Transcript Document

Catching up, innovation and future prospects
Manuel Mira Godinho (ISEG/UTL)
Presentation to the 2004 Globelics PhD School
Presentation partially based on:
J. Fagerberg and M. Godinho, Innovation and Catching Up,
chapter in Jan Fagerberg, Richard R. Nelson and David
Mowery (eds.) (2004), The New Oxford Handbook of
Innovation, OUP.
1. “Catching Up”
2. Accounting for growth and catching up
3. Learning and Innovation
4. Future prospects for catching up
5. China
Part 1
“Catching Up”
Analysis of «catching up»
not the same as
Analysis of «economic convergence»
Economic convergence literature:
based on the prediction of conventional economic
theory: diminishing returns to capital in advanced
economies plus mobility of resources would bring
poor economies closer to the richer ones
However convergence has hardly been noticed on a global
level in recent decades
 If anything over the last 200 years: divergence
(GDPpc from 1:10 to 1:400)
Results dependent on methods and indicators used
E.g.Sala-i-Martin (2002) using country-weighted convergence
measures concludes that 1990s witnessed some degree
of global convergence (China effect), but divergence
happened when taking into account worldwide
distribution of income (again China effect)
Catching up Literature
Focus on specific cases:
countries particularly successful in closing
the gap in a relatively short span of time
Focus on:
- Historical conditions
- Institutional arrangements
- Innovation, technology and learning
Old Institutionalism (Veblen...)
Economic History (Gershenkron)
Catching up
1950-2000
23
countries
1960
GDPpc
1999
GDPpc
1º Quartile
US
(West) Germany
UK
France
Finland
Italy
11.3
10.1
8.6
7.5
6.2
5.9
US
Japan
Singapore
France
Hong Kong
Ireland
28.1
21.0
20.7
20.1
19.9
19.7
2º Quartile
Argentina
Chile
Ireland
Japan
Spain
Mexico
5.6
4.3
4.2
3.9
3.4
2.2
UK
Finland
(Unified) Germany
Italy
Taiwan
Spain
19.2
19.1
19.0
18.2
16.6
14.6
3º Quartile
Greece
Hong Kong
Portugal
Brazil
Singapore
Malaysia
3.1
3.1
3.0
2.3
2.1
1.5
Portugal
South Korea
Greece
Chile
Argentina
Malaysia
13.5
13.2
11.5
10.0
8.7
7.7
4º Quartile
Taiwan
Philippines
South Korea
India
China
1.5
1.5
1.1
0,8
0.7
Mexico
Brazil
China
Philippines
India
6.9
5.4
3.3
2.3
1.8
1960-1999
6,46
6,26
5,78
South Korea
Taiwan*
Singapore*
Hong Kong*
Malaysia*
China
Japan
Ireland
Portugal
Spain
Greece
Finland
Italy
France
Brazil*
United States
India*
Chile*
United Kingdom
Germany**
Mexico
Argentina*
Philippines*
4,86
4,22
4,17
4,15
4,14
3,85
3,76
3,4
2,91
2,9
2,52
2,32
2,32
2,24
2,19
2,09
2,05
2,05
1,17
1,14
0
1
2
3
4
5
6
Part 2
Accounting for growth
and catching up
Factors behind successful catching up
 Accumulation
 Structural Change
 Institutional Change
Accumulation
and learning
Structural
Change
Institutional
change
• Investment in
capital goods and
in infrastructure
• Labour force
• Investment in
education and
training
• R&D, reverse
engineering
•...
• Adjust sectoral
composition of the
economy towards
sectors of high
demand growth and
technologically more
progressive
• Clustering
• Firm demography,
size distribution...
• Create new
(lacking)
institutions or
redesign existing
ones
Where is innovation??
Next:
focus just on a small part of the previous table
Accumulation
and learning
• Investment in
capital goods and
in infrastructure
• Labour force
• Investment in
education andin
•Investment
training and
education
• R&D, reverse
training
engineering
• R&D,
reverse
engineering
•...
Structural
Change
Institutional
change
• Adjust sectoral
composition of the
economy towards
sectors of high
demand growth and
technologically more
progressive
• Clustering
• Firm demography,
size distribution...
• Create new
(lacking)
institutions or
redesign existing
ones
Part 3
Learning and
Innovation
258,24
435,94
100,5
Hong Kong
Singapore
Ireland
Chile
Malaysia
China
United Kingdom
Brazil
Portugal
Spain
Argentina
Germany
France
Finland
Mexico
Philippines
United States
Greece
Italy
South Korea
Taiwan
India
Japan
2001
1980
FDI Stock / GDP
0
20
40
60
80
100
Learning:
the relevance of connecting to external sources
• Exports
• Imports
• FDI
• Licensing
• Subcontracting
Example of Korea and Taiwan
(Hobday, 2000)
OEM – Original Equipment Manufacturing
ODM – Original Design and Manufacturing
OBD – Own Branding and Design
US
Finland
South Korea
France
UK
Spain
Germany
Japan
Greece
Argentina
1995
1965
Ireland
Portugal
Singapore
Chile
Education Level 3
Phillipines
Mexico
20-24 years old
Brazil
Malaysia
Source: UNESCO
India
China
0
10
20
30
40
50
60
70
80
Japan
US
South Korea
Finland
Germany
France
UK
Taiwan
Singapore*
Ireland
Italy
Spain
Brazil*
Chile
India
China**
Portugal
Greece
Argentina
Malaysia
Mexico
Philipines**
90s
60s
GERD/GDP
0
0,5
1
1,5
2
2,5
3
United States
Japan
Taiwan*
Germany**
Finland
France
UK
South Korea
Hong Kong*
Italy
Singapore*
Ireland
Spain
Greece
Malaysia*
Argentina*
Portugal
Mexico
Chile*
Brazil*
Philippines*
India*
China*
95-01
81-87
US Patents
per million
inhabitants in the
country of origin
0,01
0,1
1
10
100
1000
Part 4
Prospects for
catching up
Questions for the future
• Global convergence or divergence?
• Will there be new countries catching up over the
next decade(s)?
• What are the factors that will account most for
rapid catching up? And what will hinder most
the catching up opportunities?
Part 5. China
5.1. Opening up
5.2. Growth and accumulation
5.3. Threats
5.1. Opening up to external relations
• 1978: policy shift
• SEZ’s: Shenzen, Zuhai
• Inward investment
• Growth in trade
Cumulative FDI 1978-2002
Total 447 b US$
HK 45,7%
US 8,9%
Japan 8,1%
Taiwan 7,4%
Virgins Is. 5,4%
Singapure 4,8%
S. Korea 3,4%
FDI/GFCF 2002  4,6%
1990s  > 10%
UK 2,4%
Germany 1,8%
Macau 1,1%
Netherlands 1,0%
Caiman Is. 0,9%
Canada 0,8%
Malaysia 0,6%
Others 6,6%
External trade, 106 USD
Comércio Externo
350000
300000
250000
200000
E xport
150000
Im porta
100000
50000
0
1985 1990 1995 1998 1999 2000 2001 2002
EXPORTS
• 2001: 23% GDP
• FDI exports: 56%
• Share in international market
1980  1,0%
1990  1,9%
2001  4,3%
• 4th world exporter
• High-tech exports: 19%
IMPORTS: effects on world markets
5.2. Economic Growth and accumulation
GDP growth 91-96: 11,6% 97-02: 7,8%
Germany, Japan, US
Taxas de crescimento do PIB real
14,00%
12,00%
10,00%
8,00%
6,00%
4,00%
2,00%
0,00%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
(a)
CPI
Indíce de preços no consumidor - Taxa de Variação
20,00%
17,50%
15,00%
12,50%
10,00%
7,50%
5,00%
2,50%
0,00%
-2,50%
1990
1995
1998
1999
2000
2001
2002
Accumulation
Investment rate 2002  44%
Education: > 6 y.o., 2002
35% Primary education
38% Basic
13% Secondary education
5% Third level
R&D, Scientific publications
GERD/GDP (%)
I&D/PIB %
1,4
1,2
1
0,8
0,6
0,4
0,2
0
1997
1998
1999
2000
2001
2002
5.3. Threats
• Big train moving at high speed
• What will make it get out of the tracks?
Threats (1): Regional imbalances
Coast
14% area
40% population
70% wealth
> 90% FDI
GDPpc  1:12
Demand for consumer
goods in urban areas:
from 19% in 1985 to
58% in 2002
Threats (2): Financial risks
– Overborrowing
– Public sector enterprises
But  External Reserves: US$ 400b
Threats (3): Political tensions
•
•
•
Taiwan
Tibet
Hong Kong
(1) + (2) + (3)
But  satisfaction with income growth
END