Asia's 'Upgrading Through Innovation' Strategies and Global Innovation Networks : An Extension of Sanjaya Lall's Research Agenda

This essay is a very personal homage to Lall's work on technological change and industrialization, in particular his pioneering study on technological capabilities, prepared for the OECD Development Centre (Lall, 1990). I will not seek to add yet another review of Lall's work. Instead, I will sketch a roadmap for extending Lall's research agenda to explore the challenges that result from global transformations (i.e. global innovation networks) for Asian attempts to upgrade its industries through innovation. I will demonstrate that Lall's framework remains valid, once globalization extends beyond markets for goods and finance into markets for technology and knowledge workers. As a result, Asia's integration into global production networks is now complemented by its integration into global innovation networks, which adds a new dimension to Lall's research agenda. If not mentioned otherwise, the evidence used to support my arguments draws on unique data base of global innovation networks for a sample of now almost 150 companies in the information and communications technology industry (Ernst, 2008b) . Section one of the essay introduces what I consider to be the essence of Lall's work, summarized in five propositions. In the rest of the paper, I will use these propositions to study the link between ‘upgrading-through-innovation' strategies and global innovation networks. In section two, I introduce a conceptual framework to examine how specialization, learning and innovation enhance the potential for industrial upgrading. Section three addresses the international dimension of industrial upgrading – I discuss characteristics and drivers of global innovation networks and explore implications for learning and knowledge diffusion. Section four presents generic policy suggestions