Industrial Catch-up Research Articles

Strong business–state alliances at the expense of labour rights in Ethiopia’s apparel-exporting industrial parks

In the past decade, Ethiopia has demonstrated a strong ideological convention to the East-Asian model of ‘developmental state’, which stands for state-led industrialisation as its underlying industrial policy premise. Nevertheless, the labour rights externalities of this industrial policymaking have been overlooked in the existing academic and practical policy debates. Hence, using qualitative empirical data, the article attempts to address the research gap by analysing why and how Ethiopia’s state-led industrialisation and the corporate behaviours of apparel-exporting firms, as well as their respective global brand buyers, have contributed to the existing poverty wages and repressive practices against the associational rights of local industrial workers at those selected apparel-exporting industrial parks of the country. The maxim of industrialisation with a human face has increasingly become a promising alternative to the neoclassical intellectual view of labour relations following its fundamentals towards achieving a more sustainable industrial development in a given state. In light of this human right imperative, the finding revealed Ethiopia’s stateled industrialisation has firmly embraced strong business-state alliances, thereby curbing the power of local industrial workers. The Ethiopian government employs diverse de facto or de jure labour control mechanisms across those selected apparel-exporting industrial parks of the country. This is manifested through poverty wages and repressive measures todeny the associational rights of workers. Further, the flawed Corporate Social Responsibility (CSR) of employing firms and their respective global brands have contributed to the ongoing labour abuses across those selected apparel-exporting firms. Hence, Ethiopia’s industrial policy is expected to navigate a reasonable balance between facilitating industrial catch-up and ensuring labour standards for more viable and sustainable labour relations.

An Economic History of Regional Industrialization edited by Bas van Leeuwen, Robin C. M. Philips, and Erik Buyer

<i>An Economic History of Regional Industrialization</i> edited by Bas van Leeuwen, Robin C. M. Philips, and Erik Buyer

Engineer-centered enterprise and context-based knowledge: the sources of Chinese competitiveness in grid equipment

PurposeThe purpose of this study is to explore the competitive source of Chinese firms in an industrial sector of complex product systems. It helps to reveal the organizational innovation developed by Chinese firms in coping with international competition and technological challenges.Design/methodology/approachThe study uses a qualitative method of research. The evidences are mainly collected through interviews, field observation and document analysis.FindingsA pattern of engineer-centered organization is the source of competitiveness of Nanrui (NR) Electric (NREC) in this study. The firm equips its front project teams, and now its overseas branches with developmental human resources and authorizes them the power of decision-making to leverage R&D projects. It is an emerging challenge to the traditional multi-national companies (MNC) pattern, and enables the Chinese firms to build their capabilities on context-based knowledge.Research limitations/implicationsAs a single-case study paper, there are limitations about the external validity of its argument. Through the in-depth discussion of the NREC case, this paper aims to generate some clues for future study in the relevant academic community, which can be a useful step to formal theorizing and modeling. That is why the authors develop the paper on a single case. As future directions of research, comparative studies covering more cases not only within the power system control and protection industry but also among different complex technology products industrial sectors are really needed.Practical implicationsFor innovative firms from developing countries like China, they need to develop institutional arrangements to incentivize engineers in the frontline, which may help them to build competence upon successful interaction with customers. During the era of globalization, such a pattern may generate special competitiveness over giant multi-nationals or global production networks (GPNs).Originality/valueThe research provides an instructive case on the Chinese rise in industrial sectors of complex product systems. Its findings can not only provide enlightenment for industrial catch-up in developing countries through organizational innovation but also help to initiate a reconsideration of the traditional theorizing of MNC and GPN.

Technology Decomposition and Technology Recombination in Industrial Catch-up for Large Emerging Economies: Evidence from Chinese Manufacturing Industries

ABSTRACTThe influence of technological learning on industry-level catch-up has long drawn substantial attention in the catch-up research field. However, the underlying mechanisms of technological learning and the unique catch-up context in large emerging economies are much less explored. To explain the technological learning processes of latecomers that face the technology gap and strive to build differentiated competitive advantage, this study builds on the absorptive capacity perspective and deconstructs technological learning processes into two mechanisms: technology decomposition and technology recombination. The former entails decomposing advanced technologies into pieces, parts, or modules, while the latter entails the process of capturing market opportunities through recombining knowledge from diverse sources into commercial products through localized innovations and adaptations. Then, we propose a unique ‘ladder-like’ catch-up context (i.e., technology ladder and market ladder) and investigate how the technological learning process and the unique catch-up context jointly affect industrial catch-up performance in China. Using seven-year panel data from Chinese manufacturing industries, the results indicate that only technology recombination has a significantly positive relationship with industrial catch-up performance. In addition, the market ladder strengthens the positive impact of technology recombination on industrial catch-up, while the technology ladder weakens the positive impact of technology decomposition on catch-up.

The AEC and a Technology-Driven Industrial Catch-Up: Three ASEAN Country Cases

ABSTRACT There is a growing consensus that effective Science, Technology, and Innovation (STI) policies, aimed at supporting long-term national structural transformation, are a crucial element in helping latecomer countries escape from the middle-income trap. Citing cases of Northeast Asian catch-up and Latin American middle-income traps, scholars emphasize that the key to catch-up is a triple-helix coordination that is used to transform foreign technology into indigenous technological capabilities. Thus, ideally, the expansion of the global production network, as promoted by the ASEAN Economic Community (AEC), provides opportunities for middle-income ASEAN countries to implement this technology-driven industrial catch-up strategy. This paper investigates three middle-income ASEAN countries (Malaysia, Thailand, and Indonesia) to argue that the AEC, as an open market-led economic regionalism scheme, does not have the ability to create a strong sense of urgency on the part of national governments to alter their national STI policy directions. As resource-abundant countries, Malaysia, Thailand, and Indonesia have yet to find any urgent need to prioritize the upgrading of indigenous manufacturing over natural resource-based technological developments. For these three countries, the AEC amplifies the need to compete against other ASEAN member countries instead pushing them to pursue industrial catch-up collectively. Keywords: economic regionalism, STI, industrial catch-up, ASEAN DOI : https://doi.org/10.33005/jgp.v7i02.1832

Shifting IP Battlegrounds in the U.S.–China Trade War

Intellectual property (“IP”) represents one of the main controversies of U.S.– China trade relations in the past three decades and remains one of the core issues behind the two countries’ recent trade frictions. This Article provides an overview of the current IP debates between the two largest economies in the world. It illustrates the transformation of the Chinese government’s role from inactive IP law enforcer to active facilitator of access to and acquisition of foreign technologies. This study further explains how China’s approach to learning western technologies has transformed from low-end imitation to gaining a controlling stake in foreign companies via joint ventures or outbound investments. More importantly, this Article discusses the legal and policy implications of the IP issues in this trade war. I argue that the recent IP trade war represents the struggle for global technological leadership as well as a new institutional competition in the post-Cold War era. Moreover, China’s “economic aggression,” as the United States understands it, has caused a number of unsolved issues for the international IP regime, which include the justification of China’s controversial IP policies for the purpose of industrial catch-up as well as the evidentiary and legal bases for holding China liable for its economic aggression in relation to IP.

Industrial upgrade, economic catch-up and industrial policy in Brazil: general trends and the specific case of the mining industry

Abstract The aim of this paper is to analyze the role of industrial policy in promoting technological upgrading in Brazil. To do that, we focus on the main characteristics of the Brazilian national innovation system and the role of its institutions. We examine whether industrial policy implemented between 2003 and 2014 was able to promote changes in agents’ conventions towards more vigorous strategies linked to technological upgrading and catch-up. In addition, we analyze the Brazilian mining industry, a sector in which Brazil has developed relevant competitive advantages in international markets, and in which domestic agents have built important operational capabilities. Main results show the huge difficulties faced by industrial policy efforts in establishing mechanisms to drive technological catch-up, based on the unsuccessful experiences of policies in the years 2002 to 2014. The specific experience of the Brazilian mining industry confirms these general findings, since domestic mining companies were not able to create new technological capabilities, even during the commodity price boom period.

Regulating the Digital Economy: Are We Heading for a Win-Win or a Lose Lose?

The digital economy has been growing by leaps and bounds in recent years, mostly as a result of new digital technologies that are promoting a global transformation to industry 4.0. The resulting expansion of digital trade has sparked off a political and policy controversy on digital economy and e-commerce, where its boundaries stand and how best to regulate it. Policy discussions on the topic however do not take into account the true expanse of digital trade, which encompasses hardware, software, networks, platforms, applications and data as its core elements, and stretches the boundaries of e-commerce policy to trade in goods, services and intellectual property protection. This Article focuses on the challenges in regulating the digital economy, with a particular focus on development, and offers a discussion of the interdependency between the economic, social, personal and developmental aspects of digital trade for developing countries. Section II opens with a detailed discussion on key digital technologies and their plausible impacts on employment globally and industrial catch-up of particular importance to developing countries, to highlight the divisive nature of digital technologies. Section III then analyses the unfulfilled promise of a pro-development perspective at the WTO looking at how multilateralism has currently failed e-commerce. The incoherence between digital realities and the policy debates at the WTO are presented to show how the institution is losing effectiveness in the war between countries to legitimize national policies on a universal level in this important area of policy making. Norm-setting through FTAs is also analysed at length in section III of the article, which provides a comprehensive review of the plurilateral and bilateral policy developments in e-commerce. The ramifications for developing countries are discussed in the form of a couple of examples. Section IV presents some options for developing countries for the future at the national and international level.

Shaping selection environments for industrial catch-up and sustainability transitions: A systemic perspective on endogenizing windows of opportunity

Transitioning economic sectors towards more sustainable futures is a major global challenge, in particular for non-OECD countries. Policymakers in these countries are confronted with a double challenge: how to implement cleaner technologies and infrastructures while at the same time promoting rapid industrial development. In catch-up studies, this trade-off has been increasingly interpreted as providing windows of opportunity for gaining strong leadership in new generations of cleantech industries. In this paper, we maintain that in order to specify how these windows of opportunity can be endogenized, a deeper understanding is needed about whether, how and by whom the directionality of innovation systems can be influenced. For this purpose, we propose an analytical approach that draws on the technological innovation system framework extending the current understanding of directionality in two ways: first, we complement the prevalent top-down perspective with a bottom-up view exemplified by the institutional entrepreneurship literature. Second, we posit that the focus has to be shifted from the manufacturing of single technologies to the transformation of entire socio-technical systems. The presented framework is validated by a case study on recent shifts in the dominant technology in China’s urban water management sector. Major changes in the country’s sectoral selection environment led membrane bioreactor technology to become the dominant design in urban water management – a development that is unmatched in any other country in the world. Owing to these transformations, China’s technology firms outcompete multinational players and therefore they show strong potentials for industrial leapfrogging. However, although the promise to solve environmental problems played a decisive role in the shaping of the selection environment, it remains unclear whether the observed transformation leads the way to a more sustainable sector structure in the longer run. The case, however, still enables us to specify how windows of opportunity can be endogenized through the interplay of different actors trying to shape different layers of the selection environment in a specific sector.

Developing technologies or learning institutions? Exploring the role of hackathons for developing innovation capability in emerging economies: the case of Taiwan

ABSTRACTThe paper deals with issues concerning latecomers’ industrial catch-up. Using the recent development of hackathons as an example, this study explores how actors in an emerging economy manage to enhance innovation capability through certain events. Based on qualitative studies on the innovation activities and outcomes within major hackathons in Taiwan, this paper argues that, thanks to the unique environment and settings of hackathons, industrial actors in Taiwan are able to not only obtain resources and stimulus to facilitate their production of and investments in innovation, but also to improve local institutions for innovation. In addition to demonstrating the nature of these latecomers’ enhanced innovation capability, we also explain key mechanisms contributing to hackathons’ specific innovation dynamisms.

Industrial growth in interwar Egypt: first estimates, new insights

Based on the first estimates of output growth, this article shows that Egyptian industrial output grew at an accelerating rate in the interwar period and the country joined the industrial catch-up club after the Great Depression. What characterized the industrial re-composition was the major shift from export-processing and home-demand oriented sectors to the import competing textiles. That was in turn driven by the combined forces of massive terms of trade shock, tariff protection and stagnant incomes. Crucially, the panel-data analysis of disaggregated growth patterns indicates that the effect of tariff protection on growth was much smaller than usually assumed in the historiography.

Industrial catch-up in China: a sectoral systems of innovation perspective

This study analyses the industrial catch-up in four sectors in China. The technological regime of sectors affects the chance for latecomers to catch up, but the final outcomes also depend on the actions of governments and firms. A successful catch-up requires the growth of indigenous firms rather than dependence on foreign direct investment. The government has an important role, but different forms of intervention across sectors must be identified. For firms, adopting a path-following strategy does not bring ultimate success, whereas leapfrogging is often required. Any uniqueness in the catch-up pattern of China can be attributed to its large size leading to bargaining power in technology transfer. The Chinese markets with several segments also help to nurture indigenous firms.

Local government policies and pharmaceutical clusters in China

Purpose – The purpose of this paper is to study how local government policy influences the structure of Chinese pharmaceutical clusters during their industrial catch-up. Design/methodology/approach – This paper applies a case study method by targeting pharmaceutical clusters in Tonghua, Taizhou, and Tianjin. Findings – The varied structures of pharmaceutical clusters in China demonstrate local governments' efforts to utilize local resources accordingly. While the local governments in China introduce different policies to firms with different ownership in the process of constructing different cluster composition, all the local governments emphasize motivating the development of small- and middle-sized enterprises for cluster dynamics. Practical implications – The local governments should try to reach a balance between short-term foundation and long-term competitiveness for industrial cluster development. Originality/value – This paper provides the detailed analysis of local governments' influences on the formation of pharmaceutical clusters in China and helps to enrich the knowledge about how local government promotes industrial clusters to realize industrial catch-up through sectoral innovation system.

Strategic coupling of local firms in global production networks: the rise of the home appliance industry in Shunde, China

This paper examines the rise of the home appliance industry in Shunde, a city district of Foshan municipality located in the western Pearl River Delta (PRD), China. It contributes to the literature of China’s industrialization and regional development by revealing the salient Shunde model, distinctive from the export-oriented development prevailing in the eastern PRD. Based on intensive field investigation and firm-level interviews, this paper argues that the Shunde model is attributed to the proactive roles of local firms in establishing domestic market-oriented production networks and expanding global market reach. They mobilized regional assets to develop strategic coupling with foreign firms in a conducive institutional environment for industrial catch-up. This viable trajectory has valuable policy implications for latecomer regions in the aftermath of global financial crisis.

Reinventing Mass Production: China's Specialization in Innovative Manufacturing

Based on more than one hundred firm-level interviews conducted between 2010 and 2012, this paper examines the political economy of China’s emergence as a global manufacturing powerhouse. Our argument is that China’s industrial growth trajectory cannot be fully explained by either factor the cost advantages associated with markets or the policy interventions associated with the developmental state. Instead, we argue that China’s rise stems from the development of unique capabilities in innovative manufacturing. We provide a typology for understanding the phenomenon of innovative manufacturing, and show how it has led to a complex distribution of risks and rewards, as well as multidirectional learning, across a variety of national contexts. Thus, through our analysis of Chinese industrial upgrading, we generate new frameworks for understanding national competitiveness and industrial catch-up in the contemporary global economy.

How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries

China has been utilizing foreign direct investment (FDI) based on the strategy of “trading market access for technology” since 1978. However, there are differences in opinion regarding the performance of China's strategy. This paper examines the growth of technological capability of Chinese indigenous firms under a revised model of technological learning and catch-up based on research by Kim (1997) and Lee and Lim (2001). The paper investigates the process of industrial growth in China by developing the two cases of the telecommunication equipment industry and the automobile industry, and analyzes the aforementioned strategy from the viewpoint of technological learning and industrial catch-up. This study finds that knowledge was gained by leveraging China's huge market to “trade market access for technology”, and that indigenous firms must enhance the intensity of their efforts to assimilate acquired technologies so as to improve their technological capabilities. Through comparison of the two industries, we find that industrial policy regulating private firms’ market access directly affects the performance of the industrial catch-up.

Basic research and catch-up in China's high-speed rail industry

The existing literature has not studied the role of basic research in industrial catch-up in developing countries in any depth. This article takes high-speed rail as a case study in order to show how basic research has helped the industry to master imported technology and produce secondary innovations. The role of government is important in terms of coordinating the process of technology importation, digesting imported technology and innovation. The role of the home market is also very important in an era of globalisation to promote innovation in this emerging industry.

Innovation, catch-up, and leadership in science-based industries

In this article, we seek to shed new light on the sources of industrial leadership and catch-up in science-based industries. We propose an evolutionary model that incorporates scientists’ training and migration, endogenous R&D decisions, and the possibility of funding capital accumulation through debt. The analysis of the model allows us to characterize a robust pattern of industrial catch-up. Likewise, the sensitivity analysis shows which parameters act as pro-catch-up factors or slow down the process. The identification of stationary-state conditions of the model helps us to interpret the simulations, and highlights crucial interactions between technology-supporting institutions and market demand at the basis of industrial catch-up. Finally, the robustness analysis reveals further interdependencies among innovation, scientist mobility, and demand.

Patenting Public-Funded Research for Technology Transfer: A Conceptual-Empirical Synthesis of US Evidence and Lessons for India

India's post-independence technology policies relied heavily on public-funded research for indigenous technological capacity building and technology development. However, public-funded research has failed to adequately contribute to India's industrial catch-up. India is now contemplating a new legislation similar to the US Bayh–Dole Act 1980, to energize public-funded research for effective technology transfer. The Bayh–Dole Act was passed in the United States in 1980 in response to the growing concern over the fact that federally funded inventions in the United States were not reaching the market place. The act allowed universities to retain patent rights over inventions arising out of federally funded research and to license those patents exclusively or non-exclusively at their discretion. In this paper, we present a critical review of the US experience after the Bayh–Dole Act and argue that the evidence is far from being unambiguous. We discuss the debate surrounding the act—the extent to which it was successful in achieving its objectives, the unintended consequences, if any, and more generally, the effectiveness of intellectual property rights as a vehicle of technology transfer from universities. The paper presents an Indian perspective against the backdrop of the US experience in an attempt to draw concrete lessons for India.

The political economy of industrial policy in East Asia: the semiconductor industry in Taiwan and South Korea

Contents: 1. Introduction 2. Theoretical Debates on the East Asian Miracle: An Analytical Review of Literature 3. A Big Step by a Small Giant: Taiwan's Industrial Catch-up for Semiconductors 4. Toward the World Best: Korean Industrial Leapfrogging for Semiconductors 5. Why Differ? Taiwan and South Korea Compared 6. Conclusion Index