Industrial competitiveness of the auto parts industries in four large Asian countries : the role of government policy in a challenging international environment

Rationalization and stabilization following the Asian financial crisis of the late 1990s combined with the expansion and liberalization of regional and global trade to create significant parts industries in China, Indonesia, and the Republic of Korea. Conventional policies of stabilization and liberalization, however, cannot fully explain growth patterns. Japan and Korea grewinto major players before liberalizing trade and investment, while even after extensive liberalization Indonesia has yet to move from extensive to intensive growth. These anomalies suggest that to explain success in the auto parts industry we need to move beyond liberalization to look at policies and institutions promoting economies of scale, skill formation, quality upgrading, supplier-linkage cooperation, and innovation. In Japan, the regional and global leader, innovative assemblers led industrial development and supported key suppliers, but the government also supported diffusion of quality control techniques and new technology to small and medium enterprises, and encouraged stable employment among core employees. Korea remains weaker on both small and medium enterprise and employment fronts, but government-encouraged consolidation around a small number of business groups, an extended period of protection, and support for export promotion led to economies of scale. Liberalization of foreign investment after the financial crisis helped ameliorate the excessive statism of earlier policies and strengthened the parts industry. In China, liberalization for WTO entry, rapid expansion in demand, and strong support by local governments encouraged a wave of foreign investment in both assembly and parts. In contrast, institutional weaknesses continue to constrain development opportunities in Indonesia.Technology Industry,Economic Theory&Research,Water and Industry,Markets and Market Access,Non Bank Financial Institutions

Innovación y construcción institucional: Latinoamérica y el Este de Asia

Las instituciones, sean de naturaleza económica, política o cultural, surgen y evolucionan como producto de las interacciones sociales. Por momentos las instituciones son el resultado de iniciativas deliberadas, mientras que en otras ocasiones surgen más o menos por accidente, consecuencias inintencionadas de conductas que se vuelven rutinarias con el tiempo. Mientras los científicos sociales concuerdan en que las instituciones son determinantes cruciales de los resultados a lo largo de una variedad de dominios de la sociedad, las perspectivas difieren respecto de cuándo anticipar la innovación institucional y cómo predecir la performance de determinadas instituciones con el tiempo

Business Associations and Economic Development: Why Some Associations Contribute More Than Others

Most current theoretical treatments view business associations as rent-seeking, special interest groups. Yet, empirical research in a wide range of developing countries reveals a broad range of functions and activities undertaken by business associations, many of which promote efficiency. These positive functions address crucial development issues (emphasized in the New Institutional Economics) such as strengthening property rights, facilitating vertical and horizontal coordination, reducing information costs, and upgrading worker training. The associations that engage in these developmental activities tend to be well organized and staffed. This institutional strength depends in turn on high member density, valuable selective benefits (often delegated by governments), and effective internal mediation of member interests. In addition external factors, especially competitive markets and government pressure, encourage associations to use their institutional strength for productive ends.