Industrial development and structural adaptation in Taiwan: Some issues of learned entrepreneurship

Abstract

The industrialization of Taiwan has been a remarkable phenomenon. This paper discusses recent changes in Taiwan's manufacturing industries and the response of both government and private enterprises to the challenges presented by a dynamic environment and by global competition. Several cases are discussed in light of the activities and adjustments on the part of government and of the public sector, of small and medium business, and of high-tech industries. Government participation over the last four decades has been and will remain pivotal in economic growth and in achieving adjusted positioning. Taiwan's personal computer and IC industries have evolved from an infant stage through an accelerated growth period and are now extending to other technologically associated industries. The small enterprise sector is in a transitional stage of upgrading competitive niches. The unsuccessful stories of biopharmaceuticals and automobiles are discussed in terms of what they reveal about government intervention and the performance of public research institutes. Active patenting activities by Taiwan enterprises and public research institutes illustrate the accumulated technological capability found on this island. The accelerated sociopolitical movements toward democracy, the bureaucratic management of public issues, and the political and economic interactions between Taiwan and China, exert significant effects on the industrial structure and on government's role in directing the industrial evolution. This article presents an integrated reasoning of Taiwan's economic success, It reveals that the neoclassical doctrine of market efficiency is fundamentally valid, and that the effective commercialization of national technological capability has created Taiwan's industrial evolution. Market governance proved to be an efficient short-term policy instrument when the latecomer strategy of cost leadership was applied. A conceptual model of industrial competition and technology commercialization is also proposed to facilitate the methodological analysis. This study concludes that learning capability and human capital will determine the endurance of Taiwan's industrial success, and that entrepreneurship must be learned by the state, as well as by the private firms.