Uneven Paths of Development

Uneven Paths of Development

Innovation and Learning in Asia and Africa

Banji Oyelaren-Oyeyinka and Rajah Rasiah

This book focuses on what can be learned from the complex processes of industrial, technological and organizational change in the sectoral system of information hardware (IH). The IH innovation system is deliberately chosen to illustrate how sectors act as seeds of economic progress. Detailed firm-level studies were carried out in seven countries, three in Africa (Nigeria, Mauritius and South Africa) and four in Asia (China, Taiwan, Malaysia and Indonesia).

Chapter 8: Taiwan’s Move from Follower to Leader

Banji Oyelaren-Oyeyinka and Rajah Rasiah

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

Extract

1 INTRODUCTION The successful insertion of Taiwanese firms to the global information hardware (IH) value chain was greatly supported by the systemic and institutional environment developed through smooth coordination between government, institutions and firms. Government policy was particularly important in stimulating technological upgrading and research and development (R&D) activities. The Taiwanese government adopted policies that were complementary to its vertically decentralized structure and encouraged the development of technological capabilities. The flexibility enjoyed by small size and strong bonds of trust helped Taiwanese firms to harness the advantages of scope offered by global production chains. From original equipment manufacturing (OEM), strong coordination from markets and trust, and government participation in the stimulation of R&D activities helped transform Taiwanese computer and component firms to enter original design manufacturing (ODM) and own brand manufacturing (OBM). Although foreign direct investment has remained small, significant diffusion of foreign technology to local computer and component firms took place in Taiwan. Lin’s (1986) study of cathode ray tubes (CRT) found that the manufacturing capability of personal computers and peripherals, such as monitors and computer terminals, originated from the manufacture of colour television (CTV) sets in the 1970s. The assembly of radios and black and white television sets in the 1960s, particularly by Japanese manufacturers, laid the foundation for technological capability building in the industry. Modern manufacturing technology was developed only since 1969 when foreign joint ventures started producing CTV sets in Taiwan. CTV used transistors and thus used printed circuit boards and...

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