Industrial Development in the New Century Chi Schive President Taiwan Academy of Banking and Finance...
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Transcript of Industrial Development in the New Century Chi Schive President Taiwan Academy of Banking and Finance...
Industrial Development in the New Century
Chi Schive
President Taiwan Academy of Banking and Finance
Adjunct ProfessorNational Taiwan University
May 4, 2001
OutlineI. Megatrends in the Coming Decade 1. Production Technology in Retrospect 2. Globalization
II. Conventional Thinkings of Industrial
Development 1. Definition of Industry 2. Target Industry and Industrial Policy 3. Ambiguity and Challenges
Industrial Development in the New Century
III. Alternative Thinkings of Industry 1. Knowledge-Based
2. Organization
3. Location
IV. Impacts and Implications 1. Business Model--Global Logistics
2. Regulation--Competition vs Industrial Policy
3. Software Infrastructure--Institutional Reforms
V. Conclusions
Industrial Development in the New Century
The Tonne Age Industrial revolution - 1950s
Steel, ships, textile, construction
The Kilo Age 1960s-1970s
Cars, consumer electronics, appliances
The Gram Age 1970s - 1980s Micro electronics, robotics
The Vacuum Age 1990s
Services, systems, media
Production Technology in History
Source: Slightly revised from Jean-Pierre Lehmann,“The Future of the Asia Pacific Economies: Dynamism of Trade and Investment” presented at APEC Economic Committee Symposium The Future of Asia Pacific Economies, December 6 1999, Tokyo.
� 通道 1. 分行 2. 電話銀行 3. CD/ATM 4. (專屬)PC銀行 5. 網際網路銀行
成本/交易US$ 1.07US$ 0.54US$ 0.27US$ 0.015US$ 0.010
Source: Booz Allen & Hamilton research (1996/North American)
服務通道趨勢-銀行處理成本
Source: Booz Allen & Hamilton research (1996/North American)
World Output and Goods Trade
3.5
2.22.9
6.9
5.3
8.7
2.02.4
3.0
World Output (Growth, %) Trade Growth/
Output Growth
World Goods Trade Volume (Growth, %)
84-88 89-93 94-98 84-88 89-93 94-98 84-88 89-93 94-98
Regionalism, Regionalization of Trade
30
35
40
45
50
55
60
65
1980 1985 1987 1989 1990 1991 1992 1993 1994 1995 1996 1997
NAFTA
East Asi a
Taiwan
EU
Intra-regional Trade as a percent of Total Trade
Net Private Capital Inflows to Emerging Economies
1984-19893 1990-19963 1996 1997 1998 1999
Total Capital1 12.5 141.7 214.8 117.8 69.5 89.7
FDI
Portfolio
Others
13.1
4.4
-4.9
64.6
64.0
13.0
121.1.
79.9
13.9
145.0
66.6
-93.8
127.3
42.0
-99.8
119.2
25.1
-54.5
Asia &NIEs2 9.9 58.3 108.1 -15.1 -49.5 -38.1
Africa 2.3 3.7 5.1 14.1 7.3 14.2
Middle East &Europe
2.3 22.9 3.9 7.9 24.9 21.9
Latin America -0.2 46.1 81.7 88.3 73.6 75.3
Note: 1. Net private capital flows comprise net direct investment, net portfolio investment, and other long- and short-term net investment flows, including borrowing.2. NIEs = Hong Kong, South Korea, Singapore, Taiwan, and Israel. 3. Annual averages.
Source: IMF, World Economic Outlook, December 1998.
US. $ billion
II. Conventional Thinkings of Industrial Development
Definition of Industry: Any branch of trade, business, production, or manufacture
• Output-oriented
Agriculture, Industry (mining, manufacturing, public utilities, construction), Service
• Characteristics-oriented
Heavy and Light Industry
High-tech / Technology Intensive Industry
Capital / Labor Intensive Industry
• Stage of Process (Commodity)Agriculture Intermediates Final (Consumer, Capital goods) Service
II. Conventional Thinkings of Industrial Development
Target Industry:
• Ten emerging industries in Taiwan
• 15 New Growth Areas in Japan (1995)
II. Conventional Thinking of Industrial Development
Ten Emerging Industries
• Communication• Information• Consumer Electronics• Semiconductor• Precision Instruments
and Robotics
• Chemical Specialties and Drug
• Health and Medical• Anti-pollution• Aerospace• Special Materials
Examples of new products and services
Health and welfare Home care, care equipment, home health,telemedicine, advanced medical equipment
Culture and family life support Community business, continuing education, leisuretravel, apparel
Information and communicationstechnology
E-commerce, content, GIS (geographicalinformation systems), electronic government
New manufacturing technologies Next-generation new materials, advancedproduction control robots, maintenance-freeequipment
Distribution and transport Internet mail order, third-party logistics (3PL),distribution information services
Environment Low-pollution vehicles, recycling, environmentalequipment, environmental creation and restoration
Business support Outsourcing, authorization business, solutionsbusiness
Marine business Mega-float project (ultra-large floating structures),fishing industry infrastructure
Source: Nomura Research Institute, from Review of the “Action Plan for Economic Reform”, Ministry of International Trade and Industry, March 1998.
II. Conventional Thinking, Targeted Industry
Fifteen New Growth Areas: New Products and Services
Examples of new products and services
Biotechnology Pharmaceuticals, food, chemicals,energy/environment
Urban environmental facilities New traffic systems, cable burying
Aerospace (private demand) Next-generation aircraft, hub airports, testingaircraft limits
New sources of energy and energyconservation
Solar energy, wind energy, waste-to-energysystems, clean energy, energy servicecompanies (ESCOs)
Human resources Temp staffing, vocational training, recruitmentagencies
Internationalization International transport, foreign companies,international business consulting, support forexpatriates
Housing Renovation, previously owned housing market,new building materials
Source: Nomura Research Institute, from Review of the “Action Plan for Economic Reform”, Ministry of International Trade and Industry, March 1998.
II. Conventional Thinking, Targeted Industry
Fifteen New Growth Areas: New Products and Services
Ambiguity:
• Commodity Vs. Service
Newspaper--Broadcasting--TV--Internet
R&D, an industry?
• Market and Industry
Where is a market, there is an industry.
But market and production may not be at the same place--production fragmentation.
II. Conventional Thinking of Industrial Development
• Vertical DisintegrationEmerging small and medium-sized business
• Production Fragmentation
International division of labor in line with comparative advantage
In pursuit of dynamic advantage--changes in the “Flying-Geese” pattern of development
• Target Industry and Industrial Policy
II. Conventional Thinking of Industrial Development
“… modern economic growth could best be viewed as a process based on a change which raises greatly the stock of technological and social knowledge … When the … knowledge is used, it becomes the source of … increase in output and structural shifts that characterize modern economies.”
Simon Kuznets
Modern Economic Growth-Rage, Structure and Spread, 1966
Knowledge Creating Industries
Industry Society Meansproduction
Form ofproduction
Management Nationalpower
Agriculturalization Land Smallquantities of afew products
Cooperation Military
Industrialization Machines Largequantities offew products
Standardization Political
Computerization Computers,ICT networks
Smallquantities ofmany products
Computerization Economic
Creationintensification=knowledge creation
Conceptors,ideaengineering
Unique itemsof manyvarieties
Networking Cultural
Source: Sozo no Senryaku [ Strategy for Creation ] , Nomura Research Institute, 1990.
Innovation as Problem Solving
• Capability of problem solving is related to knowledge base.
• Knowledge comes from experience, publicly available information and the uncodified character of innovators, e.g., capability and tacitness.
Innovation as Problem Solving
• Technological Paradigm affected by and including three elements:
l. the needs to be fulfilled;
2. the scientific principles to be utilized for the task;
3. the material technology to be used.
• Functional
Knowledge Integrating Industries
Petaloid Industry
III. Alternative Thinkings: Knowledge Integration
T. Murakami, Encouraging the Emergent Evolution of New Industries, Nomura Research Institute, 2000
IV. Impacts and Implications: Infrastructure
Livelihood
National Competitiveness
Other Industries
MarketDom.Gov.
Exp.
Demand SideDemand Side
NewActivitiesinExistingBusiness
New
Enterprises
Innovations
Capital
V.C.
Banking
FinancialMarket
Supply SideSupply SideFactor Market
Management
Other Labor
R & DPersonnel
LaborMarket
B2BB2CG.L.
New Business/Investment
IT Infrastructure
Hardware Software
Foreign
Knowledge-Based Economy Paradigm
LaborCapital
ICT
The Foundation of the ICT Industry
R&D PeopleVenture Capital
Institutional Setting
III. The Foundation of the New Economy
IV. Impacts and Implications: Government Role
Infant industry or infant entrepreneur?
Are government officials smarter?
Will the state-owned company be necessary?
Are means at hand, --tariff, subsidies, and regulations--still available or necessary?
Limits of fiscal and monetary policies.
Global Logistics: A New Business Model
• Changes in business environment, production fragmentation
• New technology available
• A knowledge creating and integrating business
Production Sharing of Taiwan’s Information Industry
1995 1996 1997 1998 1999*
Total 100.0 100.0 100.0 100.0 100.0
Taiwan 72.0 67.9 62.6 57.0 52.7
China 14.0 16.8 22.8 29.0 33.2
Thailand 5.0 5.5 5.9 5.4 5.3
Malaysia 7.2 7.4 5.6 4.5 4.0
Other 1.8 2.4 3.1 4.1 4.8
%
* Estimates.Source: Market Intelligence Center, Institute for Information Industry.
1. DELL sends a request to Taiwan upon a Singaporean client order
2. The U.S. firm sends CPU to Taiwan
3. China sends cases and power supplies to Taiwan
4. China sends semi-assembled parts to Taiwan
5. Malaysia sends PCB to Taiwan
6. Taiwan sends DRAM mainboard and semi-assembled parts to Singapore
7.China send monitors to Singapore
8. Singapore assembles and sends the finished PC to the client
9. DELL sends the payment to Taiwan
Singapore
China U.S.
DELL
5
PCB
6
1
2
4
Order
CPU
MO
NIT
OR
9
DRAM main-board
8 PC
7
Source: Compiled by CEPD.
3
Taiwan as a Global Logistics Center
Taiwan
Malaysia
Steps 1 to 8 take 2 to 5 days to complete
Operation Characteristics in Taiwan: from OEM to GL
R&D Manufacturing Marketing andDistribution
OEM
R D Mfg Marketing andDistribution
ODM
R D Mfg Logistics M
ODL/GL
Before the mid-1980s
In the late 1980s and early 1990s
After the mid-1990s
: Local operations
Japan
Taiwan U.S.
I: InvestmentM: Materials/IntermediatesQ: Finished product/commodityS: Strategic alliance
Before the mid-1980sLate 1980s and early 1990sAfter the mid-1990sASEAN
I&M
M
I&MQ
QS
Q
Q
Taiwan’s International Division of Laborfrom Triangle to Diamond
China
I&M
Q
S
全球運籌中心
總體經濟調整建立符合國際規範之經營環境,減少人員、資金、資訊進出障礙,改善兩岸經貿往來
資訊流
商流 物流
資金流
改善通關作業,縮短運送時間及提升配送能力
累積科技及製造能力,使台灣成為國際市場的主要貨品供應者
協助跨國資金調度及支付建立網路系統,便
捷資訊傳遞與處理
電信中心
製造中心 海、空運中心
金融中心
From APROC to Global Logistics Center