Beyond the Global Production Networks: A Case for Further Upgrading of Taiwan's Information Technology Industry

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In the current literature on globalisation and economic development, the global production networks and global commodity/value chains perspectives highlight the importance of transnational organisational linkages as the conduit of technology transfer and knowledge diffusion, enabling manufacturers in the less developed economies to catch up by learning from lead firms in more developed countries. The institutional perspective, however, ascribes great importance to the role of public and semi-government institutions in facilitating active technology leveraging and knowledge diffusion. This paper uses the development of the information technology (IT) industry in Taiwan as a case to examine the two perspectives discussed. Global production networks were found to have played a pivotal role in the initial stage of the development of the IT industry in Taiwan. With the changing structure of the IT industry and emerging threat from low-cost competitors, the roles of the state and institutions were found to be increasingly important in overcoming barriers against the further upgrading of the industry concerned. It was concluded that the organisational and institutional approaches to globalisation and economic development are complementary to, rather than competing with, one another.