Learning from Entrepreneurial East Asian States

Abstract

Explaining the role of the state in industrialization process of the East Asian countries requires summoning empirical objective evidence to do so. This approach should help to debunk the myth of the state as an impediment to innovation and industrial progress as espoused by proponents of the need for government to recede from areas that are supposed to be the reserve of risk management savvy private sector entities. An objective positioning of the instrumental role of the state in industrial development process therefore serves as a pragmatic guide to what Sub-Sahara African national government industrial policy priorities should be, having understood the same role of East Asian governments in industrialization process. Lall (2000:13–62) identified the market failures directly relevant to technological capability building efforts of a country as; unpredictable, risky and variable costs of learning, externalities, capital market deficiencies, and coordination problems. These market failures leads to the undesirable outcome of underinvestment in the direly required linkage-intensive technologies. Lall therefore strongly argued, based on evidence from the experience of East Asian countries’ success in positive technological capability change for an overriding strategic objective of the state, which completely departs from the conventional market failure corrective role of the state. As such, in the framework of analysis for technology transfer and economic growth, based on industrial development, we introduced the concept of technology triangle comprising of the government, private sector/industry, and science and technology institutions (educational and research institutions) as the dynamically interlinked organizational entities contributing to industrial progress at the macro-level, subject to meeting the requisite conditionality of the components in each part of the triangle. In essence, the overriding strategic intervention of the state can be focused on the technology triangle. Figure 10.1, gives an illustration of the technology triangle with some of its various components.