Edited by Sanjaya Lall and Shujiro Urata
Chapter 11: Industrial technology transition in Malaysia
Rajah Rasiah1 1. INTRODUCTION The economic development literature has conceptualized technical change in diﬀerent ways. While the issues involved are too complex to treat here in any detail, it is important to note that there are two opposing views. One is the traditional neoclassical view that treats technology as largely exogenous. Its advocates see a passive role for governments, with economies achieving the ‘natural’ rate of growth and structural change under free markets or, at most, with market-friendly interventions. The other view is that of evolutionary institutionalists, who emphasize the building of national capabilities as central to rapid growth and structural change. The proponents see a proactive, and in some cases selective, role for government interventions. List’s (1885) industrial policy argument to create dynamic comparative advantage was perhaps the earliest institutionalist eﬀort to conceptualize the development of national innovation capabilities. Dynamic national innovation systems have helped nations transform comparative and competitive advantages (Gerschenkron, 1962; Kaldor, 1979; Lall, 1996). Given the qualitative attributes of the term ‘technology’, pioneering works in this ﬁeld have deliberately left the national innovation system (NIS) open, with several agents (including organizations) playing important interactive and mutually supportive roles to develop nations’ productive capacities (Lundvall, 1985; Freeman, 1987; Nelson, 1985; Dosi, 1984). Technical change covers innovations, broadly deﬁned, to include both the path-breaking inventions and the more mundane (but equally important) eﬀorts by which ﬁrms introduce new manufacturing designs and processes, including minor improvements that are not entirely new to the universe. Firms...
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