China's technological capability and Northeast Asian integration in electronics industry, 1974‐2000

Abstract

PurposeThis study investigates the evolutionary pattern of China's electronics industry and China's industrial integration into the Northeast Asian region from a historical perspective. The purpose is to shed some light on the catch‐up path of China's technological capabilities using some empirical evidence covering the period of 1974‐2000.Design/methodology/approachMarket share and the Finger‐Kreinin similarity index (FKSI) are used as measures to trace the path of catch‐up from both quantitative and structural perspectives and evidence is provided at the sectoral level. The Standard International Trade Classification (SITC) classification systems is adopted and FKSI values are derived from international trade data at both four‐digit SITC and sectoral levels.FindingsFirst, the take‐off points toward rapid progress of China's technological capability in different sectors happened not concurrently but in a sequentially manner. Second, as to structural evolution, the process of China's integration into the world market and the Northeast Asian region started in 1978 and the extent of integration has become higher and higher ever since. Until late 1990s, gaps between China and Japan and between China and Korea have been successfully narrowed in terms of comprehensiveness of export structure in electronics.Originality/valueThe period of 1974‐2000 saw the tremendous transition in China from a centralized and planned system into a market‐driven economy. It also saw several noteworthy shifts of China's industrial policy in order to build up its innovative capacity and to catch‐up with Japan and Korea. Unlike many other studies that deeply root in macroeconomic approach, this study traces the evolution of China's performance at the sectoral level by focusing on electronics industry. The findings of this paper are explained in terms of national industrial policy, location effects, and low‐cost sourcing.