Industrial Clusters, Upgrading and Innovation in East Asia

Industrial Clusters, Upgrading and Innovation in East Asia

Edited by Akifumi Kuchiki and Masatsugu Tsuji

This lucid and informative book analyzes the problem of clusters in transition through studies of agglomerations at different stages of development in various East Asian countries.

Chapter 1: Introduction

Masatsugu Tsuji and Akifumi Kuchiki

Subjects: asian studies, asian economics, asian urban and regional studies, development studies, development economics, economics and finance, asian economics, development economics, economics of innovation, industrial economics, regional economics, innovation and technology, economics of innovation, urban and regional studies, clusters, regional economics


Masatsugu Tsuji and Akifumi Kuchiki 1.1 ECONOMIC TRANSFORMATION IN EAST ASIA The world economies have been suffering from a great recession caused by the so-called Lehman Shock, which is being referred to as a recession that occurs only once in a hundred years. The resulting financial disorder triggered an economic crisis in the EU. In this situation, although OECD member countries are still struggling to dispel the confusion, developing economies in East Asia, such as the ASEAN (Association of South East Asian Nations), and notably China and India, have already recovered and have been leading the recovery of the global economies. In particular, the Chinese economy has now become the second largest in terms of GDP after the US and can no longer be referred to as a developing economy. These facts have proven the truth of the decoupling theory; developing countries tend to play a more important role in the global economy than developed economies. One of the success factors of East Asian economic growth lies in the agglomeration of firms in the region, now termed the ‘Factory of the World’. MNCs (multinational corporations) have been establishing factories or branch headquarters in this area since the mid-1980s in order to take full advantage of the relatively cheap human and natural resources such as labor, land, and raw materials. MNCs combined these native resources with their technologies, which included business management as well as engineering. This initiated a ‘Big Bang’ of growth in the area. In addition to economic development...