Export-led Technology Development in the Four Dragons: The Case of Electronics Mike Hobday
To date, little attention has been paid to the strategies of local firms in bringing about industrialization in East Asia. This article focuses on the methods by which domestic firms utilized foreign connections to overcome technology and market bamers in electronics. A simple market-technologymodel is developed as a first approximation of how domestic technology assimilation relates to export marketing in the four ‘Dragons’ of East Asia (South Korea, Taiwan, Hong Kong and Singapore). It proposes that export demand shaped the pace and pattern of technological progress in electronics in each of the four Dragons. Historical evidence shows that each country used a distinctive mix of direct and indirect export mechanisms to acquire technology and to enter international markets. Foreign buyers, transnational corporations (TNCs), original equipment manufacturer (OEM) arrangements, joint ventures and licensing deals were exploited by ‘latecomer’ firms to their market and technology advantage. Asian firms progressed from simple assembly tasks to more sophisticated product design and development capabilities, travelling ‘backwards’ along the product life cycle of traditional innovation models. Today, leading Asian firms invest heavily in R&D and engage in partnerships with TNCs to acquire and develop advanced new electronics technologies. The technological progress of latecomers remains closely coupled to export demand through OEM and other institutional arrangements.
Following Japan, the four ‘Dragons’or newly industrializingcountries (NICs) of East Asia (South Korea, Taiwan, Hong Kong and Singapore) have made remarkable economic and technological progress’. During the 1980s, the Research for this article was funded by the Economic and Social Research Council (ESRC) of OO the UK, grant reference R O 23 3116. The author is grateful to Prof. Yao-Su Hu, Prof. Christopher Freeman, Dr Jose Cassiolato and Dr Norman Clark for advice and comments on earlier drafts. The normal disclaimers apply. 1. The four Dragons are also referred to as Tigers. The symbol of South Korea (hereafter Korea) is a tiger. The other three economies are called Dragons, the Chinese sign of power and dynamism. Development and Change Vol. 25 (1994), 333-361. 0Institute of Social Studies 1994. Published by Blackwell Publishers, 108 Cowley Rd, Oxford OX4 IJF, UK.
four Dragons developed from low to medium wage economies. Today, the four economies have established high value-added industries and compete strongly in technology-intensive export markets, such as electronicsz. In the literature on East Asian industrialization little attention is paid to understanding how firms in the four NICs overcame barriers to market entry, acquired technology and learned to compete in foreign markets. Most of the debate has focused on the relative importance of market mechanisms versus government policies. While some studies stress the role of government policies in guiding industrialization (Amsden, 1989; Kim and Dahlman, 1992; Wade, 1990), others claim that economic fundamentals such as macroeconomic stability, market orientation, inflation and interest rate policies underlie East Asian development. A major World Bank study, for example, concludes that industrial intervention cannot explain patterns of productivity, evolving industrial structures or Asian export success (World Bank, 1993)’. The dominance of the ‘market versus policy’ debate has left little room for the study of Asian firms’ strategies for overcoming barriers to entry and acquiring technologp. This is an important field of enquiry because firms are usually the locus of competitiveness, innovation, market entry and productivity increase. How they acquire technology and access foreign markets is therefore essential to understanding Asia’s industrialization. This article...
Please join StudyMode to read the full document