Competitiveness, Technology and Skills

Competitiveness, Technology and Skills

Sanjaya Lall

This book draws together recent contributions by Sanjaya Lall – a leading authority on international investment, technology and industrial policy – on competitiveness and its major determinants. It draws upon his wide experience of competitiveness analysis in Asian and African countries and his recent work on technology and skills. It contains his most important published material as well as previously unpublished articles, and will be of interest to students, researchers and policy analysts interested in industrial development, technology and human resources.

Chapter 2: ‘Market-stimulating’ Technology Policies in Developing Countries: A Framework with Examples from East Asia

Sanjaya Lall

Subjects: development studies, development economics, economics and finance, development economics, industrial economics, innovation and technology, technology and ict


* 2.1 INTRODUCTION In a recent paper, Nelson and Pack (1996) distinguish between two explanations of the growth of the Asian Tigers. ‘Accumulation’ theories, predominantly neoclassical in spirit, stress the role of physical and human capital investments, while ‘assimilation’ theories, which are more evolutionary, stress the centrality of learning in identifying, adapting and operating imported technologies. Both theories recognize the importance of high levels of physical and human investment, but the causal mechanisms differ. Assimilation theories emphasize the significance of learning in making investments successful and efficient; accumulation theories tend to assume automatic learning with investment. Nelson and Pack support the assimilationist position: learning and technical change play critical roles in economic growth, and should receive as much attention as the accumulation of ‘primary’ factors. But what are the policy requirements for promoting learning and technical change, and how appropriate are received analytical tools for understanding them? We suggest that these requirements are not well understood, and that conventional tools need to be modified and sharpened to deal with the practical needs of technology policy. There remains substantial controversy on the role of governments and free markets, much of it revolving around the experience of the newly industrializing economies (NIEs) of East Asia (widely regarded as the most successful developing countries in using modern industrial technologies). Much has been written on the nature of their policies, and their departures from laissez-faire. While it is now accepted that most East Asian governments intervened widely, and in many different ways,...

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