Tiger Technology: The Creation of A Semiconductor Industry in East Asia

Article excerpt

Tiger Technology: The Creation of A Semiconductor Industry in East Asia. By John A. Mathews And Dong-Sung Cho. Cambridge: Cambridge University Press, 2000. Pp. 389.

This is an important book looking in detail at an important aspect of the East Asian economies -- the semiconductor industry. The development of this sector, together with the wider electronics industry of which it is a crucial part, has been at the leading edge of the region's rapid industrialization along with the car, steel, textiles, and petrochemical industries. The book takes the semiconductor sector as a prime example for understanding the dynamics behind this rapid industrialization and describes why parts of East Asia (Japan, Korea, Taiwan, Singapore, and, to some extent, Malaysia) have managed to come close to the world cutting edge in such complex technologies. The book follows in the tradition of Hobday (1995) and Borrus et al. (2000) with a detailed discussion of country experiences and applies a thorough review of the literature regarding technology diffusion and organizational theory to the specifics of the East Asian semiconductor industry. In this way the authors examine the wider implications including prospects of replication in both other developing economies and also in the United States and European Union (EU). This book is an important contribution to our understanding of why the region developed so fast and will be useful for a variety of readers from macroeconomists to industry specific specialists and policy-makers around the world.

The key dynamic stressed is the creation of institutional capabilities to leverage existing technology from more advanced countries as opposed to traditional product invention and discovery. They rigorously explain that this was not a spontaneous development. Rather, it was the result of a concerted effort by the development-- orientated state to build the required institutional frameworks. In the context of technological underdevelopment, and with the disadvantages of being latecomers, the governments were instrumental in creating the mechanisms by which technology could be first introduced, then adapted to local requirements and finally mastered. Japan was the first and was perhaps sui generis with its strategy of full infant industry protection and a heavily mercantilist view. In the contemporary globalizing world with WTO (World Trade Organization)/IMF (International Monetary Fund) type policy agendas, the potential for broad replication focuses more on examining the strategies of Korea, Taiwan, and Singapore. Broadly similar approaches to technology diffusion were taken albeit with differing focuses reflecting differing characteriztics and initial endowments. In Korea, the focus was on the top with vertically integrated chaebols as the lead with easy credit supplied by government-controlled banks. Alternatively, in Taiwan, small and medium enterprises (SMEs) were dominant, supported by the public sector which took on an enabling role. Crucially, it established agencies such as ITRI acting as technology providers and "incubators". ITRI then spun off successes such as UMC and TSMC (a joint venture with Philips) into the private sector. These became some of the most successful firms of their type in the world. The Singapore strategy was more open to foreign direct investments (FDI) with the crucial role of state agencies such as the Economic Development Board (EDB) in creating backward and forward linkages around the multinational corporations (MNCs) in clusters centred on industrial estates.

The conclusion is rightly that variants of the Singapore model are the most replicable for most developing countries with a focus on MNCs as the production core alongside institutional structures to ensure adequate technology transfer and the creation of backward linkages into the wider economy. Of great contemporary interest is that China has now embraced the successful leverage strategy. As the authors correctly point out, China is big and diverse enough to follow simultaneously all three versions of the leverage strategy. …