The political economy of Southeast Asia's techno-glocalism

Abstract

Asian economies' prospects for upward mobility within the global division of labour hinge significantly on the degree to which transnational corporations' (TNCs) global production networks (GPNs) accommodate or hinder their efforts to shift from simple production into more remunerative roles. A growing literature notes the rise in various countries of a ‘neo-techno-nationalism’ that aims to bolster local innovation and challenge TNCs' technologically derived leverage over the distribution of roles and rewards within GPNs. Industrial and technological policies in Southeast Asia, however, reflect a quite different ‘techno-glocalist’ strategy. Such strategies are based on a ‘governance bargain’ in which host governments, in exchange for technological upgrading, facilitate TNCs' exercise of governance authority transnationally as well as in coordinating local investments in innovation and other cluster-building activities. They highlight a conceptual distinction between the degree of internalization and hierarchy within networks that is typically elided in theories of GPN governance.

Notes

² ‘Because Japan has been the core of [the] regional product- and technology-proliferation system, some such as Kaname Akamatsu came to see it as the lead goose in a flying ‘v’—which is the truth but not the whole truth. It is true only if one's optic misses the real lead goose or the ceiling above which the regional v formation does not fly’ (Cumings 1997, 149). See also Borrus (1999) and Hatch (2003).

¹ Research for this paper was supported in part by a Willamette University Atkinson Faculty Development Grant and a Willamette University Center for Asian Studies Research Grant.

³ Singapore, of course, is usually included in the first tier along with South Korea, Taiwan and Hong Kong.

⁴ Akamatsu's model actually preceded Vernon's, though the latter's ideas have been blended with citations and elaborations of the former over the past twenty years.

⁵ See also Morris-Suzuki (1992).

⁶ Hatch (2003) argues that these enduring differences in GPN governance explained Japanese companies' relative success in the more transaction-specific automotive sector and US. TNCs' prowess in an electronics sector made less transaction-specific by digital technology. Sturgeon (2007) likewise argued that Japanese TNCs, though challenged on cost and flexibility by US companies' shift towards ‘factory-less’ network strategies, maintained more relational governance systems in order to avoid vulnerabilities such as supply shocks or poor quality performance.

⁷ See also Ernst (2006).

⁸ According to Yoshimatsu (2007), ‘The Japanese government and firms were strongly motivated to establish and diffuse Japanese technology standards in order to … challenge the existing Western rivals. This motivation encouraged them to adopt Asia-based technology policies and strategies in addition to domestic-oriented technology policies’.

⁹ In the words of Hatch and Yamamura (1996, 28), ‘Using vertically integrated production networks, Japanese MNCs have jealously guarded their technology, the source of their competitive advantage. Web networks, in particular, serve to minimize leaks. By locating discrete pieces of the production process at different sites throughout the region, high-tech manufacturers controlling such networks can thwart the ability of potential Asian competitors to master and appropriate the entire package of technology’.

¹⁰ Malaysia's own more modest wafer fabrication industry was launched in the early 2000's with two state-backed companies, one of which, First Silicon, partnered with Japan's Sharp Corporation as chief technology supplier and customer.

¹¹ Phillips' consumer electronics division head announced, ‘That's business creation—Singapore coming up with an idea that the guys in Eindhoven didn't think up … . In the past, Singapore was executing ideas from others. Now, our team in Singapore will create the ideas and develop them and they will get manufactured by other countries such as China’ (Lee 2003).

¹² In fact, while the RosettaNet Consortium is headquartered in Silicon Valley, the Malaysian chapter took on the role of standards upgrading and was designated the Asian innovation centre.

¹³ See also Lall (2000).

¹⁴ In 2008, A*STAR inaugurated an aerospace research consortium involving its own scientists working with researchers from Boeing, EADS, Pratt and Whitney and Rolls-Royce.