Epilogue: Implications from industrializing East Asia's innovation and learning experiences

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  • This article was downloaded by: [Queensland University of Technology]On: 21 October 2014, At: 15:49Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

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    Epilogue: Implications fromindustrializing East Asia's innovationand learning experiencesRajah Rasiah aa Centre of Regulatory Studies, University of Malaya , KualaLumpur, MalaysiaPublished online: 19 Apr 2011.

    To cite this article: Rajah Rasiah (2011) Epilogue: Implications from industrializing EastAsia's innovation and learning experiences, Asia Pacific Business Review, 17:02, 257-262, DOI:10.1080/13602381.2011.533500

    To link to this article: http://dx.doi.org/10.1080/13602381.2011.533500

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  • Epilogue: Implications from industrializing East Asias innovation andlearning experiences

    Rajah Rasiah*

    Centre of Regulatory Studies, University of Malaya, Kuala Lumpur, Malaysia

    This conclusion provides a summary of the learning and innovation experiences ofselected East Asian economies, as well as using the evidence to draw implications fortheory and policy. The cross-country East Asian study of automotive parts provided thestarting block that underscored the importance of the embedding institutions andorganizations in driving innovation and learning in firms. Although local firms showedhigher R&D intensity levels than foreign firms thus reflecting the significance of homecountry advantages, intensity levels were higher in countries with a stronger high-techinfrastructure regardless of ownership differences. The subsequent cases address broadmacro innovation policies, for example in Thailand and Korea, and micro economicand technological catch up successes such as those in the button city of Qiaotou.Contrary to the neoclassical logic of leaving it to the markets, the evidence amassedshows that a combination of markets, government and cooperation has beeninstrumental in successful innovation and learning outcomes in East Asia.

    Keywords: catch up; East Asia; innovation; learning

    1. Introduction

    The examples discussed in this volume provide a wide range of experiences that stand out

    as technological learning and innovation achievements in their respective countries in

    East Asia. The research experiences presented in this collection examined technology and

    innovation in both the richer (e.g. Korea) as well as the poorer economies (e.g. Laos), as

    well as the larger (China) and smaller countries (e.g. Malaysia and Laos). In this

    conclusion we examine the implications of the findings for both theory and policy.

    To recap, the examples were chosen because of the significance of the sectors to either the

    national economy or their contributions in world production. In the conclusion we discuss

    the implications of the experiences for theory and policy.

    2. Key findings

    Using evolutionary methodologies, the research provided a novel analytical explication of

    innovation and learning in selected experiences from East Asia. This section summarizes

    the important innovation and learning experience findings in the volume.

    Rasiah showed that statistically the embedding institutional and organizational

    environment is critical to automotive parts firms participation in higher technology

    activities in China, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand.

    Although there were mixed results with the particular technologies involved, only the

    ISSN 1360-2381 print/ISSN 1743-792X online

    q 2011 Taylor & Francis

    DOI: 10.1080/13602381.2011.533500

    http://www.informaworld.com

    *Email: rajah@um.edu.my

    Asia Pacific Business Review

    Vol. 17, No. 2, April 2011, 257262

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  • degree mattered with ownership in the dependence of firms on the supporting institutions

    and meso-organizations. The dependence of firms on the supporting environment is

    highest when involving R&D intensities. However, foreign firms clearly enjoyed far

    higher export intensities than local firms which could also be a consequence of the

    predominantly open trade regimes that faced East Asian economies from 2000.

    Rasiah, Kong and Vinanchiarachi provided a lucid account of the remarkable

    progression of Qiaotou as a button using and distributing town in the late 1970s into a

    button manufacturing town in the 1980s and into a composite cluster of mature button

    firms engaged in both manufacturing, and designing and materials development from the

    late 1990s. The initial incorporation of the town in button sales was the evolvement from

    entrepreneurs buying imported buttons from Hubei and distributing them to garment

    manufacturers, to the development of hundreds of stores using market-based armslength

    transactions. Increased demand for buttons attracted button manufacturing in Qiaotou but

    its transformation into a composite cluster was very much driven by strong support from

    the Yongjia County government, which assisted with both financial support as well as

    attracting R&D support from the universities of Huanen and Lanzhou in new design and

    materials development. A strong history of cooperation among the entrepreneurs in

    Zhejiang province made collaboration initiatives both easy and productive. Hence, strong

    interaction markets, government and cooperation has helped Qiaotou not only to produce

    65% of the worlds buttons but also become a composite button cluster with strong

    technological deepening.

    Unlike previously where the Government Research Institutes (GRIs) came under the

    purview of their respective ministries, Lee argued that the reformed research council

    system has allowed for greater autonomy in the operations of GRIs in Korea. There is

    much less bureaucratic intervention in the operations of the GRIs under the new system

    and this changed situation has led to positive outcomes in terms of research performance

    within a relatively short period of time. The changes in the governance system of the

    research councils also involved changes in the way funding was provided to the GRIs.

    Under the reformed system, GRIs will be allocated funding by the central government

    based on evaluation by the respective research councils which rank each GRI according to

    a defined criteria of performance. Such an evaluation system has contributed towards

    intense competition amongst the GRIs as well as the researchers. Despite the impressive

    achievements following the introduction of the new research system, there remain

    concerns over excessive rounds of evaluation which may exert unnecessary an

    administrative burden on GRIs. In short, given committed and sustained support by the

    government, pragmatic approaches to reforming the public research system can yield

    positive outcomes within a short period of time.

    Rasiah, Nolintha and Songvilay showed how small windows of opportunity can set off

    manufacturing synergies even in the most underdeveloped of locations. Taking advantage

    of preferential access to the European Unions everything but arms clause, Laos has

    managed to experience growth in garment manufacturing since the late 1990s. Whereas

    the economic synergies have evolved, the evidence shows that not much technological

    deepening has taken place to suggest that garment manufacturing will be long lived once

    the export access privileges in major markets expire. Although silk manufacturing enjoys

    natural resource endowments, Laos distance from sea outlets make the country naturally

    less attractive for garment manufacturing than Cambodia and Vietnam.

    Among all obstacles, Ee Shiang and Nagaraj show that funding related obs