We have seen that the capability research has focused predominantly on the modern large-scale industrial sector in developing countries. This sector is often seen as the core of industrial development from where new technological capabilities emerge and diffuse through the rest of the economy as it modernizes. For example, Katz observes that
… many of the(se) new engineering activities tend to be localised in specialised technical departments
of medium size and large firms. …
It is here that domestic technological capabilities actually appear and develop (Katz, 1985:129, emphasis added).