Chapter 16: How Taiwan Built an Electronics Industry: Lessons for Developing Countries Today
1 John A. Mathews This chapter is concerned with the ‘how to’ of technological change, examining the steps followed by Taiwan in building its electronics industry, broadly deﬁned, over the three decades from the 1970s to the 2000s. Taiwan was able to diversify away from primary products to manufactured products very quickly in its development trajectory, and established a series of industries in the 1960s that mopped up unemployment. By the 1970s, it was ready to pursue Japan and South Korea into knowledge-intensive sectors, like electronics. But it did not follow Japan and South Korea in every way, and, instead, built a distinct institutional system for managing and channelling technology diﬀusion, taking extraordinary measures to build technological competences. Technological learning and acquisition is an instrument of economic development, and it involves both the micro-determinants of change, and the macro-beneﬁts in terms of changing market shares and export performance. The analysis in this chapter builds on a broad foundation of literature that is concerned with development as competence enhancement, as a complement to macroeconomic stabilization.2 Innovation is given a broad interpretation, covering not just the development of products and processes new to the world, but the adoption and adaptation of products and processes that are already in use in the advanced countries. It is this aspect of ‘innovation’ that is of critical relevance to developing countries, and was utilized to great eﬀect by Taiwan in the creation and building of its electronics industry. The institutional innovations involved...
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