Environmental Engineering Reference
In-Depth Information
lengthening the time horizons of business. Those elites also built more or less capable
public sector bureaucracies that enjoyed embedded autonomy with the private sector
(Evans, 1995). Embeddedness meant that technocrats in government understood the real
problems faced by business. Autonomy meant that technocrats were able to escape capture
by their private sector clients.
Long-term commitments to development, substantial bureaucratic capabilities and
embedded autonomy were used to create a set of institutions and incentives that enticed
fi
rms to build their technological capabilities so that they could successfully penetrate
world export markets for manufactures. Those institutions and incentives included main-
taining political and macroeconomic stability; investing in reliable infrastructural services
- transport, telecommunication and power - at competitive prices; and eschewing pro-
tection of labor and the creation of social welfare states in favor of investing in education
that provided
rms with the skilled and unskilled labor they needed at competitive wages
(World Bank, 1993). Because the institutions used to promote technological learning and
the incentives o
fi
ff
ered
fi
rms and industries were
fi
rm and industry speci
fi
c, promotional
privileges were selective.
Institutional structures
Since governments recognized that technological catch-up had to be carried out by
fi
rms,
they worked hard to develop contextually appropriate
rm and industry structures. In
Japan, Korea, Indonesia and Thailand, governments organized business into large-scale
conglomerated
fi
rms - Japanese
zaibatsu
(Johnson, 1982), Korean
chaebols
(Amsden,
1989), Sino-Indonesian conglomerates run by
cukong
entrepreneurs (Hill, 1996), and
Sino-Thai conglomerates (Rock, 1994). In Taiwan, the government used the power of the
state to keep
fi
, 1999) and
Malaysia (Rasiah, 1995), governments followed a catch-up strategy based on attracting
foreign direct investment and linking local small and medium-sized
fi
rms small and medium sized (Wade, 1990). In Singapore (Hu
ff
rms as suppliers to
OECD multinationals. Governments also took historically unique and direct roles in
promoting technological catch-up. Three distinct strategies are evident.
1
Taiwan built the public sector institutions of a national technology system and tightly
linked them to the country's small and medium-sized enterprises (SMEs) and the inter-
national economy (Wade, 1990). A public sector investment promotion agency identi
fi
ed
industries and technologies thought to be most applicable to each stage of industrial
development. A public sector science and technology institute acquired these technolo-
gies, reverse-engineered them, and di
fi
used them to the country's numerous SMEs.
Another public sector agency linked the country's larger
ff
fi
rms to clusters of smaller
fi
rms
that became suppliers to the larger
rms. In numerous instances, state-owned enterprises
in upstream industries were used to acquire technological capabilities in scale-intensive
industries which in turn supplied downstream users with high-quality and competitively
priced intermediate inputs (Wade, 1990).
The Republic of Korea and, to a lesser extent, Indonesia and Thailand focused new
government institutions and new incentives on building large indigenous national
fi
rms
with substantial technological capabilities that could compete with developed-country
multinational corporations. This strategy housed technological capabilities in
fi
rms and
de-emphasized the role of the public sector in technical change. Korea did this by allo-
cating performance-based promotional privileges, particularly subsidized credit from
fi
