Asia's New High-Tech Competitors - Findings
NSF 95-309


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

Taiwan and South Korea seem best positioned to move closer to Japan's technological stature.

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 U.S. 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 (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.) in place in both economies that should serve to support further growth in high-tech industries.

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 technology 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 will limit their ability to make a major impact across any broad spectrum of technology areas. In addition, the pace of Hong Kong's technological development will soon be altered by its integration with China in 1997: the extent and direction of this alteration is difficult to predict with any certainty. However, the prospect of a "greater China" - a China that is not limited by geographical boundaries, but rather is formed around networks of expatriate Chinese peoples and resources spread throughout Asia - also looms in the background. Hong Kong's considerable capital and technology resources will be highly valued in either scenario.

Malaysia is the single emerging Asian economy that, on the basis of these indicators, could likely develop into the next Asian "tiger" - that is, move closer in technological mastery and high-tech production to the more developed NIEs.

Malaysia is purchasing increasing amounts of U.S. high-tech products and has attracted large amounts of foreign investment, much of it in the form of 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 technology 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 it 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 strengths in certain of the indicators, but also shows weaknesses. India has a long tradition of educating highly qualified scientists and engineers and of excellence in basic research, yet it harbors 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 may have motivated India to better capitalize on its engineering strengths. Now, evidence of change underway in India's regulations and policies opening the economy to more foreign investment and goods may allow the country to leverage its many science and technology (S&T) strengths, such as in software development.

China and Indonesia show many mixed signs in these indicators of technology development and competitiveness. On the positive side, both countries have enjoyed tremendous economic growth and have attracted large amounts of foreign investment. Both have large populations that could support a large domestic market, abundant natural resources, and a central Government that has placed a high priority on technical training and development. But many challenges remain. China will face many difficulties in the years ahead as it continues to transform its centrally planned economy to one directed by market forces. These difficulties should not be underestimated. Indonesia's challenge is different. A continuity in leadership for over 30 years has produced a certain stability but may have also masked growing social and ethnic discontent among the peoples of Indonesia. With a change in the presidency expected soon, many wonder whether the economic and technological progress achieved over the past decade will continue. Consequently, political and social uncertainties for both countries prevent any direct projection of their technological future based on their recent technological achievements.

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