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Regional innovation systems in Asian countries: A new way of exploiting the benefits of transnational corporations
Bjorn Asheim
Professor, Center for Innovation, Research and Competence in the Learning Economy (CIRCLE); Department of Social and Economic Geography, Lund University; Centre for Technology, Innovation and Culture, University of Oslo, Sweden
Jan Vang
Assistant Professor, Center for Innovation, Research and Competence in the Learning Economy (CIRCLE); Department of Social and Economic Geography, Lund University, Sweden
Abstract
This paper argues for the importance of using the regional innovation systems (RIS) approach as both an analytical framework and a policy tool for generating economic development in developing countries. The paper reconceptualizes the RIS-model to the context of developing countries. RIS is normally based on endogenous growth models; however, in this paper we extend it to rely on external capital, transnational knowledge sources and transnational corporations (TNCs). In particular we stress -
- the importance of developing firm and regional absorptive capacity;
- the importance of embedding TNCs in the region; and
- regional policies for attaining these goals.
These factors, we argue, are important for achieving sustainable economic development, building on exogenous sources of capital and knowledge. Finally, we illustrate the relevance of RIS for analyzing as well as formulating regional development policies by referring to two of Asia's most significant cases: Shanghai's (China) and Bangalore's (India) regional innovation systems.
Keywords
Regional Innovation System, regional development, social capital, absorptive capacity, embeddedness
Article Text
Introduction
During the last decade, regional analysts, scientists, consultants and policymakers have reached the conclusion that earlier state-driven regional policies based on standardized formulas and incentive programs aimed at the atomistic firm have failed (Amin 1999). Regional innovation systems (RIS) have increasingly been recognized as a fruitful alternative analytical framework and tool for generating economic policies in the developed world (Asheim 2001; Asheim and Gertler 2005; Asheim and Isaksen 2002; Cooke 2001, Cooke et al. 2000; Amin 1999; Barthelt et al. 2004; Maskell and Malmberg 1999). There have however been only a limited number of studies addressing the relevance of RIS for regionally and socially cohesive economic development in developing countries. This situation suggests unpacking the relevance of RIS for developing countries. The main task of the paper is to discuss how RIS can be used to analyze and generate policies for two of the most remarkable cases of regional economic development in Asia: Shanghai's and Bangalore's Regional Innovation Systems. The two RISs are interesting in several ways. Most paradigmatic studies on rapid economic development have until recently focused on the Tiger economies (e.g. South Korea, Taiwan, Hong Kong and Singapore) (Amsden 1989) or their younger siblings in South East Asia (e.g. Malaysia, Thailand, Philippines and (earlier) Indonesia) and there is a need for studies analyzing other development models, especially development models resulting in rapid economic growth by other means than the state-centered models in East Asia. The RISs in China and India live up to these criteria. This does not mean that their success can be copied uncritically to other countries, as central in RIS are the institutional and systemic dynamics which always display idiosyncratic and path-dependent traits.
RIS has so far been applied mostly in the context of developed countries; hence it needs to be contextualized to the particular characteristics of developing countries. RIS is based on mobilizing and refining endogenous economic potentials in a region. Developing countries, due to limited capital, limited training and formal education, and limited developed industrial knowledge bases have to rely on exogenous sources of capital, technology and knowledge. Therefore, we focus especially on the strategic coupling between the region and these transnational sources of capital, technology and knowledge (Dicken et al. 2002; Dicken 2000). We have delimited the scope of the paper to look at TNCs (and to a minor extent transnational communities) as the external sources and not included other external sources. Special attention is paid to a) how developing local/regional absorptive capacity can contribute to avoiding situations where TNCs become 'cathedrals in the dessert', and b) how to develop local/regional linkages between TNCs and local firms, in ways that embed the TNCs in the region.
The rest of the paper is structured as follows. We begin with a presentation of the RIS concept where we stress the differences in respect to National Systems of Innovation (NSIs). This is crucial as we argue for the importance of the regional government bodies as opposed to focusing on national government bodies. To a larger extent than in RIS in developed countries, we stress the importance of accessing transnational corporations as a source of capital and knowledge and of developing an absorptive capacity for integrating these transnational flows of knowledge and capital. Dickens and colleagues have labeled this 'strategic coupling' (Coe et al. 2004). As the focus is on the RIS, it is beyond the scope of the paper to engage in a thorough theoretical stocktaking and empirical assessment of TNC literature so we focus only on strategic coupling (and how we position ourselves in contrast to general positions within TNC literature). Moreover, we point to the importance of city-regions for RIS in developing countries. Our points are illustrated by two cases: the Shanghai regional innovation system and the Bangalorian regional innovation system. Based on these studies, we allude to some policy recommendations before concluding the paper.
.... continued ....
Acknowledgements
Prof Yun-Chung Chen (Hong Kong University on Science and Technology) and Drs Ping Gao (Copenhagen Business School) for valuable information on China; Drs Tine Aage (Copenhagen Business School) for stimulating discussions on absorptive capacity; and Prof Balaji Parthasarathy, India, for information on Bangalore, India.
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