Late-developing Countries Research Articles

The middle-income trap and the middle-technology trap in Latin America–practice comparison based on East Asian perspective

Most Latin American countries entered the ranks of middle-income levels almost simultaneously with Japan and South Korea. However, while Japan and South Korea embarked on the path of economic development through technological innovation and industrial upgrading, Latin America fell into the middle-income trap. By examining the history of industrial and technological development in Brazil, Argentina, and Mexico, three representative countries in Latin America, this paper finds that the fundamental reasons for Latin America falling into the middle-income trap lie in the tension between the choice of industrialization path and primitive accumulation, as well as the institutional deficiencies in technology and industrial development. Latin America, which has fallen into the middle-income trap, finds it hard to upgrade its technology and is trapped in premature industrialization and the middle-technology trap. It can be said that Latin America has fallen into a double trap, which reinforces each other and forms a solid trap pattern. The warning from the Latin American experience is that late-developing countries need to maintain an open attitude during the process of technological catching up, build a complete technological innovation system, enhance industrial and technological governance capabilities, and seize the window of opportunity for technological and industrial upgrading. Otherwise, there is a significant risk of falling into the middle-income trap and even the double trap.

Challenges in Achieving Consensus on Data Localization: Digital Inequality of Digital Service Trade

The disagreements on data localization policies significantly hamper the progression of digital service trade and free cross-border data flow. This study adopts the Theory of Comparative Advantage and the Heckscher-Ohlin Theory (H-O Theory) to construct an analytical model that investigates the inequality of digital service trade on the well-being of nations and the valuation of digital factors. Our findings suggest that digital service trade exacerbates the terms of trade for developing countries. In an environment of unrestricted data flow, developed countries capitalize on the data resources from developing nations, thereby augmenting their digital comparative advantages and factor endowments. The dynamics foster a state of digital inequality or digital poverty, where late-developing countries are disadvantaged in keeping pace with their developed counterparts. Notably, data localization, while seemingly a protective measure for developing countries, may not be the optimal strategy. It potentially undermines the overall well-being of all participants by diminishing network effects. The paper argues that the path towards the liberalization of digital trade and data flows will be a lengthy and complex one, demanding concerted international efforts to overcome entrenched trade barriers.

Preserving the Feitao Ritual in an Era of Globalization: The Heritage Ecology of Maonan Ethnic Minority in Modern China

This article examines the dynamics of the Feitao ritual, a traditional practice of the Maonan ethnic minority, within the broader context of globalization and heritagization in China. It addresses the challenge of preserving the cultural identity and memory of ethnic minorities amidst economic development imperatives, a dilemma common to many late-developing countries. By focusing on transforming the Feitao ritual from a communal practice to a performative spectacle, this study unravels the intricate process of heritage ecology within minority rituals. Utilizing a combination of ethnological fieldwork and interviews, this article explores the perceptions and approaches toward the post-heritagization of the ritual among the Maonan community members and policymakers. It also emphasizes on the evolution of the ritual into a significant tourist attraction, showcasing the performative transformation of religious practices by an ethnic minority in China. The central argument of this article is that this ritual is formed in ecological interactions; it also symbolizes a self-defense for the rights and a pursuit of recognition for a minority group. It has been a vital medium for the Maonan people to construct and uphold a positive self-perception. This study endorses a faith-aware and community memory-focused approach to preserve the cultural heritage of ethnic minorities. The authors contend that this approach is essential to safeguard the cultural memory and identity of minorities in developing countries like China against the homogenizing forces brought by globalization in China.

Navigating the energy transition and industrial decarbonisation: Ghana's latest bid to develop an integrated bauxite-to-aluminium industry

Research on how countries are positioning and ‘greening’ their heavy industries in response to the ‘global energy transition’ has focused on higher-income countries with established heavy industries, rather than lower-income countries with fledgling industries and aspirations to continue expanding them. Our paper responds to this lacuna by examining Ghana's current plans for, and challenges with, developing an integrated bauxite-to-aluminium industry. Adopting a multiscalar political economy approach, and drawing on research methods including documentary analysis and key informant interviews, we argue that Ghana's challenges stem significantly from the mode of its insertion – or subordination – within the global economy. Like other late-developing countries in the global economic periphery, Ghana is struggling to access the latest ‘green’ technologies or devise a strategy for powering its bauxite-to-aluminium industry because of uncertainties in the ‘green’ taxonomies of core economies in the Global North. Nationally, meanwhile, tentative plans to feed Ghana's aluminium industry with relatively ‘green’ hydropower (also Ghana's cheapest electricity source) are provoking pushback because of the trade-offs involved, while other contestations are emerging around expanding bauxite mining into forest reserves. Collectively, these multiscalar challenges may frustrate Ghana's ambitions once more, even though a bauxite-to-aluminium industry could generate significant economic benefits. Ghana's government can overcome some of these issues by consulting meaningfully with domestic stakeholders around the design of an integrated bauxite-to-aluminium industry. However, at an international level, peripheral economies like Ghana need clarity about how particular energy technologies will be classified by core economies moving forwards, and for climate financing and (green) technology transfer pledges to be honoured.

Social capability and long-term sustained growth

Long-term growth is not a simple transition along the path of equilibrium growth, but a process of the interplay of technological, economic, institutional, and social factors. Social capability is an important prerequisite for late-developing countries to catch up with leading countries, and the combination of social capability and the technology gap co-determine the potential of a country to improve productivity through catching up. This paper clarifies the theoretical mechanism of social capability to promote economic growth, and reveals that accountability quality may become capability gap which impedes the convergence of economic growth of the low-income countries by analyzing the panel data from 166 countries over the period 1996–2019. This paper believes that with the rising income level, it is the general path of sustained economic growth to promote the modernization of economic structure while ensuring the supply of goods and effective social incentives.

Research on the heterogeneity of technical innovation in the Chinese e-cigarette industry – rethinking the A-U model

PurposeUnlike traditional industries, the e-cigarette is an epoch-making innovative product originating in China and occupying an absolute competitive advantage in the international market. The traditional A-U model describes the laws and characteristics of technological innovation in developed countries. In contrast, the inverse A-U model depicts the process of “secondary innovation” in late-developing countries through digestion and absorption. This paper aims to find out that if the e-cigarette, as a “first innovation” industry in a late-developing country, conform to the A-U model or conform to the “inverse A-U model”.Design/methodology/approachThis paper takes the patent data of e-cigarettes from 2004 to 2021 as the research object, and uses Python’s Jieba segment words to divide product innovation and process innovation, and then uses statistical analysis methods to conduct empirical analyses on these data.FindingsThus, an improved A-U model suitable for the e-cigarette industry is proposed. In this model, product innovation in the e-cigarette industry appeared earlier than process innovation, but the synchronous development of product and process innovation is not lagging. The improved A-U model in the e-cigarette industry is not only different from the traditional A-U model but also does not conform to the inverse A-U model.Research limitations/implicationsIt is conducive to expanding and clarifying the theoretical contribution and applicable boundaries of the A-U model and has sparked thinking and exploration of the A-U model in e-cigarettes and emerging industries.Practical implicationsOn this basis, suggestions on the development path and countermeasures of the e-cigarette industry are put forward.Originality/valueBased on the e-cigarette industry, this paper takes patents as the research object and provides the method of dividing product innovation and process innovation, and proposes an A-U model suitable for the e-cigarette industry on this basis. By comparing the traditional A-U model with the inverse A-U model in latecomer countries, the background and causes of e-cigarette A-U model heterogeneity are analyzed from different stages and overall morphology. Based on this, the heterogeneity characteristics of e-cigarette innovation are summarized and sorted out.

The Difference between Chinese path to Modernization and Western Models: Systematic Analysis

The new path of Chinese path to modernization is fundamentally different from the development model of western modernization. The latter is rooted in aggression, exploitation and oppression. The capitalist system established through modernization is also not the "end of history". Chinese path to modernization is from passive to active, from backwardness to catch up gradually. In the deepening and evolution of the theme of Marxist theory, it has realized the curve overtaking of the western modernization model. The Chinese model provides an example of development that late-developing countries can follow. However, the Chinese model is short and a transitional development model, which will eventually change its value-neutral characteristics through a series of value additions of economic growth, legal reform, democratization and constitutionalism.

Balancing multiple mandates: A case study of public research institutes in South Africa

AbstractThe role of public research institutes (PRIs) in innovation and development is typically researched as a linked couplet with universities, but there is little empirical research on PRIs specifically. The article investigates how PRIs in late-developing countries balance multiple mandates, shaped by disciplinary fields and historical trajectories, drawing on comparative case studies of five PRIs in South Africa. PRIs succeeded in articulating new and ambitious strategic policies but most struggled to give effect to expanded mandates. The article compares their ‘interactive capabilities’ by examining the internal and external interface structures and incentive mechanisms created to support and promote interaction with other knowledge producers and users and highlights misalignments at the macro level. National policy will need to promote the development of stronger interactive capabilities if PRIs are to balance their mandate to link to global knowledge flows, grow economic competitiveness, and address complex problems arising from high levels of poverty and inequality.

Global M&A and the Development of the IC Industry Ecosystem in China: What Can We Learn from the Case of Tsinghua Unigroup?

The integrated circuit (IC) industry is the foundation of the information industry, and its level of development is an important manifestation of the economic and technological strength of a country. At present, the IC industry is primarily monopolised by developed countries. Although China is the world’s largest consumer of semiconductors, it has a disproportionately small international market share of production and a very low domestic chip self-sufficiency rate, lagging far behind Europe, the United States, Japan, and South Korea. The process of promoting the development of China’s IC industry ecosystem is discussed based on a case study of Tsinghua Unigroup and the observation and analysis of its recent international mergers and acquisitions. The resulting conclusions suggest valuable mechanisms that could benefit the technological improvement of late-developing countries and help them close the gap with more developed countries. Relevant theory for the industrial ecosystem is enriched, providing a useful reference for the development of the IC industry in late-developing countries.

Negotiating Authenticity in China’s Urban Historic Preservations – the Case of the Kuan and Zhai Alleys in Chengdu

ABSTRACTThis paper discusses how authenticity is understood and negotiated in the context of the preservation of urban historic heritage in China today. In the age of rapid economic development and social change, how to safeguard the historic identity and memories embedded in urban districts while encouraging economic growth has been a perennial problem concerning late-developing countries like China. The contested notion of authenticity lies at the heart of the debate between urban historic preservation and economic growth, as this fluid term merits a myriad of interpretations and contemporary re-workings. This study combines theoretical examinations, field research and interviews to reveal the inner logic behind Chinese cities' current practice of transforming urban historic districts into iconic tourist destinations. It probes how authenticity is understood differently by local residents and urban planners by using the example of the famous transformation project of the Kuan and Zhai Alleys (Kuanzhai xiangzi) in Chengdu. This study reveals the intrinsic tensions between urban cultural preservation and economic growth in China and how the "growth coalition" (Zhang, Jingxiang, and Fulong Wu. 2008. “Mega-event Marketing and Urban Growth Coalitions—A Case Study of Nanjing Olympic New Town.” The Town Planning Review 79 (2–3): 209–226.) formed by local governments and developers impose elite ideals of "authenticity" on urban historic districts. In response, the author proposes a historically aware and community-focused approach in preserving urban historic heritage and safeguarding cultural memories in late-developing countries like China.

The Belt and Road: Mutual Connectivity, Shared Prosperity

As one of the six thematic sessions on the topic of the “the Belt and Road International Cooperation Forum”, infrastructure connectivity with the theme of “Connectivity and Prosperity”, has cooperated with all sides to discuss transportation, energy and telecommunication in China. In the future, the global infrastructure upgrades and interoperability, transportation, energy and telecommunication technology integration development, will have new power to stimulate economic growth. In the construction of a new generation of infrastructure network system, the late-developing countries face a rare opportunity for leapfrog development, and the experience of China’s infrastructure development is of great significance.

THE GLOBAL DISTRIBUTION OF ECONOMIC ACTIVITY: NATURE, HISTORY, AND THE ROLE OF TRADE.

We explore the role of natural characteristics in determining the worldwide spatial distribution of economic activity, as proxied by lights at night, observed across 240,000 grid cells. A parsimonious set of 24 physical geography attributes explains 47% of worldwide variation and 35% of within-country variation in lights. We divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, and confront a puzzle. In examining within-country variation in lights, among countries that developed early, agricultural variables incrementally explain over 6 times as much variation in lights as do trade variables, while among late developing countries the ratio is only about 1.5, even though the latter group is far more dependent on agriculture. Correspondingly, the marginal effects of agricultural variables as a group on lights are larger in absolute value, and those for trade smaller, for early developers than for late developers. We show that this apparent puzzle is explained by persistence and the differential timing of technological shocks in the two sets of countries. For early developers, structural transformation due to rising agricultural productivity began when transport costs were still high, so cities were localized in agricultural regions. When transport costs fell, these agglomerations persisted. In late-developing countries, transport costs fell before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. Consistent with this explanation, countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers.

The battle over flexibilization in post-communist transitions: Labor politics in Poland and the Czech Republic, 1989–2010

In post-communist transitions, given the steepness of union decline and the inheritance of rigid communist-era Labor Codes, a convenient way to compare the relative efficacy of organized labor is to assess its ability to contain the push for ‘flexibilization’ in the revision of labor regulations. This article compares Poland and the Czech Republic (1989–2010), where important differences emerged in revised Labor Codes in such areas as dismissals, fixed-term contracts, collective bargaining, and union rights. In all these aspects, Czech labor did significantly better in resisting flexibilization. The explanation rests on the evolution of a legacy union in the Czech Republic that was able to concentrate labor’s resources and coordinate with an electorally viable set of left parties to secure their backing for labor’s agenda. This was not possible in Poland given the deep divisions within organized labor and the shifting fortunes of left parties in a more volatile party system. The cohesiveness of labor and the viability of left parties do not explain variation in labor power everywhere. They do, however, jointly constitute a portable mechanism that enhances the strength of organized labor in post-communist countries and possibly even in late-developing countries marked by market reforms and democratic contestation.

The Great Socialist Experiment? The Soviet State in its International Context

This essay takes the October Revolution's centennial as an occasion to consider Soviet state practices in an international context. Many features of Soviet governance reflected an interventionist ethos that first arose in western Europe and subsequently informed programs of population management around the world. From this perspective, we see that Soviet methods of rule derived not from socialist ideology but rather from pre-existing state practices. Communist Party leaders used these practices to pursue ideological goals, but both ambitions to reshape society and the means to do so originated elsewhere. This comparative approach also highlights ways the Soviet case resembled that of other late-developing countries, where educated elites similarly relied on state interventions to transform their populations. For many of them, the Soviet Union offered an alternative model of socioeconomic advancement, albeit one based on extreme state violence.

Patent Tigers: The New Geography of Global Innovation

It is widely argued that international extension of the patent system hinders innovation and growth in developing countries by restricting access to technological inputs. I re-examine the connection between patents, innovation and development by assessing the extent to which the U.S. patent regime supports R&D investment by firms in certain emerging market countries. Based on USPTO data covering all utility patents issued to U.S. and foreign inventors (a total of 6,122,217 patents issued to inventors resident in 188 countries and territories) during 1965-2015, and supplemented by additional data sources, I argue that the U.S. patent system has supported innovation in a cluster of foreign countries that have developed rapidly and dramatically since the 1980s. The increase in the proportion of foreign (and especially, East Asian) innovators in the USPTO patentee population is so large that it accounts for much of the significant increase in USPTO patent issuance that has commonly been attributed to policy changes by U.S. courts and the USPTO. Within this expanded foreign patentee population, three smaller and late-developing countries are now (together with Japan) the most intensive foreign users of the U.S. patent system on a per-capita and per-GDP basis: Israel, South Korea and Taiwan. Based on entity type, industry type and other salient characteristics of the leading “first-named” assignees of USPTO patents in Israel and Taiwan during 2000-2015, and supplemented by other evidence relating to these countries’ innovation capacities and performance, I argue that these countries rely on USPTO patents to extract value from their R&D investments by supplying product or process inputs to the global value chains that connect innovation sources with commercialization sources on the pathway to target consumption markets. While prior work has presented evidence that patents sometimes promote entry into technology markets by upstream R&D firms that lack downstream production and distribution capacities, this paper extends that rationale and presents evidence that patents can promote entry into technology markets by economies that are rich in intellectual and human capital but have small domestic markets in which to extract returns on that capital. For those countries, the patent system (or at least the U.S. patent system) is an aid, not a hindrance, to development.

The Long-Term Impact of Foreign Multinational Enterprises in Spain: New Insights into an Old Topic

The role of foreign capital and technology in the economic and social progress of late-developing countries remains a controversial issue in both academic and policy circles. In this essay, we examine the case of Spain in the light of the academic literature from the 1960s to the present. First, we identify and contextualize the intellectual concerns and controversies of two important generations of economists and historians and their approaches to the specific issue of multinational enterprises (MNEs). We then discuss what we consider to be the seven major contributions of recent Spanish scholarship in terms of: 1/ new quantitative evidence on FDI inward flows and firm demography analyses of foreign MNEs; 2/ new approaches to the transfer of technology by MNEs; 3/ collective and individual case studies of foreign MNEs, with a focus on their impact on local capabilities; 4/ identification of patterns of investment by MNE home countries; 5/ identification and study of the local actors of inward FDI; 6/ new perspectives gained from the history of international relations; and 7) new evidence on processes leading from inward FDI to outward FDI. We argue that the time is ripe for comprehensive re-assessments of the long-term impact of foreign MNEs and the role of Spain in the global economy.

The prospects of egalitarian capitalism in the global South: Turkish social neoliberalism in comparative perspective

This paper studies the transformation of economic and social policy in Turkey during the 2000s. The policy mix that has emerged can be usefully conceptualized as social neoliberalism, combining relatively orthodox neoliberal economic policies and retrenchment of the protective welfare state (e.g. labour market institutions) with a significant expansion, both in terms of public spending and population coverage, of the productive welfare state (e.g. public health care). Therefore, social neoliberalism as a development model is distinct both from social democracy and orthodox neoliberalism. Its rise in Turkey during the 2000s is arguably best understood with reference to the interests of the AKP's support coalition, the salience of inequalities in access to public services, and the disconnect of social policy-making from civil society mobilization. Turkey's experience with social neoliberalism provides an important reference point for theorizing the ‘social turn’ that since the 2000s has occurred in many late-developing countries with now maturing welfare states, including Brazil, South Africa, Mexico and Chile.

The labour market and inflation in transitional growth: lessons from the Italian experience

The paper argues that in later-developing countries that have chosen an export-led growth strategy, such as Italy, growth is likely to be sped up in the initial stage when technology provides an increase in labor productivity to counterbalance the rise in money wages. As the stage of ‘unlimited supply of labour’ comes to an end, however, the imitation of international wage levels spreads and increasing inflationary tendencies appear. At the same time, the implementation of welfare systems inflates government expenditures and deficits, thus lowering the national propensity to save and the ‘warranted’ rate of growth. A model of inflation for late-developing countries in employed to develop this argument.

Sources of Innovation in Developing Economies: Reflections on the Asian Experience

This article is concerned with the remarkable development of technological and economic capabilities by Korean and Taiwanese firms, particularly in electronics, and Indian firms in software and a few other fields. While the cases differ in many aspects, they all Involve active learning, in some cases through reverse engineering, requiring a considerable amount to technical and economic sophistication. All of them also involved selling on sophisticated markets which provided both feedback and pressure to learn rapidly and well. The cases teach us a lot about the mechanisms involved in successful technological and economic catch up.Keywords: Innovation. Catch-up, Developing countries. Korea. Taiwan, IndiaJEL Classification: 014. 089, 032, 034, 053I. IntroductionThe very term makes the process sound deceptively easy. This has had the unfortunate effect, for many years, of leading to a neglect of the difficulties, often subtle and complex, associated with Introducing an old technology into a context that was substantially different from the economic and social context in which it originally developed. These transfers in fact involve substantial doses of and therefore risk. I use the term entrepreneurship here in order to emphasize that such transfers have been full of uncertainties. These uncertainties are typically ignored in current approaches by economists of a neoclassical persuasion who treat the entire world as if everyone had equal access to all points on some pre-existing international production function. While there has indeed been a growing awareness, in recent years, of the difficulties attached to such an approach, it is also true that many of the technologies that are now undergoing transfer are far more complicated than those that were being transferred 30 or 40 years ago. One of the reasons for this is a very gratifying one: that several countries, mainly in east and southeast Asia, have achieved considerable success in industrial development and have thus moved well up on the scale of technological sophistication.These remarks already call attention to the dangers of sweeping generalizations. In discussing technology transfer it is essential to understand that technologies are enormously diverse from one sector of the economy to another, and changes in the patterns of industrial organization, including particularly changes in the division of labor among firms, may open up opportunities that did not previously exist. Indeed, the possibility of new economic opportunities thrown up by new international divisions of labor will be one of my central concerns. But the overriding concern of my paper is to enlarge the framework within which we think about technology transfer. Most especially, I am trying to identify new doorways through which LDCs (late developing countries) can obtain access to the benefits that can be made to flow from new technologies.I intend to focus on 3 countries that have had distinctly different experiences with the introduction of new technologies into their economies. Some of the contrasts between South Korea and Taiwan, on the one hand, and India on the other, are surely blatantly obvious. But it should also be said, at the outset, that although Korea and Taiwan have been outstanding success stories, some of their successes have been attained by travelling along distinctly different paths from one another. With respect to India, I have been driven by 2 very different concerns. First of all, India's huge size simply commands attention. The population of India passed the one billion mark not long ago; indeed, India has two states (Uttar Pradesh and Bihar) each of whose populations vastly exceed the combined populations of Korea and Taiwan. Moreover, a distressingly large percentage of the world's poorest people live in India. But, secondly, recent experiences on the Indian subcontinent suggest that the country may be in a position to make much more extensive utilization of technologies - technologies that may not be new to the world, but may hold out great promise in the changing Indian context. …

Marketization and universalism: Crafting the right balance in the Turkish healthcare system

Turkey is undertaking comprehensive reforms in its healthcare sector which bring about a major transformation in the boundaries between the public and private sectors. As in many transition and late-developing countries reforms seek to universalize coverage, increase efficiency and improve quality of healthcare services. The Turkish case is interesting as it draws attention to the balance that is being struck between two major components of the reforms, namely marketization and universalism. Expansion of coverage and improvements in equity are taking place alongside state-induced market and managerial reforms. This article assesses the extent of marketization and argues that while market elements have been limited to the provision dimension, in the long run they may lead to some erosion in universalism. The Turkish case serves as an example of transformations in developing countries where market reforms have to be accompanied by a strong and active state for universalism to be achieved.