Honolulu Advertiser

Posted on: Saturday, August 15, 2009

Mapping a New Geography of Knowledge

While political debates about globalization have traditionally focused
on offshore outsourcing of manufacturing and services, there is
increasing recognition that a new type of offshoring may be just as
important, if not more so the emergence of global innovation networks
that integrate dispersed engineering, product development and research
activities across geographic borders. The challenge for economic
researchers and policymakers has been in tracing and deciphering the
increasingly complex forms of these networks, which are pushing
interdependence among national economies to historically unprecedented
levels.

To help identify the driving forces and impacts of such networks,
economist Dieter Ernst, a Senior Research Fellow at the East-West
Center in Honolulu and an international authority on globalization in
high-tech industries, has assembled a unique database tracking the
development of global innovation networks in nearly 150 electronics
companies. The database draws on surveys and case studies to provide
such information as the location and type of activity of offshore
research and development labs, the size and composition of their
workforce, and the educational background and work experience of
senior managers. In addition, it contains information on companies’
rationale for establishing innovation networks and the scope and
stability of these networks.
Ernst’s research, just published in the East-West Center Policy Study
"A New Geography of Knowledge in the Electronics Industry?",
highlights how the emergence of such networks is leading to a new map
of global innovation, particularly in Asia.
"This new geography of knowledge has important implications for major
policy issues and negotiations worldwide," Ernst explains. "It shows,
for example, that U.S. economic relations with emerging economies have
moved from hegemony to interdependence, where no player, not even the
U.S., is strong enough to impose its own agenda unilaterally on
others. This in turn impacts discussions on such diverse topics as
health care, climate change, international trade, alternative energies
and cyber-security."
Among the findings of the study are that:
The emergence of global innovation networks is expanding rapidly,
driven by increasing outsourcing of such functions as engineering,
development, and research.
The substantial increase in the mobility of knowledge has led to a new
hierarchy of innovation hubs, with global centers of excellence in the
United States, Japan, and the EU; advanced locations, such as Israel,
Ireland, Taiwan, and Korea; catching-up locations like Beijing, the
Yangtze River delta, and the Pearl River delta in China, and
Bangalore, Chennai, Hyderabad, and Delhi in India; and "new frontier"
locations, including lower-tier cities in China and India, plus
Romania, Armenia, Bulgaria, and Vietnam.
The new geography of knowledge cannot be left to market forces
alone. Although global integration of production and innovation has
facilitated rapid advancement in Asia, for example, that integration
may become a mixed blessing unless Asian governments establish
appropriate policies for developing innovative capabilities.
The big question mark at this point, of course, is the potentially
game-changing impact of the current breakdown of the financial system
and the resultant collapse of international trade and
investment. Ernst writes that "there are now clear signs that Asia’s
prospects for investment and employment are grim and that demand and
GDP growth will slow down significantly. It is unclear at this stage,
however, how this will affect Asia’s innovative capacity and its
response to the emerging new geography of knowledge."
Ernst concludes that "The systemic nature of the forces that are
driving the geographical dispersion of innovation networks indicates
that this is a lasting change in the geography of
knowledge. (However), the result is not a flatter world. Instead,
integration into global innovation networks has dispersed innovative
capabilities to new players, but overall this dispersion remains
highly concentrated in a handful of new, yet very diverse and
intensely competing, innovation offshoring hubs in Asia. As the
diversity of network players, locations, business models, and network
arrangements is increasing, new opportunities for knowledge diffusion
are being created, enabling Asian network participants to enhance
learning, absorptive capacity and innovative capabilities."
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The EAST-WEST CENTER is an education and research organization
established by the U.S. Congress in 1960 to strengthen relations and
understanding among the peoples and nations of Asia, the Pacific, and
the United States. The Center contributes to a peaceful, prosperous
and just Asia Pacific community by serving as a vigorous hub for
cooperative research, education and dialogue on critical issues of
common concern to the Asia Pacific region and the United
States. Funding for the Center comes from the U.S. government, with
additional support provided by private agencies, individuals,
foundations, corporations and the governments of the region.