Standards, Innovation, and Latecomer Economic Development – A Conceptual Framework

East-West Center Working Paper No. 134

23 Pages Posted: 2 Feb 2014

See all articles by Dieter Ernst

Dieter Ernst

East-West Center; Centre for International Governance Innovation (CIGI)

Date Written: September 1, 2013

Abstract

Little is known about the impact of standards on the economic development of countries which are latecomers to industrial manufacturing and innovation. Standardization is regarded primarily as a technical issue, and hence receives only limited high-level policy support.

However, technical standards contribute at least as much as patents to economic growth. As a key mechanism for the diffusion of technological knowledge, technical standards contribute to productivity growth. Equally important are qualitative impacts for instance of environmental, health, food and work safety standards. A well-functioning standardization system and strategy can work as a catalyst for translating new ideas, inventions and discoveries into productivity-enhancing innovation. Standards thus are the missing link in a growth strategy which seeks to create quality jobs in higher-value added advanced manufacturing and services.

The paper develops a conceptual framework to study how standards are created and used in Asian countries that seek to catch up with the productivity and income levels of the US, the EU and Japan. A stylized model of latecomer standardization tasks, capabilities and strategies is used to demonstrate that the costs of developing and implementing effective standards can be substantial. The paper examines the critical role that patents play for standardization and argues that “strategic patenting” to generate rents from de facto industry standards can stifle latecomer economic development. Policy implications conclude the paper.

Keywords: Standards, Innovation, Industrial manufacturing, Economic Development

JEL Classification: O14, O31, O32, O34, O38, O53

Suggested Citation

Ernst, Dieter, Standards, Innovation, and Latecomer Economic Development – A Conceptual Framework (September 1, 2013). East-West Center Working Paper No. 134. Available at SSRN: https://ssrn.com/abstract=2388993 or http://dx.doi.org/10.2139/ssrn.2388993

Dieter Ernst (Contact Author)

East-West Center ( email )

1601 East-West Road
Honolulu, HI 96848-1601
United States

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

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