In search of an Innovative state: the development of the biopharmaceutical Industry in Taiwan, Korea and China

Abstract

Recent developments in the biopharmaceutical industry in Taiwan, South Korea and China bear witness to the transformation of these states in nurturing an innovation-based industry. This article argues that the segmentation of the value chain of the biopharmaceutical industry has provided industrializing countries with a window of opportunity. These East Asian states have modified their former catching-up approaches by establishing a more effective institutional platform that can attract knowledge-creation players to the industry. Through case studies, the authors show that the Taiwan state`s promotion of the biopharmaceutical industry has been based on an incremental approach; existing state policies have been modified to cope with the demands of the industry, which has resulted in the continuation of its SME-based industrial structure. The methods of the Korean state have been more radical, in that the policies that previously favoured the chaebols have gradually been reoriented toward the promotion of smaller, science-based firms that now co-exist alongside the chaebols. Finally, the Chinese state and local governments have sought to promote this innovation-based industry by building biotech parks. This approach has resulted in a boom in new science firms, which have become increasingly isolated from the flourishing domestic SOE-led market.