Abstract
The biggest business story today is China, along with India and Brazil. These three emerging giants are predicted by Goldman Sachs to account for over half of global business activity by 2050. Competition and strategy as practised by these countries – and by firms and countries of the Asia-Pacific more generally – can no longer be thought of as a ‘peripheral’ feature of the world economy. Now Asia-Pacific – its firms, industries, countries – is moving to the core of the global economy, whereas strategies and competitive behaviours developed here are proving to be of much more than peripheral interest. In this paper I reflect on the technology leverage strategies developed to enter advanced industries (tiger technologies), on the accelerated internationalization achieved through complementing the global value chains created through globalization (dragon multinationals) and on the national innovative capacities developed in the region, and to what extent the practices of China, India and Brazil in developing national systems of economic learning may be said to replicate the strategies that worked so successfully in East Asia. The paper concludes that the propagation of East Asian strategies to these emerging giants promises much greater success than in countries following the precepts of the Washington Consensus.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
For the original BRICs report, see GS (2003). For an example of the commentary and analysis it has inspired, see Jensen and Larsen (2004).
There are texts appearing already discussing such ‘miracles’, for example Lin et al (1996). For a discussion as to whether China is following the ‘East Asian development model’, see Baek (2005).
This is the fundamental issue on which the World Bank's East Asian Miracle report (World Bank, 1993) turned, and the reviews querying its approach, for example Amsden (1994).
Chang (2004) captures this point well when he argues that the developed countries are ‘kicking away the ladder’ that underpinned their own success.
List had a very clear notion of industrial transformation at national level, as in this passage from his National System of Political Economy (1856):
in the economical development of nations by means of external trade, four periods must be distinguished. In the first, agriculture is encouraged by the importation of manufactured articles, and by the exportation of its own products; in the second, manufacturers begin to increase at home, whereas the importation of foreign manufactures to some extent continues; in the third, home manufactures mainly supply domestic consumption and the internal markets; finally, in the fourth, we see the exportation on a large scale of manufactured products, and the importation of raw materials and agricultural products.
See source at: http://www.fordham.edu/halsall/mod/1856list.html.
On the German Patent Law of 1877 (and its prior Prussian version), see the forthcoming treatment by Palombi (Forthcoming). This legislation was brought about by Bismarck under advisement from Werner Siemens (electrical), Friedrich Bayer (chemical) and the Deutscher Patent-Schutz-Verein (German Association for the Protection of Patents) which was founded in 1874.
See Gerschenkron (1962), for his main work expounding the latecomer effect. For a valuable collection of essays gathered together by former students, see Sylla and Toniolo (1991).
Hobday puts the matter thus: ‘Gerschenkron argued that there were no automatic stages of development and that countries did not and could not pass through the same stages of development that others had passed through before them, precisely because others had passed through them’ (2003: 294) (Emphasis in original).
On this topic, I have written other papers, including Mathews, 2007a, on the extent to which renewable energies can be utilised by developing countries to promote their upgrading efforts; and 2007b on linking strategies for renewable energies to the capture of latecomer effects; and Mathews, 2008 (also Mathews and Goldzstein, 2009) on how this process is unfolding in the case of biodiesel produced in Argentina.
On development as collective entrepreneurship, with all the strategizing connotations of that term, see Leibenstein (1968) and Hausmann and Rodrik (2003), for a more recent exposition.
This chart was first presented in Mathews and Cho (2000). For my own contributions to this literature over the course of the past decade, emphasizing collective entrepreneurial initiative in order to capture latecomer advantages, see Mathews (1996, 2001, 2002a, 2002b, 2003, 2005a, 2005b, 2006a, 2006b, 2007b), also, Mathews and Cho (2000), Mathews and Hu (2007) and Hu and Mathews (2005). This paper provides a welcome opportunity to review these contributions and assess their applicability to the case of the BICs.
There is now considerable documentation on technology leverage and technological capabilities enhancement by firms in China, India and Brazil. See Lu (2000) and Lu and Lazonick (2001) for comprehensive treatment of IT-sector firms and strategies; Mu and Lee (2005) for the telecommunications sector; Xie and White (2006) for telecoms handset makers; and Xie and Wu (2003) for the above CTV makers. Hu (2002) provides a comprehensive account of Chinese catch-up strategies in the context of latecomer strategies pursued by other developing countries in the past. These studies draw on earlier works looking at firms’ technological upgrading strategies and the network and institutional settings in which they do so, as in works by Bell (2006), Rasiah (2004) and Shin (1996).
The BCG report missed some important ‘dragon multinationals’ such as Ispat/Mittal and the Bunge group from Brazil, doubtless because of their restrictive criteria regarding stock market listing. Mittal is listed on the London and Amsterdam stock exchanges, whereas Bunge is listed on the New York exchange. They are both essentially firms that have globalized from the periphery, and thus in every sense fulfill the BCG criteria.
Out of a large literature on this topic of internationalization of firms from the Asia-Pacific, see Yeung (2007), and for the case of white goods, Bonaglia et al (2007).
For highlights of a debate on this topic, see Mathews (2006a) and Dunning (2006).
This book remains pre-eminent in studies designed to bring out how countries have to practice one kind of intervention or another – rather than pursue free market, level playing-field approaches – if they wish to overcome latecomer impediments and prosper.
Chart taken from Mathews (2005b).
On the shift of software services to India, see Dossani and Kenney (2007).
On these matters, see Lundvall, 2007 for a review of his concept of national system of innovation; and Gu and Lundvall, 2006 for the concept of endogenous innovation to convey an active approach to technology transfer; I have sought the same idea in the notion of technology leverage. Lazonick, 2004 provides an opportunity reflect on a lifetime's work as well as engage with the stimulating scholarship of Lu. By contrast, Lall, 1992 was the start of a substantial body of work on the theme of technological learning, culminating in the studies assembled in Chandra, 2006. Schumpeter started off this literature train with the publication of his remarkable ‘Theory of Economic Development’ published in German in 1911 (Schumpeter 1911/1934). A full English translation of the ‘lost’ seventh chapter of this work first appeared in the journal Industry and Innovation in 2004 (Schumpeter 1911/2004).
Griffiths developed this idea in the setting of the world meat industry: see Griffiths and Zammuto (2005). On the notion of national systems of economic learning, see Mathews (2001).
Kim (1997) remains one of the indispensable references in the field of industry strategies.
It is a promising field of research to investigate the formulation of national standards and how they may be used to enhance national competitive advantage. On the China approach, see Linden, 2004, and on the WAPI standard episode, where China proposed a WiFi standard, but had to retreat in the face of determined opposition from incumbents such as Intel, see Lee and Oh (2006).
See Hu and Mathews (2005), where the sources and arguments are reviewed. This work was followed up with a study of China's national innovative capacity, again using patenting at the USPTO as source of data (Hu and Mathews, 2008).
See Wade, 2003 for the arguments on the restriction of the ‘development space’ accorded to developing countries today by the WTO, and Wade, 2007 for the continuing argument that the international financial system is biased against developing countries. Amsden, 2007 is a hard-hitting examination of the American Empire and the influence it has exercised on the prospects for developing countries.
See Rodrik's (2006) insightful review of the 2005 World Bank, where he pronounced the death of the Washington Consensus, but is less sure of the way beyond this consensus. My argument is that the way beyond the Washington Consensus is being shown by Brazil, India and China.
References
Amsden, A. (1994) Why isn’t the whole world experimenting with the East Asian model to develop? World Development 22 (4): 627–633.
Amsden, A. (2007) Escape from Empire: The Developing World's Journey Through Heaven and Hell. Cambridge: MIT Press.
Baek, S.-W. (2005) Does China follow the ‘East Asian development model’? Journal of Contemporary Asia 35 (4): 485–498.
BCG. (2006) The New Global Challengers: How 100 Top Companies from Rapidly Developing Economies are Changing the World. Boston: Boston Consulting Group.
Bell, M. (2006) Time and technological learning in industrialising countries: How long does it take? How fast is it moving (if at all)? International Journal of Technology Management 36 (1/3): 25–39.
Bonaglia, F., Goldstein, A. and Mathews, J.A. (2007) Accelerated internationalisation by emerging markets’ multinationals: The case of the white goods sector. Journal of World Business 42: 369–383.
Chandra, V. (ed.) (2006) Technology, Adaptation, Exports: How Some Developing Countries Got It Right. New York: World Bank.
Chang, H.-J. (2004) Kicking Away the Ladder: Development Strategy in Historical Perspective. London: Anthem.
Dossani, R. and Kenney, M. (2007) The next wave of globalisation: Relocating service provision to India. World Development 35 (5): 772–791.
Dunning, J.H. (2006) Comment on dragon multinationals: New players in 21st-century globalisation. Asia Pacific Journal of Management 23: 139–141.
Ernst, D. (2005) Complexity and internationalisation of innovation: Why is chip design moving to Asia? International Journal of Innovation Management 9 (1): 47–73.
Gerschenkron, A. (1962) Economic Backwardness in Historical Perspective. Cambridge: Belknap Press of Harvard University Press.
Goldman Sachs (GS). (2003) Dreaming with BRICs: The Path to 2050, Global Economics paper No. 99, New York: Goldman Sachs.
Griffiths, A. and Zammuto, R.F. (2005) Institutional governance systems and variations in national competitive advantage: An integrative model. Academy of Management Review 30: 823–842.
Gu, S. and Lundvall, B.-A. (2006) China's innovation system and the move towards a more harmonious growth and endogenous innovation. Innovation, Management, Policy & Practice 8 (1): 1–26.
Hausmann, R. and Rodrik, D. (2003) Economic development as self-discovery. Journal of Development Economics 72: 603–633.
Hobday, M. (2003) Innovation in Asian industrialisation: A Gerschenkronian perspective. Oxford Development Studies 31: 293–314.
Hu, A.-G. (2002) Knowledge and Development: The New Catch-Up Strategy. In: B. Grewal, L. Xue, P. Sheehan and F. Sun (eds.) China's Future in the Knowledge Economy. Melbourne: Centre for Strategic Economic Studies, Victoria University and Tsinghua University Press.
Hu, M.C. and Mathews, J.A. (2005) Innovative capacity in East Asia. Research Policy 34: 1322–1349.
Hu, M.C. and Mathews, J.A. (2008) China's national innovative capacity. Research Policy 37: 1465–1479.
Jensen, T.H. and Larsen, J.A.K. (2004) The BRIC countries. Monetary Review, 2004(4): 39–54. available online at http://www.nationalbanken.dk/C1256BE9004F6416/side/Monetary_review_4_Quarter_2004!opendocument.
Johnson, C. (1982) MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975. Stanford: Stanford University Press.
Kim, L. (1997) Imitation to Innovation: The Dynamics of Korea's Technological Learning. Cambridge: Harvard Business School Press.
Lall, S. (1992) Technological capabilities and industrialisation. World Development 20: 165–186.
Lazonick, W. (2004) Indigenous innovation and economic development: Lessons from China's leap into the information age. Industry and Innovation 11 (4): 273–297.
Lee, H.-J. and Oh, S.-J. (2006) A standards war waged by a developing country: Understanding international standard setting from the actor-network perspective. Journal of Strategic Information Systems 15: 177–195.
Leibenstein, H. (1968) Entrepreneurship and development. Papers and proceedings of the 80th meeting of the AEA (May 1968), American Economic Review 58 (2): 72–83.
Lin, J.Y., Cai, F. and Li, Z. (1996) The China Miracle: Development Strategy and Economic Reform. Hong Kong: Chinese University Press.
Linden, G. (2004) China standard time: A study in strategic industrial policy. Business and Politics 6 (3), Article 4: available at: http://www.bepress.com/bap/vol6/iss3/art4/.
Lu, Q. (2000) China's Leap into the Information Age: Innovation and Organisation in the Computer Industry. Oxford: Oxford University Press.
Lu, Q. and Lazonick, W. (2001) The organisation of innovation in a transitional economy: Business and government in Chinese electronic publishing. Research Policy 30: 55–77.
Lundvall, B.-Å. (2007) National innovation systems: Analytical concept and development tool. Industry and Innovation 14 (1): 95–119.
Mathews, J.A. (1996) High-technology industrialisation in East Asia. Journal of Industry Studies 3 (2): 1–77.
Mathews, J.A. (2001) National systems of economic learning: The case of technology diffusion management in East Asia. International Journal of Technology Management 22 (5/6): 455–479.
Mathews, J.A. (2002a) Competitive advantages of the latecomer firm: A resource-based account of industrial catch-up strategies. Asia Pacific Journal of Management 19: 467–488.
Mathews, J.A. (2002b) The origins and dynamics of Taiwan's R&D consortia. Research Policy 31: 633–651.
Mathews, J.A. (2002c) Dragon Multinational: A New Model of Global Growth. New York: Oxford University Press.
Mathews, J.A. (2003) Competitive dynamics and economic learning: An extended resource-based view. Industrial and Corporate Change 12: 115–145.
Mathews, J.A. (2005a) The intellectual roots of latecomer industrial development. International Journal of Technology and Globalisation 1 (3/4): 433–450.
Mathews, J.A. (2005b) Strategy and the crystal cycle. California Management Review 47 (2): 6–22.
Mathews, J.A. (2006a) Dragon multinationals: New players in 21st century globalisation. Asia Pacific Journal of Management 23: 5–27.
Mathews, J.A. (2006b) Catch-up strategies and the latecomer effect in industrial development. New Political Economy 11 (3): 313–335.
Mathews, J.A. (2006c) Strategising, Disequilibrium and Profit. Stanford: Stanford University Press.
Mathews, J.A. (2007a) Can renewable energies be turned to a source of advantage by developing countries? Revue de l’Energie 576 (Mar-Apr): 96–105.
Mathews, J.A. (2007b) Latecomer strategies for catching-up: The cases of renewable energies and the LED program. International Journal of Technological Learning, Innovation and Development 1 (1): 34–42.
Mathews, J.A. (2008) Biofuels, climate change and industrial development: Can the tropical South build 2000 biorefineries in the next decade? Biofuels, Bioproducts and Biorefining 2 (2): 103–125.
Mathews, J.A. and Cho, D.S. (2000) Tiger Technology: The Creation of a Semiconductor Industry in East Asia. Cambridge: Cambridge University Press.
Mathews, J.A. and Goldzstein, H. (2009) Capturing latecomer advantages in the adoption of biofuels: The case of Argentina. Energy Policy 37: 326–337.
Mathews, J.A. and Hu, M.-C. (2007) Enhancing the role of universities in building national innovative capacity in East Asia: The case of Taiwan. World Development 35 (6): 1005–1020.
Mu, Q. and Lee, K. (2005) Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunications industry in China. Research Policy 34 (6): 759–783.
Palombi, L. (Forthcoming) Gene Cartels: Biotech Patents in the Age of Free Trade Abingdon, UK: Edward Elgar, in press.
Rasiah, R. (2004) Technological intensities in East and Southeast Asian electronics firms: Does network strength matter? Oxford Development Studies 32 (3): 433–455.
Rodrik, D. (2006) Goodbye Washington consensus hello Washington confusion? A review of the World Bank's Economic growth in the 1990s learning from a decade of reform (2005). Journal of Economic Literature XLIV: 973–987.
Schumpeter, J.A. (1911/1934) The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle (translated from the German by Redvers Opie). Cambridge, MA: Harvard University Press.
Schumpeter, J.A. (1911/2002) The economy as a whole: Schumpeter's seventh chapter to the Theory of Economic Development, Industry and Innovation, 9 (1/2): 93–145.
Shin, J.-S. (1996) The Economics of the Latecomers: Catching-Up, Technology Transfer and Institutions in Germany, Japan and South Korea. London and New York: Routledge.
Sylla, R. and Toniolo, G. (eds.) (1991) Patterns of European Industrialisation: The Nineteenth Century. London and New York: Routledge.
Wade, R. (1990/2004) Governing the Market: Economic Theory and the Role of Government in East Asian Industrialisation. Princeton: Princeton University Press.
Wade, R. (2007) A new global financial architecture? New Left Review 46 (July-August): 113–129.
Wade, R.H. (2003) What strategies are viable for developing countries today? The World Trade Organisation and the shrinking of ‘development space’. Review of International Political Economy 10 (4): 621–644.
World Bank. (1993) The East Asian Miracle: Economic Growth and Public Policy. New York: Oxford University Press.
World Bank. (2005) Economic Growth in the 1990s: Learning from a Decade of Reform. Washington, DC: World Bank.
Xie, W. and White, S. (2006) Windows of opportunity, learning strategies and China's handset makers. International Journal of Technology Management 36 (1/3): 230–248.
Xie, W. and Wu, G. (2003) Differences between learning processes in small tigers and large dragons: Learning processes of two colour TV (CTV) firms within China. Research Policy 32 (8): 1463–1479.
Yeung, H.W.-C. (2007) From followers to market leaders: Asian electronics firms in the global economy. Asia Pacific Viewpoint 48 (1): 1–25.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Mathews, J. China, India and Brazil: Tiger technologies, dragon multinationals and the building of national systems of economic learning. Asian Bus Manage 8, 5–32 (2009). https://doi.org/10.1057/abm.2008.28
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/abm.2008.28