The integrated circuit industry was born in the United States military as the American government responded to the threat posed by the then Soviet Union surge in space research following the end of the Second World War. The transistor, computer and internet were born in American military labs before they were transferred to private firms. European firms did emerge to compete with American firms but Korean and Taiwanese firms went a step further to leapfrog American firms in memories and logic chips. The early phases were navigated through adaptive learning, licensing, acquisition and systemic flows of knowledge from lead firms from abroad. Host-governments hired nationals with tacit knowledge gained from lead American firms to manage meso organization and the new strategic firms. Strict standards and milestones were established. Product markets were gained through connecting with global value chains. Massive build-up of human capital, and investment into R&D engendered the leap to the frontier. Such strategies facilitated the emergence of Samsung and Taiwan Semiconductor Manufacturing Corporation respectively as the flagship firms in memories and logic chips. The multinational corporation dependent routes taken by Malaysia, Thailand, Philippines, Singapore and Indonesia were also successful but none of the firms operate at the technology frontier. In this talk I will discuss by phases how Korean and Taiwanese firms along with institutional support strategized, caught up and leapfrogged to assume leadership of these industries, and why the other East Asian firms have lagged behind.
Rajah Rasiah is Professor of International Development at the Faculty of Economics and Administration, University of Malaya. He obtained his doctorate in Economics from Cambridge University in 1992, and was a Rajawali fellow at Harvard University in 2014. He is currently a member of the GLOBELICS scientific board, and an advisory member of the Industrial Development Research Centre, Zhejiang University, professorial fellow at UNU-MERIT, and associate member of the Technology Management and Development Centre at Oxford University. He has done consultancies for the United Nations Conference for Trade and Development, United Nations Industrial Development Organization, World Bank, International Labour Organization, the World Intellectual Property Organization, United Nations Educational, Scientific and Cultural Organization, United Nations Development Programme, the Asian Development Bank and the Economic Research Institute for ASEAN and East Asia have commissioned the writing of several reports for guiding industrial policy in the developing economies. He was also a principal author of the United Nations Industrial Development Organization’s (UNIDO) 2009 flagship report. He is the 2015 recipient of the Celso Furtado prize from the World Academy of Sciences for his seminal contributions in the field of social sciences (development economics).