Report Summary
NSF 95-309

Report Summary

Based on the various indicators of technological activity and competitiveness presented in this report, several Asian economies stand out and appear headed toward greater prominence as developers of technology and as more visible competitors in markets for high-tech products.

Among the group of Asian NIEs, Taiwan and South Korea are likely to increase their competitiveness in technology-related fields and product markets. This conclusion is based on both economies' strong patent activity in the United States in electronics and telecommunications, data showing both economies increasing their licensing of technological know-how, and data showing both economies' rapidly rising imports of U.S. products that incorporate advanced technologies. Other indicators highlight the technological infrastructure in place in both economies that should support further growth in high-tech industries. (Technological infrastructure is defined by the existence of a system of intellectual property rights, R&D activities closely connected to industrial applications, large number of qualified scientists and engineers, etc.)

The other two Asian NIEs, Singapore and Hong Kong, also show strong signs of technological strength and scored impressively on many of the indicators. However, both seem to be functioning on a somewhat narrower technological foundation than either Taiwan or South Korea. Singapore and Hong Kong have not shown the same level of patent activity or the same presence in global technology markets as have the other two NIEs. Their comparatively small populations have probably limited the impact of these economies across a broad spectrum of technological areas.

Among the group of Asian EAEs, Malaysia stands out based on the technology indicators presented and could develop into the next Asian "tiger." Like Taiwan and South Korea, Malaysia is purchasing increasing amounts of advanced technology products and continues to attract large amounts of foreign investment - much if it in the form of new high-tech manufacturing facilities. Even if these facilities are mostly platform (assembly) operations today, Malaysia's strong national orientation (defined by the existence of national strategies and an accepting environment for foreign investment), socioeconomic structure (evidence of functioning capital markets and rising levels of foreign investment and investments in education), and productive capacity (future capacity suggested through assessments of current level of high-tech production combined with evidence of skilled labor and innovative management) suggest that as Malaysia gains technological capabilities, more complex processing will likely follow. While it still has a long way to go before joining the ranks of the NIEs, Malaysia shows many signs of developing the resources it will need to compete in global technology markets.

India shows considerable strength in certain of the indicators but also shows weakness. India has a long tradition of educating highly qualified scientists and engineers and of excellence in basic research, yet it also continues to have one of the highest illiteracy rates in the region. This anomaly produced one of the lowest scores among the eight economies for the socioeconomic infrastructure indicator. Uneven acceptance of foreign products and investment have inhibited internal competition that otherwise might have motivated India to better capitalize on its engineering strengths. Some of India's regulations and policies related to foreign investment are slated to change, and this may improve the country's situation over the long run (See Economist 1991). Evidence of positive change occurring in India surfaced in the model of leading indicators: India's socioeconomic infrastructure received a higher expert rating in the 1993 survey than in that conducted in 1990.[32]

China and Indonesia show many mixed signs in these indicators of technology development and competitiveness. Both show rising purchases of U.S. high-tech products and increased licensing of U.S. technical know-how. Yet compared with the other Asian economies, these economies do not show the same level of national orientation, technological infrastructure, and productive capacity that would project technological competitiveness in the near future.

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32. See section 3 - Prospects for the Future.
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