Reader's feedback—Taiwan Econ

After reading our February edition of Taiwan Econ 2008, Dr. Dieter Ernst at the East-West Center shares with us insights from Taiwan’s IT industry in his recent paper— Upgrading through Innovation in a Small Network Economy. Using illustrative examples from Taiwan’s IT industry, this paper explores how internationalization of R&D affects government policies for developing knowledge economies. Taiwan’s success in the IT industry demonstrates the important role played by knowledge diffusion through integration into global production and informal global knowledge networks. The paper introduces a concept of “industrial upgrading” that links specialization with firm-level and industry-level upgrading and high integration into global networks. This concept is used to discuss specific innovative capabilities needed to upgrade Taiwan’s IT industry. Dr. Ernst argues in this paper that “technology leadership strategies” are not the only option. “Technology diversification” can serve as a complementary and arguably less costly option.

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