Content area
Full Text
Abstract
This paper examines the forces that drive Taiwan's new strategy of "Upgrading through Low-Cost and Fast Innovation". The first section highlights characteristics of Taiwan's traditional "Global Factory" innovation model and examines the role of innovation policy in that model. Section 2 reviews fundamental weaknesses that define the requirements of Taiwan's new innovation strategy. Section 3 explores Taiwan's new strategy of "low-cost and fast innovation through domestic and global innovation networks". Finally, section 4 examines the role of government and key policies and initiatives in the IT industry.
Introduction
A defining characteristic of Taiwan's IT industry is its deep integration into diverse global corporate networks of production and innovation. Equally important, Taiwan's manufacturing R&D is highly concentrated in the IT industry, accounting for 70 % of Taiwan's manufacturing R&D2.
While network integration has facilitated the catching-up of Taiwanese firms as fast-followers, it now has become a mixed blessing, unless appropriate policies are put in place to develop domestic capabilities for low-cost innovation both at the firm level and across the industry. As for R&D in the IT industry, until recently its focus has been on incremental innovation. There is a growing recognition that Taiwanese firms now must increase R&D in order to avoid diminishing returns of network integration.
Taiwanese firms and policy-makers are still groping in the dark what precisely that strategy requires, for the time being content with adopting a pragmatic trial-and-error approach until they find something that works. Like in the EU, Taiwan's new innovation strategy is still "work in progress." However, some major building blocks of Taiwan's new innovation policy are gradually taking shape. In essence, that new approach combines market-led innovation and public policy coordination of multiple layers of private and public innovation stakeholders.
Due to its pragmatism and openness to new forms of public policy and private-public partnerships, Taiwan's innovation policy may in fact shed new light on the opportunities and challenges for strengthening America's innovation capabilities in advanced computing.
To understand what drives Taiwan's new strategy of "Upgrading through Low-Cost and Fast Innovation", the first section highlights characteristics of Taiwan's traditional "Global Factory" innovation model and examines the role of innovation policy in that model. Section 2 reviews fundamental weaknesses that define the requirements of Taiwan's new...