Rent-seeking, industrial policies and national innovation systems in Southeast Asian economies

This paper seeks to deepen our understanding of the national innovation systems of Southeast Asian economies through formulating a conceptual framework that articulates the industrial policy mechanism, rents and rent-seeking activities that in turn lead to economic growth. The framework is built on the cases of industrialization and development in Southeast Asian economies to provide a context which is conceptual in orientation and seeks to address how industrial policies and rent-seeking activities can create an environment that supports a functioning innovation system. This paper highlights the importance of industrial policy and value-enhancing rents for indigenous technology development. Singapore recorded significant progress in indigenous technology development. This is largely attributed to an industrial support mechanism that promotes learning in the indigenous production system. In addition, the state structure of Singapore appears to be better positioned for creating value-enhancing rents in order to develop its indigenous industries. This study suggests developing economies such as Malaysia, Thailand and Vietnam should pursue an industrial development strategy that promotes indigenous technologies in order to obtain linkages and technology spillover that are similar to those in many of the newly industrialized economies of Asia.

► A framework is formulated to articulate the industrial policy mechanism and rents. ► The importance of industrial policy and value-enhancing rents are highlighted. ► Developing economies should pursue strategy that promotes indigenous technologies.