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Edited by Giacomo Becattini, Marco Bellandi and Lisa De Propis
Chapter 18: The New Argonauts, Global Search and Local Institution Building
18. The new Argonauts, global search and local institution building AnnaLee Saxenian and Charles Sabel 1. Introduction The emergence of technology entrepreneurship and innovation outside, but closely connected to the advanced core of the world economy is one of the most striking features of contemporary capitalism. Israel and Taiwan, both small, peripheral agricultural economies in the post-war period, became home to dynamic clusters of entrepreneurial experimentation in the 1980s and 1990s. Today Taiwan’s specialized producers define the state-of-the-art logistics and flexible manufacturing of low-cost, high-quality electronic systems. Israel, with a population of just over six million, is home to more than a hundred internet security and software-related technology companies listed on NASDAQ, more than any other country outside North America. In both countries venture capital systemically encourages the proliferation of companies that in effect co-design specialized components or subsystems for firms in the core economies. The more recent emergence of clusters of, for example, software firms in midincome developing economies like China and India is if anything more striking still. Vital urban hubs like Bangalore and Hangzhou are not only peripheral to the world economy, but are also located in large national economies that – (partial) liberalization of trade policy aside – lack most of the institutions economists view as preconditions for growth: the rule of law, secure property rights, good corporate governance, flexible labor markets, transparent capital markets, and so forth. If it is surprising that firms in the ‘periphery’ can co-design crucial components with firms in the core, then it...
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