Transcript Professor Chen-Min HSU, National Taiwan University, Taiwan

The State Governance in the Economic
Growth and Technology Growth
Hsu, Chen-Min
Professor of Economics, National Taiwan University
2014.9.10
Outline
I. Introduction
II. Literature Reviews
III. The Development of Taiwan’s ICT Industries
IV. Implementation of Science and Technology
Policies Performed by ITRI
V. Development of Science and Technology Human
Resources
VI. Hsinchu Science and Industrial Park
VII. Conclusion: Technology Industries’ Advancing to
Mainland China for Production and Investment
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I. Introduction
 The reason of why Taiwan’s electronics industry can find a foothold in
international economy and industry division of labor can be mainly
attributed to the contribution of science and technology development
promoted by government.
(1) the fact government science and technology authorities’ working closely
with universities and that the local governments is a major key to success.
(2) government leaders had adequate wisdom and determination capable of
identifying sticking points of problems, and had the courage and execution
power capable of putting solutions and measures, which should be taken,
into practice.
(3) government leaders made good use of policy promoters able to spread
concepts and ideas to the whole society, so that they had changed social
attitude towards acceptance of science and technology projects to be
promoted, and further to generate strength of collective action.
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I. Introduction
 In the course of Taiwan’s economic and industrial development,
three times of industrial structure transformation had occurred
in three different stages.
(1) major industries shifted from agricultural field to industrial
field aiming for economic development
(2)major industries shifted from labor-intensive industries to
heavy and chemical industries for economic development
(3)major industries shifted from heavy and chemical industries
towards the development of hi-tech industries
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I. Introduction
 With regard to the successful development experience of hi-tech
industries
 1974 the Premier Chiang Ching-Kuo ordered Executive Yuan
Secretary-General Fei Hua to study breakthrough measures for
industrial development in conjunction with relevant ministries, and
thus commenced the development of IC industry.
 1977 the “Applied Science and Technology Research and
Development Team” was established
 1978 Li Kwoh-Ting convened the “1st National Science and
Technology Conference”
 1972 to 1988, many peripheral and supportive institutions and
facilities required for developing hi-tech industries had been set up
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I. Introduction
 Under government’s effective leadership Taiwan had completed
the full deployment and promoted hi-tech development to lay a
solid foundation for future development of Taiwan’s hi-tech
industries, enabling Taiwan to become one of the world’s hitech industry powerhouses in 1990.
 During the ruling of Chiang Ching-Kuo in 16 years, Taiwan
had enjoyed a high average annual economic growth rate of
more than 9%, the unemployment rate fell to less than 2%,
exports climbed 11th country worldwide in 1986. In 1980 gap
between the rich and the poor dropped to 4.17 times, became
one of a few countries with most even income distribution in the
globe.
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II. Literature Reviews
 Robert Solow: Neoclassical Growth Theory
 the economic growth of a country will lead to the stationary
state of balanced growing eventually and the growth rate of
long-term balanced of average national income will be
influenced by the growth rate of the development of
technique.
 Robert Lucas and Paul Romer: Endogenous Growth Theory
 the development of technique can be created by combination
of the Human Capital and researches of innovation.
 the education policy and R&D strategies can be conducted to
encourage or to induce private enterprises to achieve the
target of development of technique.
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II. Literature Reviews
 Schumpeter : creative destruction
 the entrepreneurs could seek for enormous margin through
the innovation, then, to create new technique to replace the
old one by applying innovation afterwards.
 Gary Becker and Robert E. Lucas : human capital
 under the situation of knowledge-based economy, the economic
growth will occur on the investment on human capital from
personal and families which all analysis from the demanding side
of investment.
 To apply on the policy, it can be assumed that if governments can
provide the allowance and the exemption of educational
investment or lower education fees, it may enhance the willing of
education investment both personal and families.
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II. Literature Reviews
 Philippe Aghion
 the innovation of technology could be obtained by 2 ways,
internal R&D of the enterprises and the basic research
carried out by schools with cooperating of industrial
technologies research institute and venture organization.
 The educational training of human resource can be
completed by two education systems, the regular general
education and a system of vocational education. The former
is the general university education and the latter is the
education of technological institute or college.
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II. Literature Reviews
 Daniel Bell
 “information” is a strategic resource for today’s society, which
is the media to step into the post-industrial society, as well as
the principle key point while step into the new social structure
society which based on the telecommunication.
 three major characteristics of the information society in postindustrial, which are: (1) Transfer from the currency and
finance production into the services economics, (2) the
increasing dependence on the theoretical knowledge, (3)
applying computer and other smart machine to create new
intellectual technology.
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III. The Development of Taiwan’s ICT
Industries
Around 1960s, during 1963-1972, Yen Chia-Kan served
as the Premier.
(1)make good use of the scholars residing abroad who
can run neck and neck with international scientists
(2)fully support Taiwan’s agricultural and industrial R&D
talents trained in Japanese colonial period and their
research results
In the cooperation of these two resources, Taiwan
should be able to transform from agricultural economy to
industrial economy, and further march toward the
development of more advanced science and technology.
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III. The Development of Taiwan’s ICT
Industries
“Science and Technology Development Plan”(1967)
including objectives, strategies, important measures
and key implementing points, research projects and
budgets, and implementation and review.
The first three parts are the essence of this Plan,
their formulation was based the spirit of “OST”
• “O” stands for Objective
• “S” for Strategy
• “T” for Tactics
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III. The Development of Taiwan’s ICT
Industries
 In August 1974, Sun Yun-Suan depicted vision of Taiwan’s future
economic development, he hoped to emulate agricultural
development pattern from Netherlands and learn industrial
development from Switzerland, pursuing self-sufficiency.
 the top priority was to establish basic heavy industrial and petrochemical
industries.
 Sun believed that machinery industry should be studied by manufacturers
themselves, with research funding and technological assistance granted
from government; as for the development of hi-tech electronics, should be
led and actively planed and promoted by government.
 Sun required ITRI to assume the tasks of R&D and spread research
results of integrated circuits, electronic watch, and computer to business
sector for production; and make use of the base of existing electronics
industry to accept commissions from manufacturers to carry out R&Ds of
various advanced novel products.
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IV. Implementation of Science and
Technology Policies Performed by ITRI
 “Industrial Technology Research Institute (ITRI)” (1973)
 ITRI is an important R&D powerhouse of Taiwan. It
specializes in applied research and technology development,
and its origin is mainly based on “Union Industrial Research
Laboratories” originally focusing on natural gas research,
added with “Mining Research & Service Organization” and
“Metal Industrial Research Institute.”
 Later the Union Industrial Research Laboratories changed its
name as “Chemical Research Laboratories”, and restructured
its Electronics Center to set up “Electronics Research
Laboratories” to commence R&Ds of electronics industry raw
materials, including integrated circuits, transistors, and
semiconductors.
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IV. Implementation of Science and
Technology Policies Performed by ITRI
 After years of R&D, training and international cooperation, in
1979 UMC was established, followed by a range of hi-tech
electronics companies including TSMC, Taiwan Mask Corp.,
Vanguard International Semiconductor Corporation, etc.,
gradually laid the foundation of Taiwan’s IC semiconductor
industry.
 In 1987, Electronics Research Laboratories commenced
TFT-LCD Flat Panel Display Industrialization R&D Project.
 In 1990, the “Information and Communications Research
Laboratories” was established to vigorously promote the
development of information and communication technology
(ICT) industries, and eventually led to the establishment of
Taiwan Notebook PC Consortium.
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IV. Implementation of Science and
Technology Policies Performed by ITRI
 In 1979, “Union Industrial Research Laboratories” set up a
“Composite Materials Team” focusing on the R&D of
composite materials.
 In 1982, Material and Chemical Research Laboratories set up
an Optoelectronics Material Team, and later restructured and
founded as “Optoelectronics Research Laboratories” to
develop CD-ROM drive. It had accelerated the development
of CD, DVD and LED industries in Taiwan.
 Chemical Research Laboratories has further extended its
R&D works into pharmaceutical synthesis and biotechnology
fields, and set up the “Biomedical Center.”
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IV. Implementation of Science and
Technology Policies Performed by ITRI
 Overall, ITRI can be said the cradle and origin of Taiwan’s
Silicon Valley industries. For the sake of meeting the
country’s industrial policies, the research priorities of ITRI
focus on self-developing new technologies, improving
technological levels, and solving problems of energy raw
materials and industrial raw materials.
 From 1994, ITRI has began to carry out technology transfer,
and the annual growth rate of average number of transfers
reached 8.1% in early period from 1994 to 1998. And for
bridging with latest international researches and seeking
technological exchange, cooperation, transfer or import of
new technologies with enterprises and research institutes all
over the world, ITRI had set up overseas bases in the United
States, Europe, Russia, and Tokyo.
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V. Development of Science and
Technology Human Resources
 Aiming at accommodating the technological reform requirements of
domestic industrial development and establishing a demonstration
standard for cultivating advanced technological manpower, the
government set up the National Taiwan Institute of Technology in 1974.
 Then, this was followed by encouraging industry sector to universally set
up “private technological institutes” through adopting school-enterprise
cooperation method in order to promote the progress of industrial
technology and industrial management.
 This technical and vocational education focuses on further study of
technical personnel, rather than engaging in invention, so it can not flow
into the ordinary line of research universities, colleges.
 In these technological institutes, skilled technicians, rather than masters
and doctors without practical experience, are hired and appointed as
teachers.
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V. Development of Science and
Technology Human Resources
In the “National Science and Technology
Conference” held in January 1978, President Chiang
Ching-Kuo indicated that “Taiwan must develop
technology-intensive industries, because they have
a significant implication of long-range value and
economic structure transformation.”
Therefore, Taiwan must nurture industrial personnel
and heavily culture science and technology talents
because technology-intensive industrial products
demand high quality human resources.
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V. Development of Science and
Technology Human Resources
 In May 1979, Sun Yun-Suan approved the “Science and
Technology Development Plan”. Three national objectives
developed according to this Plan include:
(1) developing new weapons to strengthen defense selfdominance and self-reliance;
(2) supporting economic construction, developing technologyintensive industries, promoting agricultural modernization,
strengthening natural resource development and application,
and conserving the use of imported resources;
(3) improving people’s well-being, strengthening medical
researches, maintaining ecological environment, and
improving nationals’ nutrition.
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V. Development of Science and
Technology Human Resources
 In 1970, the government had set up the “National Science
and Technology Development Fund” and allocated yearly
budget of several hundred million New Taiwan Dollars (first
year NT$ 400M) to strengthen scientific and technological
R&Ds related to national defense, economy, people’s
livelihood, and national development objectives, and support
research projects in industrial, agricultural, medical fields
through granting research subsidies.
 the research projects funded by this Plan have become an
annual routine system operation, so it has made a
considerable contribution to science and technology
researches of various universities and research institutions.
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VI. Hsinchu Science and Industrial Park
 In 1979, Executive Yuan passed a new “Science and
Technology Development Plan” to commence the planning of
the establishment of “Hsinchu Science and Industrial Park”.
 This Science and Industrial Park is a successful experience of
government investment and has encouraged private businesses
to invest in production.
 The reason of selecting Hsinchu is using the convenience of
Taoyuan International Airport, and being located close to
National Tsinghua University, Jiaotong University and ITRI, thus
forming a research environment and clustering with stronger
surrounding research atmosphere. This has the same rationale
of Silicon Valley, California with the existence of surrounding
Stanford University, UC Berkeley and other universities.
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VI. Hsinchu Science and Industrial Park
 In 1981, Li Kwoh-Ting pointed out that “the focus of Taiwan’s
science and technology development lies in ‘four major key
technologies,’ including “energy technology, material
technology, information technology, and automation
technology.’”
 In order to develop these four major key technologies, it is
necessary to integrate strengths of government, academic
circles, and industry sector.
 Hsinchu Science and Industrial Park can be said a concrete
practice with government’s stepping-in to integrate domestic
and overseas hi-tech talents and industry sector to accelerate
technological investment.
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VI. Hsinchu Science and Industrial Park
 In 2008, total area of Taiwan’s science parks had been
expanded to reach 3,746 hectares, accounted for 0.1% of total
area of Taiwan.
 In 2013, total revenue of these science parks reached NT$
1,970.8B, accounted for 14.93% of Taiwan’s total manufacturing
production value. Among all industries in these science parks,
integrated circuit industry and optoelectronics industry had
highest revenue, accounted for 90.96% of total revenue.
 A total of 691 enterprises have set up in science parks all over
Taiwan, 444 in Hsinchu Science Park, 157 in Tainan Science
Park, and 90 in Taichung Science Park, respectively. There are
99 foreign manufacturers. Number of total employees in all
science parks has amounted to 203,943.
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VII. Conclusion: Technology Industries’ Advancing
to Mainland China for Production and Investment
 1990s is a period of rapid development of Taiwan’s electronics
industry, in 1993 the export to Mainland China reached peak of
market share 12.52%, and Taiwan was the second largest
importer of Mainland China.
 In the expectation of exchanging with Taiwan, and developing
biological industry, new energy industry, new materials industry,
energy-saving environmental protection industry, and new
energy automotive industry similar to Taiwan, as well as
integrating with integrated circuit industries (including design,
production, packaging and finished products) in order to
facilitate and shorten Mainland China’s hi-tech development
process, Taiwan’s successful experience in hi-tech development
in 1990s had urged Mainland China to emulate Taiwan’s system
to set up a similar “industrial research institute”.
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VII. Conclusion: Technology Industries’ Advancing
to Mainland China for Production and Investment
 Taiwan’s successful industrial development experience
depends on government’s effective planning, supervision and
promotion of science and technology policies, as well as
integration of talents and industries to proactively engage in
technology R&D, investment, and industrial production. And,
through engaging in foreign direct investment, Taiwan has
taken a further step to spread technological progress into
mainland China and East Asian countries to achieve the
result of regional cooperation and competition.
Such experience is quite worthy countries
developing industries to learn.
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Thank you
Q&A
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