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Ulrich Witt

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Ulrich Witt

Please note this updated and revised Research Review is only available online. The link to Buy Book in Print and Find This Book in Your Library is to a previous edition available in print. The previous print edition reprints the full text of many, though not all, of the recommended articles and complements the online edition. Evolutionary economics has become a major heterodox approach over the last decades. Its roots can be traced back to Schumpeter and Veblen. More recently, an important role is also played by analogies to evolutionary biology, notably to natural selection models. As this research review explains, the approach of evolutionary economics offers an improved understanding of market processes, industry dynamics, structural change, and economic growth as being driven by human innovativeness
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Ulrich Witt

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Ulrich Witt

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Witt Ulrich

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Keun Lee

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Keun Lee

Chapter 8 examines the experiences of selected industries in Korea to identify the stylized facts in the process of technological capability building and thereby to sort out the conditions for the catching-up to occur. To explain the process, we have built a model of technological and market catching-up. Special attention has been given to the question of whether there has been a case of leapfrogging in any industry in Korea and, if so, what are the conditions for its occurrence. In our framework, we first measure the degree of catching-up in terms of market shares in the world. Then we focus on catching-up in technological capabilities in explaining the different records and prospects of Korean industries in market share catch-up. Using this model, we explain the different technological evolutions of selected industries in Korea in the 1980s and 1990s, including the memory chips (D-RAM), automobile, mobile phone, consumer electronics, personal computer, and machine tool industries. We find three different patterns of catching-up: path-creating catching-up (CDMA mobile phone), stage-skipping catching-up (D-RAM and automobile), and path-following catching-up (consumer electronics, personal computers, and machine tools). We interpret the first two cases of catching-up as “leapfrogging.” We find that important R & D projects involved both private and public capacities (except automobiles where only private R & D was involved), and that entry was not driven by endogenous generation of knowledge and skills but by collaboration with foreign companies.
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Keun Lee

Chapter 13 investigates how through the transformation of latecomer small- and medium-sized enterprises (SMEs) in emerging economies from dependent or subcontracting original equipment manufacturing (OEM) firms into independent or original brand manufacturing (OBM) firms it is possible to achieve a significant catch-up in terms of share of regional or global markets. Given that SMEs are rarely able to make such a transition, we elaborate this dynamic process by performing case studies on eight Korean SMEs. These SMEs created their own paths instead of following their forerunners. These paths are neither entirely new nor take the form of leapfrogging, but are characterized by new combinations of existing paths. We identify several risk factors, such as counterattacks and intellectual property lawsuits, that latecomer SMEs face from incumbent SMEs. In addition, we emphasize the importance of cultivating firm-specific knowledge by engaging in a continuing process of trial-and-error-type in-house experiments.
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Keun Lee

Chapter 9 examines the leapfrogging thesis using the case of catch-up in digital TV by Korean firms. Despite the disadvantages implied by the technological regime of digital TV and the risks facing early entrants in trajectory choice and initial market formation, Korean firms had achieved a “path-creating catch-up” in the sense they chose a different path from the Japanese forerunning firms. As they had been closely watching the technological trends and the standard-setting process, there was less risk of choosing the wrong technological trajectory. Also, despite the lack of sufficient capability and core knowledge base, Korean firms had some complementary assets, such as the experience of producing analogue TV, and were able to develop the prototype digital TV and the ASIC chips, given the access to the foreign knowledge via overseas R & D posts and the acquisition of a foreign company. To secure the initial market size, the Korean firms targeted the US market from the beginning, and their source for competitive advantages was the speedy setting up of the production system for mass production of products at the initial stage. The initial failure of the Japanese firms and the success of the Korean firms do suggest that the period of paradigm shift, like this toward digital technology, can serve as a window of opportunity for latecomers while penalizing the forerunner.
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Economic Catch-up and Technological Leapfrogging

The Path to Development and Macroeconomic Stability in Korea

Keun Lee

This book elaborates upon the dynamic changes to Korean firms and the economy from the perspective of catch-up theory. The central premise of the book is that a latecomer’s sustained catch-up is not possible by simply following the path of the forerunners but by creating a new path or ‘leapfrogging’. In this sense, the idea of catch-up distinguishes itself from traditional views that focus on the role of the market or the state in development.