Local Enterprises in the Global Economy

Local Enterprises in the Global Economy

Issues of Governance and Upgrading

Edited by Hubert Schmitz

This book opens a fresh chapter in the debate on local enterprise clusters and their strategies for upgrading in the global economy. The authors employ a novel conceptual framework in their research on industrial clusters in Europe, Latin America and Asia and provide new perspectives and insights for researchers and policymakers alike.

Chapter 9: Clustering and upgrading in global value chains: the Taiwanese personal computer industry

Chikashi Kishimoto

Subjects: development studies, development economics, economics and finance, development economics, geography, economic geography, innovation and technology, innovation policy


Chikashi Kishimoto 1. INTRODUCTION In the early 1980s when Taiwan embarked on the development of a personal computer (PC) industry, few people expected that the country would obtain a dominant status in the world PC hardware production market within 20 years. In 1995, the total output of the Taiwanese information technology (IT) industry reached about US$ 20 billion and Taiwan became the third largest country in the production value of IT hardware, next only to the US and Japan. However, its status as the world’s main hardware producer is not visible to the equipment users. This is because many Taiwanese products are supplied with the brand name of foreign computer companies, and Taiwanese firms undertake the role of contract manufacturers. This does not mean, however, that Taiwanese manufacturers are only charged with simple production tasks under the supervision of foreign clients. This may have been the case in the 1980s, but since then Taiwanese producers have accumulated substantial capabilities not only in production skills but also in more complicated tasks such as product design and logistics. It is important to note that this Taiwanese industry mainly consists of homegrown small and medium-sized enterprises (SMEs) that are geographically clustered. This chapter examines the upgrading trajectory of this cluster. The Taiwanese PC industry is a particularly challenging case because of two key features. First, it probably presents the most significant case of industrial upgrading outside the OECD countries. Second, this upgrading has been accompanied by the offshore manufacture of a...

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