Local-global interface as a key factor in the catching up of regional innovation systems: Fast versus slow catching up among Taipei, Shenzhen, and Penang in Asia

Abstract

This study raises the question of why economic performance and growth trajectories differ among three Asian regions, namely, Taipei, Shenzhen, and Penang. Among them, Taipei the most developed, whereas Penang is the least developed. The question is also why Shenzhen is catching up fast with Taipei, whereas the catching-up speed of Penang is slow. From a Schumpeterian perspective, this study addresses these questions based on the divergent nature of regional innovation systems (RIS) in the three regions by focusing on the local-global interface. Results reveal that Taipei show the highest and increasing level of intra- and inter-regional localization of knowledge and a low and decreasing level of internationalization (the degree of relying on foreign knowledge). Shenzhen replicates this trajectory of Taipei more closely than Penang that continue to be dependent upon foreign knowledge sources. Penang also increases very slowly its intra- or inter-regional localization of knowledge. Second, the main carrier and ownership of innovation in Taipei have shifted from foreign MNCs to indigenous firms. Shenzhen closely replicates this phenomenon, but Penang continuously relies on foreign MNCs. Third, Taipei has an increasing and high value of technological diversification, which is closely followed by Shenzhen but not by Penang. These findings help us identify a dynamically catching-up RIS, which can be characterized by a steady increase in intra-regional localization, a decrease in internationalization, an increase in local innovation ownership, and an increase in technological diversification. Its implication for policies is the importance of eventually increasing the localization of innovation and its ownership after these regions learn from foreign knowledge sources.