A New Geography of Knowledge in the Electronics Industry? Asia's Role in Global Innovation Networks (Policy Studies (East-west Center Washington))

Debates about globalization are focused on offshore outsourcing of manufacturing and services. This approach, however, neglects an important change in the geography of knowledge--the emergence of global innovation networks (GINs) that integrate dispersed engineering, product development, and research activities across geographic borders.

This new form of globalization poses new challenges and opportunities for research on international economics, economic geography, and international relations and for developing new policy responses. Written by a leading expert, this monograph draws on a unique database of GINs in the electronics industry to explore their drivers and impacts and how integration of Asian firms into these networks affects their learning, capability formation, and innovation. The study shows a rapid expansion of these networks, driven by a relentless slicing and dicing ("modularization") of engineering, development, and research. Asia's role in these networks, quite minor until recently, is increasing. The resurgence of China and India as markets and production sites plays an important role in that increase.

However, the new geography of knowledge is not a flatter world where technical change and liberalization rapidly spread the benefits of globalization. Instead, the offshoring of R&D through GINs creates a handful of new--yet very diverse and intensely competing--innovation offshoring hubs in Asia. A new global hierarchy of innovation hubs juxtaposes global centers of excellence in the United States, Japan, and the European Union and a handful of new--yet very diverse and intensely competing--innovation offshoring hubs in Asia. While integration into GINs has facilitated Asian firms catching up with those in the West, this may become a mixed blessing unless Asian governments can establish appropriate policies for developing absorptive capacity and innovative capabilities both at the firm level and across the industry.