routes for Rapid Technological Development of Late-Industrializing Countries – Towards a Conceptual Framework
As pointed out by others (see e.g. Hobday1995, Hikino and Amsden1994, Kim
1997 and Mathews 1996), the initial conditions that firms from late-industrializingcountries faced were very different from those of firms in the advanced countries.Consequently, the design of industrial organizations and national innovation systemsfor rapid technological catch up by late-industrializing countries ought to be verydifferent from those for sustaining technological competitiveness in the advancedcountries. However, there appears to be little agreement as to what elements are
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national innovation systems for rapid technologica
