Managing technological development: Lessons from the newly industrializing countries

This survey looks at the technological development of the newly industrializing countries to draw some important lessons for firms and governments in other developing countries. First, inventing products and processes is not at the center of the technological development needed for successful industrialization. It is at the fringe. What is at the center is acquiring the capabilities needed for efficient production and investment. Second, some countries have overemphasized the drive for technological self-sufficiency and paid a high price in poor productivity. What makes the best economic sense is to combine foreign and local technological elements—and to do this in a way that progressively develops local capabilities in areas where they can be more efficient. Third, the acquisition of technological capability does not come merely from experience, though experience is important. It comes from conscious efforts — to monitor what is being done, to try new things, to keep track of developments throughout the world, to accumulate added skills, and to increase the ability to respond to new pressures and opportunities. Fourth, the economic environment, through its influence on the technological efforts of firms, is very important in determining the productivity of a country's resources. The environment is shaped by the incentives and penalties that affect the way firms use and adapt technology. It is also shaped by the activities of specialized technological agents that can provide technological information, means, and understanding to firms.