Asia’s Innovation Systems in Transition

Asia’s Innovation Systems in Transition

New Horizons in the Economics of Innovation series

Edited by Bengt-Åke Lundvall, Patarapong Intarakumnerd and Jan Vang

The success of Asian economies (first Japan, then Taiwan, South Korea, Singapore, Hong Kong and, more recently, China and India) has made it tempting to look for ‘an Asian model of development’. However, the strength of Asian development lies less in strategies that reproduce successful national systems of innovation and more in the capacity for institutional change to open up new development trajectories with greater emphasis on knowledge and learning. The select group of contributors demonstrate that although there are important differences among Asian countries in terms of institutional set-ups supporting innovation, government policies and industrial structures, they share common transitional processes to cope with the globalizing learning economy.

Chapter 7: The Indonesian Innovation System at a Crossroads

Peter Gammeltoft and Erman Aminullah

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation


Peter Gammeltoft and Erman Aminullah INTRODUCTION One of the most conspicuous features of the Indonesian innovation system as it evolved under the 32-year rule of President Soeharto, was its segmentation: the co-existence of a set of divergent development orthodoxies worked to produce a corresponding set of relatively self-contained industrial subsystems, from government departments down through supporting institutions, to industries and supporting industries. The end of Soeharto’s rule in 1998 hurled the country into a series of economic, political and social reform processes. The further course of these reforms is as important for the future constitution and performance of the Indonesian innovation system as it is uncertain. In this chapter we take stock of the development of the Indonesian innovation system. Indonesia is at a crossroads, having to come to grips with two major impetuses for reform: one is the multi-dimensional domestic reform process, the other is the one induced by what is commonly referred to as ‘globalization’. Accordingly, in the first section we will look at how contemporary global economic dynamics, especially globalization and the changing economic role of knowledge and information, is redefining some of the core operating principles of the innovation system. Among the themes touched upon in this section are the necessity of avoiding excessive (borrowed) capital investment, strengthening technological capabilities, strengthening the SME sector, shifting focus from mere economic growth to techno-economic development, accommodating knowledge-based industrial transformation, strengthening absorptive capacity to better capture emerging opportunities offered by globalization, and strengthening national capacity to govern...

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