Latecomer upgrading in Taiwan

Taiwan successfully upgraded its industries and entered into the high-tech industries in the last decades of the twentieth century. This essay examines how Taiwan achieved latecomer upgrading, by exploring the process by which its latecomer firms entered high-tech and modern services. It is found that the latecomer firms, called second movers here, entered high tech when the product just turned mature, and relied upon a different set of capabilities from those of the first movers in the advanced countries. The findings challenge prevalent orthodoxy, which includes open markets, increased foreign investment, small firms, and diminished state intervention. In reality, large domestically owned second movers rather than foreign enterprises or small networked firms have led Taiwan's entry into mature high tech. In the meantime, the government intervention has not been lessened, but has been adapting to the changing environment, in promoting high-tech industry and modern services.