Standards, innovation, and latecomer economic development: Conceptual issues and policy challenges

Abstract

Little is known about the impact of standards on the economic development of countries which are latecomers to industrial manufacturing and innovation. Standardization is regarded primarily as a technical issue, and hence receives only limited high-level policy support.However, technical standards contribute at least as much as patents to economic growth. As a key mechanism for the diffusion of technological knowledge and due to the dominant leadership by advanced countries in patenting, technical standards have emerged in latecomer countries as an alternative to patenting. However, latecomer countries and their firms have a set of capabilities and constraints that are fundamentally different from that of advanced countries and firms. This paper argues that latecomer countries should adopt assessment criteria that are more fitted with latecomer contexts which emphasize learning effects and building dynamic capabilities. The paper discusses current issues that are essential in understanding the rise of Asian countries in standardization. We also examine the critical role that patents play for standardization and argue that “strategic patenting” to generate rents from de facto industry standards can stifle latecomer economic development.