- New Horizons in the Economics of Innovation series
Edited by Bengt-Åke Lundvall, Patarapong Intarakumnerd and Jan Vang
Chapter 2: Opportunities for Asian Countries to Catch Up with Knowledge-Based Competition
2. Opportunities for Asian countries to catch up with knowledge-based competition 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...
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