Wednesday, July 27, 2011

Integrated Capabilities Accumulation: A Gerschenkronian Catching-up Strategy.

Since the industrial revolution, developing countries have been trying to catch-up with frontiers countries. Today we can identify three main waves of successful catch-up experiences: The pre, the before-and-after, and the post Second World War (SWW) waves. Indeed, Germany and the United States have been the first to catch-up with the UK, and then during the decades before and after the SWW, Japan converged to the elite group of developed countries, to be followed by the “Asian tigers” post SWW catch-up wave.

Many authors and scholars have been and are still attempting to provide a general framework for the understanding of the catch-up process while basing their analysis mainly on the importance of the creation and application of knowledge, the needed institutional transformations, and the congruent policies devised to facilitate such development. Thorstein Veblen and Alexander Gerschenkron were the initiators of this debate and contributed to it through their work on the European catch-up prior to the First World War (FWW).

It is interesting to note that the fathers of cutch-up had two contrasting attitudes as to its feasibility, and thus proposed quite different means for achieving it! Veblen argued that catch-up could be achieved relatively easily through the availability of funds, the adequate supply of educated workforce, and skilled workmanship. However, Gerschenkron admitted that catching-up was a difficult endeavor and required targeting promising technologies, devising novel institutional adjustments, and engaging the government.

Nowadays, the process of catch up is getting even more complex and does proceed at a faster pace to keep up with the variety and speed of the newly produced knowledge and its accelerating pace of exploitation. In addition, economic globalization and the spread of communication technologies are making catching-up an ever challenging journey. Therefore, developing countries are called to adapt to their advantage successful templates as a necessary strategy to fulfill their convergence objectives on one hand, and unavoidably devise specific novel and efficient instruments, not (sufficiently) available to the frontier countries, on the other hand, in order to maximize their chances of convergence. This later point is the key challenge facing catch p countries.

In this paper we propose such a novel instrument that we call “Integrated Capabilities Accumulation” catch up strategy. This stratagem is designed along the lines of Gerschenkron’s analysis. Indeed, this Gerschenkronian catch up strategy is meant to enhance the operation and thus the learning capabilities of the National Innovation System by tightly coordinating and managing a targeted pilot innovation chain. This undertaking should aim at the transfer and then the mastery of a strategic dynamic “Low Cost” technology, from knowledge transmission via training and know how transfer via licensing, to skilled employment creation via the establishment of small and medium high tech firms specialized in the targeted industry and its wide service sector.

The targeted technology that will be used to illustrate our proposal is space technology. Indeed, small satellites are being put into orbit and successfully exploited with dramatically Low Costs. Therefore, by planning and executing the design, integration, test, launch, and exploitation, of a micro satellite in an integrated fashion, i.e., from knowledge transfer to spin offs creation, one is able of accumulating the necessary capabilities to design, plan and successfully implement such complex cutch up project.

In addition to its low cost and minimal risk, such a project is a means of training high skilled engineers and scientists, along with experienced S&T managers, capable of creating their own spin offs and thus assuring employments for higher education graduates in high return high tech small and medium firms.

Keywords: Technological catch up, Gerschenkronian strategy, learning capabilities, “Low Cost” technology.


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