Chapter 7: Technological Change and Industrialization in the Asian Newly Industrializing Economies: Achievements and Challenges
7. Technological change and industrialization in the Asian newly industrializing economies: achievements and challenges* INTRODUCTION The process of technological change in developing countries is one of acquiring and improving on technological capabilities rather than of innovating at frontiers of knowledge. This process essentially consists of learning to use and improve on technologies that already exist in advanced industrial economies. This is not a trivial or costless task, and industrial success depends on how well the process is managed: since all countries have access to the same international array of technical knowledge and equipment, a critical determinant of industrial performance is different rates of technological learning by different countries. This chapter uses the experience of the Asian newly industrializing economies (NIEs) (the ‘Tigers’) and other industrializing countries to illustrate how industrial technological capabilities differ at the national level and the role that policy plays in these differences. In the process, it revisits the debate on industrial policy, arguing that an evolutionary perspective gives better insights into market failures in technology and information than conventional approaches that tend to gloss over crucial technological phenomena. Despite a growing acceptance of a marketfriendly role for the government, industrial policy (in the sense of selectivity in government interventions) is considered unhealthy in current development thinking. The reasons for this hostility are more political than economic. A consideration of the technology development process at the microlevel provides a strong and valid economic case for industrial policy, and the East Asian case provides the empirical backing. The...
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