Innovation and the state : development strategies for high technology industries in a world of fragmented production : Israel, Ireland, and Taiwan

Abstract

One of the most unexpected changes of the 1990s is that firms in a number of emerging economies not previously known for their high-technology industries have leapfrogged to the forefront in new Information Technologies (IT). Surprisingly, from the perspective of comparative political economy theories, the IT industries of these countries use different business models and have carved out different positions in the global IT production networks. Of these emerging economies, the Taiwanese, Israeli, and Irish have successfully nurtured the growth of their IT industries. This dissertation sets out to establish that emerging economies have more than one option for developing their high technology industries. Moreover, it advances a theoretical framework for analyzing how different choices lead to long-term consequences and to the development of successful and radically different industrial systems. Hence, this dissertation strives to give politics - the art and profession of creating alternatives and the social struggles of choosing between, and acting on, them - the importance that it seems to have lost in the social sciences. The research focuses on the role of the state in shaping the structure of the IT industry in Israel, Ireland, and Taiwan.

(cont.) It argues that the developmental path of the IT industry is influenced by four critical decisions by the state. First, decisions about how to acquire the necessary R&D skills influence which organizations - public or private - play a leading role in innovation. Second, state decisions about financing significantly affect both the R&D resources available to the industry and the scope of R&D activity. Third, state efforts to develop local leading companies have long-term consequences for the industry's opportunity structure. Fourth, state decisions regarding foreign firms and investors within and outside national borders affect the resources and the information that the industry receives from its customers, as well as the diffusion and development of specific innovative capabilities. Of particular importance are state decisions that develop specific links between local and foreign companies, investors, and financial markets. Overall, the dissertation utilizes this framework to explain the divergent development of the IT industry in Taiwan, Israel, and Ireland.