Asia’s Innovation Systems in Transition
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Asia’s Innovation Systems in Transition

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.
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Chapter 2: Opportunities for Asian Countries to Catch Up with Knowledge-Based Competition

Tilman Altenburg


Tilman Altenburg INTRODUCTION In the worldwide division of labour the production factor ‘knowledge’ is growing increasingly more important. Price proportions for the traditional factor costs of labour, capital and land are no longer sufficient to fully explain the specialization patterns of industrial locations. The ability to generate innovations is becoming the crucial factor for competitiveness. Innovations are for the most part the result of systemic-interactive processes involving a large number of specialized private- and public-sector actors, and they require complex infrastructural and economic policy inputs. Innovation dynamics should therefore develop in particular in locations endowed with highly qualified personnel, competitive and diversified firms and effective institutions. With the exception of some highly developed Asian countries and regions (such as South Korea, Singapore, Taiwan and Hong Kong), these favourable conditions only rarely exist in Asia’s developing and emerging economies and where they exist they are limited to very specific sub-sectors (for example, India’s satellite industry). Asia’s developing countries are thus faced with the risk of being cut off from the self-reinforcing processes involved in competition for innovations. This confronts us with the question of how Asia’s newly industrializing nations may best master the transition from labour-cost-based and resource-based to knowledge-based competitive advantages. The present chapter offers some conceptual thoughts on this and points out, using practical examples from the region, how it is possible for countries to catch up with knowledge-based competition and start to build the necessary national innovation systems. In the first section...

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