Technology, Trade Policy and Competitiveness: 'Learning' in East Asia & Its Lessons for India

Abstract

This paper has examined the major issues relating to the technology dimensions of competitveness confronting India, as it globalises its economy through a trade and FDI liberalisation policy package. Drawing from a wide range of available evidence from East Asia, the paper has argued for a strategic approach, rather than a passive market orientation approach. The outstanding success of Japan and S. Korea was based on the ability to create dynamic advantage in high value, fast growing industries. Their approach to technology has been based on the build up of technological capability, while remaining open to market competition. There has been a remarkable strategic focus in technological effort to increase industrial productivity. The relation between the public and private components of technological effort has been synergistic. The contrast with India has been highlighted, to draw out the implicit lessons. The paper also examines evidence related to the Indian, Korean and ASEAN experience with respect to technology transfer to show that the link between liberalisation, FDI, export growth and technology development is complex, and can go counter to the build up of technological capacity. The paper closes with an assessment of the positive and negative aspects of the limited evidence concerning the technology posture of Indian firms in post 1991 period. While some indications are encouraging, the attainment of international competitiveness will require much more of both strategy and effort.