State, Institutions and Industrial Development: Industrial deepening and upgrading policies in Taiwan and Thailand compared

What happens when developing countries can no longer grow by simply exploiting their existing comparative advantages in natural resources or cheap labour? Many middle income countries are situated in a sandwiched position between on the one hand competitive pressure from lower-wage countries and on the other hand competition from innovators in the advanced capitalist countries. To climb onwards to higher income levels they must deepen and upgrade their industries.

The dissertation is based on the assumption that this transition from low to high value-added activities does not take place ‘automatically' as a result of the working of market forces or of the choices and activities of transnational companies. Hence it examines the role of the state in such late-industrial transformation processes in Taiwan and Thailand. Most scholars have dealt with this issue from the perspective of trade and have studied the role of the state in relation to the shift from import-substitution industrialisation to export-oriented industrialisation. The present study is not specifically concerned with trade or trade policy, but with policies related to production structure and technological advance.

The study belongs to a group of studies examining the influence of policies and institutions on national economic performance in late industrialising countries in a comparative perspective. It is guided by the proposition that the nature of the politico-institutional setting has an important impact on the effectiveness of policy-making, and that the quality of industrial policy has an important bearing on the pace and pattern of industrial growth. In other words, the constraints on dynamic industrial transformation are thought to result in part from policy weaknesses, which in turn are seen as a function of the state's capacity and the nature of politics. Henceforth, the dissertation examines the ability and willingness of the state to design and implement an adequate and coherent set of strategic industrial policies, and the likely impact of such policies on industrial deepening and upgrading in Taiwan and Thailand.

The study is published in three volumes and organised into five parts. Part I sets out the theoretical and methodological framework. It approaches the issue of the quality of state-related institutional arrangements from a developmental state perspective (Chapters 3 and 4), from competing theoretical perspectives on the state and the economy (Chapter 5), from the perspective of policy networks and collaborative advantages between the private and public sectors, and from a politico-institutional and politics perspective (Chapter 8). Chapter 6 develops the notion of strategic industrial policy, while Chapter 7 develops theoretical ideas related to three types of industrial deepening and upgrading policies: basic industry policy; linkage formation, supplier development and SME policies; and industrial technology policies. Part II introduces the reader to the different historical experiences and political economies underpinning economic growth and transformation in Taiwan and Thailand respectively (Chapter 9), but also analyses industrial policy-making; macro-institutional arrangements and the socio-political underpinnings of industrial policy; and the pattern of industrialisation in Thailand, all prior to 1991 (Chapters 10, 11 and 12).

Part III investigates the three above-mentioned industrial upgrading and deepening policies in Taiwan covering generic policies as well sectoral policies along the petrochemical-plastic production chain (Chapters 13-16). The final Chapter 17 targets the underlying macro-institutional arrangements and socio-political underpinnings of industrial policy in Taiwan from 1960 to 1996.

 

Part IV investigates the same policies, institutional arrangement and politics in Thailand during the post-1991 period (Chapters 18-22). Chapter 23 offers a brief diachronic comparison of industrial deepening and upgrading policies as well as institutions in Thailand by comparing the pre-1991 and the post-1991 periods. Part V then makes a synchronic comparison of Thailand versus Taiwan followed by a conclusion and theoretical-methodological reflections (Chapter 24).