Technology, industrial organization and industrial policy: Governments of South Korea and Taiwan in information technology industrial development (China)

The 1997 economic crisis that hit most of the East Asian countries tarnished the East Asian Developmental State Model. It is imperative for us to understand what government policies worked and what did not. Focusing on information technology (IT) industrial policies of Taiwan and South Korea, this dissertation claims that we need a better tool to explain the conditions under which industrial policies become successful. Three variables require attention: the nature of IT technologies, or “technology trajectory”, industrial organization, and industrial policy. My research elucidates why South Korea was successful in memory semiconductor industry but not in PC/PC components while Taiwan showed successes in both PC/PC components and ASIC semiconductor industries. The followings are major lessons learned in this study: (1) “Technology trajectory”, or the technological characteristics of particular industry, is a major determinant of IT industrial development. Even within the same IT industry, different products have different trajectories. In this study, the technology trajectory of three IT products was analyzed: memory semiconductor, ASIC semiconductor, and PC/PC components. (2) Particular technology trajectory requires an appropriate network among engineers and markets to prosper. Only appropriate industrial organizations can supply such a network. In this study, the extensive network among small and medium enterprises helped Taiwan's PC industry. Both governments successfully created a dense network for semiconductor industry. However, Taiwan's ASIC semiconductor industry and South Korea's memory semiconductor industry are established on distinct industrial organizations. (3) A government can help develop the industry by nurturing such an industrial organization. However, it is difficult for governments to change the industrial organization in short or medium terms because of vested interests. Furthermore, the prediction of technology trajectory and suited industrial organization is a difficult task. In fact, both Taiwan and South Korea used existing industrial organization to develop respective IT industry without much consideration on technology trajectory and industrial organization.