This article explores how industrial policy influenced enterprises, and allowed them to develop independently. The article focuses on two points, one, how the government build up an environments which promoted enterprises to develop independently and two, how it created technology transfer capacity of the enterprises.
The article focuses on two industries, air-condition and DRAM industries for comparison, comparing the same technology supplier to omit the influence from technology supplier, further limiting each industry to two cases.
The result is as follow.
Under the same industry, two cases had the same technology transfer result. Both aircondition companies depended on Japanese technology and could not expand production scale, although they had transferred technology from Japanese companies more than 15 years. However, the production scale of DRAM companies expanded, although before that, they had no DRAM technology foundation.
Under two different industries, the technology transfer result had a big difference. Air-condition and DRAM enterprises transferred technology from the same technology supplier, had completely different result, with two cases having the same phenomenon. Air-condition company had poor technology transfer result but DRAM companies had remarkable result.
The result above shows that technology transfer is influenced by industrial policy as follow.
Under protection policy, Air condition industry had many foreign capitals invested or technology transferred to Taiwan to avoid high tariff. This resulted in too many enterprises competing for a small market, preventing each enterprise to expand its production. Furthermore, the government did not build up potential of enterprises technology, which limited the development of enterprises.
Whereas DRAM industry, under free trade policy, had no foreign capital invested in Taiwan semiconductor industry. Furthermore the government continued investing in human capital and transferring technology to private sector to build up their technology ability from the very beginning. Under the condition of the increase in human capital and technology built up in the mid-1990's, the foreign capitals transferred technology to Taiwanese enterprises to build up international production base. The competitive environment and technology transfer capacity enabled Taiwanese enterprises to transfer technology smoothly, and expand production scale after technology transfer.
The result of comparing inter-industries and inter-enterprises, shows that industrial policy makes enterprises develop independently; therefore, the government should build up an environment which can promote enterprises to develop independently and create technology transfer capacity.
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