Lecture 4 - Technological change and industrialisation
-
Upload
unumerit -
Category
Technology
-
view
6.218 -
download
1
description
Transcript of Lecture 4 - Technological change and industrialisation
Lecture 4: Technological change and industrialization
Facts on technological change and Industrialization
• The speed of the catching up • Trends in world trade• The highly concentrated benefits• The scale of restructuring• The complexity of industrial dynamics• Overall assessment
Periods during which output per capita doubled
0 10 20 30 40 50 60
China 1977-1987
Rep. Of Korea 1966-1977
Brazil 1961-1979
Turkey 1957-1977
Japan 1885-1919
United States 1839-1886
United Kingdom 1780-1838
A Technology driven taxonomy of products
• Primary products• Manufactured products
– Resource based: e.g. food, wood & forestry products, processed minerals, petroleum products
– Low technology: e.g. textiles, clothing, footwear, toys, sports goods, simple metal products
– Medium technology: e.g. automotive products, TVs, machinery, chemicals, steel
– High technology: Advanced ICT and electricals, pharmaceuticals, aerospace, precision instruments
Global exports are increasingly driven by innovation (annual growth rates, 1985-98)
-5 0 5 10 15 20
Primary
Resource based
Low tech
Medium tech
High tech
1995-981990-951985-90
Manufactured exports by industrial and developing countries, 1985-98
Rates of export growth, 1985-98 Developing world’s export shares
0
5
10
15
20
25
Primary RB LT MT HT
Industrial Developing
0
10
20
30
40
50
60
Primary RB LT MT HT
19851998
Only 12 countries account for 90% of developing world’s total manufactured
exports ($ million)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000Ch
ina
Kore
a
Taiw
an
Mex
ico
Sing
apor
e
Mal
aysi
a
Thai
land
Braz
il
Philip
pine
s
Indo
nesi
a
Indi
a
H. K
ong
19851998
Technology upgrading is vital for success: shares of high/medium tech products in total
0
10
20
30
40
50
60
70
80
Phi
lippi
nes
Sin
gapo
re
Mex
ico
Mal
aysi
a
Kor
ea
Taiw
an
Thai
land
H.K
ong
Chi
na
Bra
zil
Arg
entin
a
Indi
a
Indo
nesi
a
19851998
Chart 5-1 Korea Strategic alliances
KSIA HEI
Samsung
LG Semicon
Equipment andSuppliers
Intel
SGS Thomson
Toshiba
Mitsubishi
Siemens
General Electric
Apple
Array Microsystems
Micron
Harris Microwave Semiconductor
NECIGT TI Oki
Hitachi Motorola
Micron
TI
Sundisk
Compass
Siemens
Compaq Rambus
Metaflow
Fujitsu
AT&T (NCR)
IBM
Maxtor
Image Quest Technologies Laser Byte BMI
Hyundai
DNS Korea Dai Nippon Screen – Samsung
POSCO Huls MEMC – Samsung/POSCO
LG Semicon - Monsanto Siltron
Dong Yang – Sumitomo Dongwu
The key to Korean success: A national system of learning
[taken from the Mathews book]
Chart 6-1 Taiwan strategic alliances
TSIA
TEEMA
ITRI/ERSO
ASMI
MXIC
Nan Ya
UMC Powerchip (UMAX)
MV
VSC
Winbond
WSMC
TSMC
Matsushita (DRAM)
NKK
Philips
MIPS
VLSI HP (PA-RISC)
Toshiba (DRAM)
SST (flash)
Symphony Lab
C-CubeMicrosystems
Etron
Oki
Siemens (ProMos)
Mitsubishi
IBM
TI(Micron)
Oki
IBM
NEC
Philips
Fujitsu
WaferTech
AMD
Altera
Analog Devices
ISS
Toshiba
Cirrus Logic Xilinx ISSI and others
UICC
USC USIC Utek
SMS
The key to Taiwan success: A system of strategic alliances
Industrial Policy in Developing Countries
Back to the 1970s - Technological change and industrialization
• Embodied (and imported) technological change– Linked to fixed capital investment (which was
considered as the driving force of development)
– Then, emphasis shifted on investment decisions, relative prices and appropriate technologies
– An interesting debate had emerged on the short-term cost of technological transactions
Back to the 1970s – Endogenous Technological in Developing Countries
• Differences in the efficiency of process industry plants with similar technologies
• Diverging industrialization trajectories
• Insights from evolutionary thinking on knowledge accumulation [learning]
1. Continuous incremental, engineering-based improvement: processtechnology, methods of organising production, diversification and upgrading in productspecifications and designs, etc.
2. Continuous improvement in technologies linking stages in valuechains: hardware (e.g. transport and computer-based systems) and organisation/management
3. Technology search (and research and training) for acquiring andabsorbing technology
4. Acquisition of technology : machinery and equipment, and in the designs andspecifications of materials, products and components
5. Design, (reverse) engineering and project management: for new productionfacilities, to diversify/upgrade products, or to source components, materials and equipmentfrom local suppliers
6. Research and development, plus design and engineering : to introducetechnologies that cannot be acquired (competitively) from foreign sources, and for introducingnew products and processes that permit competitive entry to domestic or foreign marketsindependently of foreign technology sources.
Different Types of ‘Innovation’/Technical Change
How did Korea do it?
Large firms (chaebol) as vehicles of developmental resource leveragePrior experience in mass manufacturing (eg electronics)Prior market entry contactsPrior OEM contractual links
Leveraged access to product technology eg circuit designs from Silicon Valley
Leveraged access to process technologyeg US suppliers and Japanese engineers
Leveraged access to strategic alliances
How did Taiwan do it?
Taiwan -- started with smaller firms
Utilized public sector research instituteseg ITRI Industrial Technology Research Institute
Strategy of managed diffusion of technologies
Foreign partners -> ITRI -> small Taiwan firms
Use of innovative institutions, R&D alliances
0
1
2
3
4
5
6
7
8
9
$US
Bill
ion
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Year
IC packaging
IC manufacturingIC design
Source: ERSO/ITRIS
Taiwan: IC related revenues: 1989-1998
Starts at back-end of value chain, and moves forward
How is China doing it?
China is utilizing all three models:
Model 1 Large firms as vehicles China: State-owned enterprises
Model 2 Smaller firms plus public sector RIsChina: Township enterprises; scientific research institutes
Model 3 MNC-linkageChina: Open door policy since 1978
Results: Developmental resource leverage through three avenues simultaneously “Walking on three legs”
The Second-Mover industrial development model
Second-Mover’s characteristics:• Enter market when tech/products
mature, which implies risk averseness.
• Imitate, copy, incremental improvement, learning by doing.
• Inherit first-mover’s accumulated capabilities, but usually exclude core technologies and competencies at initial stage.
• Utilizing accumulated organization capabilities in order to upgrade and up-scale
• Extract economic rent from scale efficiency, i.e. mass production to lower costs.
• Advantage lies in technology know-how, manufacturing and project execution capabilities.
Source: Amsden and Chu (2003)
��������������� ������������������ ���
����������������
� �� �
������������������
��� �������� �����
������������������
��� �������� �����
Patterns of Technological Development
PHASE I: INFRASTRUCTURE DEVELOPMENT FOR FDI• Solicitation of FDI• Creation of attractive investment and regulation regimes• Public investment on IT, energy and transportation infrastructuresPHASE II: LOCAL CAPABILITIES AND TECHNOLOGY ACQUISITION• Offset policies for market access• Technology transfer and technology acquisition strategies• Expanded incentives to local producers• Incentives for increasing local value addedPHASE III: INDIGENOUS R&D AND COMMERCIALISATION
PROCESSES• Government funding of R&D• Investment in technology commercialization• Investment in higher education and human resources• Targeted promotion of innovation at the sectoral level
Technological Capabilities and Industrialization –an assessment of the literature
• Against production function analysis [the TFP debate]
• Qualitative methodologies and case studies
• Definitions difficult to measure (and to compare)
• Policy implications: from best practice to benchmarking (what is missing is: a) the micro-macro linkages, and b) the dynamic context.
Challenges [the UNIDO report is a good example]
– East Asian crisis and exogenous shocks (open economies … transmission channels)
– Diffusions of technologies, product cycles and production networks
– The limited success of policy imitation– Phase III of technological development [the
technological frontier]– Lack of criteria for allocation of resources– Dual production systems (informal sector vs. firms
moving close to technological frontiers) – Findings from other streams of research
Technological change and industrialization: a selective review of recent literature
I. The Aggregate approach• Technology=investment [the macro-view]• Human capital externalities• Co-ordination failures• Political economy considerations
II. The Non-aggregate approach • Government failures
– (intervention, lack of regulation)• Credit constraints• Insurance markets• Local externalities• Incomplete contracts, within generations and across generations• Social behaviour
III. The Evolutionary approach • Technology gaps
– [ trajectories explained by technology regimes, institutions and firms]
Readings…
• All three papers.