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Chinese Telecom Equipment Industry a Thesis Submitted STATE-LED CATCH-UP: CHINESE TELECOM EQUIPMENT INDUSTRY A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF SOCIAL SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY BY A. ULAŞ EMİROĞLU IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN THE DEPARTMENT OF SCIENCE AND TECHNOLOGY POLICY STUDIES FEBRUARY 2014 Approval of the Graduate School of Social Sciences Prof. Dr. Meliha Altunışık Director I certify that this thesis satisfies all the requirements as a thesis for the degree of Doctor of Philosophy. Prof. Dr. Erkan Erdil Head of Department This is to certify that we have read this thesis and that in our opinion it is fully adequate, in scope and quality, as a thesis for the degree of Doctor of Philosophy. Prof. Dr. Haluk Geray Prof. Dr. Erkan Erdil Co-Supervisor Supervisor Examining Committee Members Assoc. Prof. Dr. Teoman Pamukçu (METU,STPS) Prof. Dr. Erkan Erdil (METU, STPS) Assoc. Prof. Dr. Funda Başaran Özdemir (AU, ILEF) Assist. Prof. Dr. Semih Akçomak (METU, STPS) Assist. Prof. Dr. Erdal Akdeve (YBU, IIBF) I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last name : A. Ulaş Emiroğlu Signature : iii ABSTRACT STATE-LED CATCH-UP: CHINESE TELECOM EQUIPMENT INDUSTRY Emiroğlu, A. Ulaş Ph.D., Department of Science and Technology Policy Studies Supervisor: Prof. Dr. Erkan Erdil Co-Supervisor: Prof. Dr. Haluk Geray February, 2014, 362 pages The aim of this dissertation is to investigate an alternative policy to the neoliberal development policy suggestion in the scope of the high-technology industrial catch-up of the latecomers with testing the hypothesis of “Chinese telecom equipment industry’s catch-up is the success of the guidance of the state and the state-led development policies.” In this policy, the state’s active and interventionist role is suggested in all phases of the catch-up. It is a triple system of state, foreign investment, and national industry-capital, and this system has a dynamic and interactive relation with each other. Telecom equipment industry of China is chosen as a case study for this research. Study of Chinese high-technology catch-up with related theoretical approaches, which underline the importance of the “triple system”, is the main contribution to the literature. Policy part of the conclusion chapter suggests an alternative catch-up way to the latecomer economies, rather than neoliberal catch-up policies. This model is managed by the state and “transfer of modern iv technologies via JVs between MNCs and national companies”, “funding of industrial activities by state-owned banks and markets” and “re-organizing or creating competitive SOEs in these industries” are the major characteristics of the model. This system is named in this thesis as “generative state” in which the state creates and sets up all related institutions and processes which are necessary to development and catch-up in a continuous manner. State actively manages all these phases with state-owned instruments. This structure as a whole is the major finding of the thesis. Keywords: State-led, catch-up, China, telecom, telecom equipment v ÖZ DEVLET KAYNAKLI YAKALAMA: ÇİN TELEKOM EKİPMANLARI ENDÜSTRİSİ Emiroğlu, A. Ulaş Doktora, Bilim ve Teknoloji Politikası Çalışmaları Bölümü Tez Yöneticisi: Prof. Dr. Erkan Erdil Ortak Tez Yöneticisi: Prof. Dr. Haluk Geray Şubat 2014, 362 sayfa Bu tezin amacı, geriden gelen ülkelere yüksek teknoloji içeren endüstrilerde yakalama ve gelişme fırsatı sağlayacak, neoliberal kalkınma politikalarına alternatif oluşturacak politikayı “Çin telekom ekipmanları endüstrisindeki yakalama, devlet yönlendirmesinin ve devlet kaynaklı yakalama politikalarının başarısıdır” hipotezini test ederek oluşturmaktır. Bu politikada yakalamanın her aşamasında devletin aktif ve müdahaleci rolü ön plana çıkarılmaktadır. Bu yapı, içerisinde devlet, yabancı yatırımlar ve ulusal endüstri ve sermayenin olduğu ve birbirleriyle dinamik ve interaktif bir ilişki içerisinde oldukları “üçlü bir yapıdır”. Bu araştırma için Çin telekom ekipmanları endüstrisi örnek endüstri olarak seçilmiştir. Bu üçlü yapının önemini vurgulayan teorik yaklaşımlarla çalışılan Çin’deki yüksek teknoloji içeren endüstride yakalama çalışması, tezin literatüre temel katkısıdır. Sonuç bölümünün politika kısmı, neoliberal yakalama modellerine alternatif bir politika önerisi sunmaktadır. Bu model, bizzat devlet tarafından yönetilmekte olup, “ulusal firmalar ve çokuluslu vi firmalar ile kurulan ortak girişimler sayesinde modern teknolojileri transfer eden”, “endüstriyel faaliyetlerin devlet yönetimindeki bankalar ve pazar tarafından finanse edildiği”, “endüstri içindeki kamu iktisadi teşebbüslerinin re-organize edilerek rekabetçi bir yapıya kavuşturulduğu” özel bir sistemdir. Tezde bu sistem “doğurgan devlet” olarak tanımlanmış olup, devlet, gelişme ve yakalama için gerekli tüm kurum ve süreçleri doğurur ve onları sürekli olarak yenileyerek sürecin devamını sağlar. Devlet, tüm bu aşamaları kendi enstrümanlarıyla bizzat yönetir. Bu yapının tamamı ise tezin temel bulgusudur. Anahtar Kelimler: Devlet-kaynaklı, yakalama, Çin, telekom, telekom ekipmanları vii To My Family Nursen, Selahattin and Sinem viii ACKNOWLEDGEMENTS The author wishes to express his deepest gratitude to his supervisor Prof. Dr. Erkan Erdil and co-supervisor Prof. Dr. Haluk Geray for their guidance, advice, criticism, encouragements and insight throughout the research. The author would also like to express great appreciation Assoc. Prof. Dr. Funda Başaran Özdemir for his commitments, suggestions and endless support. The author would like to thank to Assoc. Prof. Dr. Teoman Pamukçu, Assist. Prof. Dr. Semih Akçomak and Assist. Prof. Dr. Erdal Akdeve for their commitments and comments. The author wishes also to his parents, Nursen Emiroğlu and Selahattin Emiroğlu for their endless support and guidance. and The author wishes also to express his deepest respect and honour to his sister Sinem Emiroğlu for her presence and incredible support. ix TABLE OF CONTENTS PLAGIARISM...................................................................................................iii ABSTRACT ...................................................................................................... iv ÖZ ...................................................................................................................... vi DEDICATION.................................................................................................viii ACKNOWLEDGEMENTS .............................................................................. ix TABLE OF CONTENTS ................................................................................... x LIST OF TABLES .......................................................................................... xiii LIST OF FIGURES .......................................................................................... xv LIST OF ABBREVIATIONS ......................................................................... xvi CHAPTER 1.INTRODUCTION ...................................................................................... 1 2.THEORETICAL FRAMEWORK ............................................................ 12 2.1 Theoretical Debates .......................................................................... 14 2.2 Development Theories Discussion ................................................... 16 2.2.1 Modernization Theory ............................................................ 18 2.2.2 Dependency Theory ................................................................ 21 2.2.3 Latin American Structuralism ................................................. 27 2.2.4 Friedrich List -Listian State-led Developmentalism, .............. 33 Gerschenkron- Economic Backwardness ........................................ 33 2.3 Reclaiming State-led Catch-up Policies with Successful Industrialization Cases ............................................................................ 40 2.3.1 Soviet Union ........................................................................... 42 2.3.2 East Asia ................................................................................. 44 2.3.3 Introduction to Chinese Catch-up ........................................... 50 2.4 Discussion ......................................................................................... 54 3.TRANSFORMATION OF CHINA: INDUSTRIALIZATION AND TECHNOLOGICAL PROGRESS (1949, 1978) ......................................... 58 3.1 People’s Republic of China under the reforms of 1949 and 1978 .... 63 3.2 Deng and 1978 Reform ..................................................................... 73 x 3.3 Reform in State-Owned Industry ...................................................... 87 3.4 Reform in Science and Technology (S&T) System .......................... 91 3.5 The Confucian Heritage .................................................................. 103 3.6 Discussion ....................................................................................... 106 4.THE EFFECT OF FOREIGN INVESTMENT ON NATIONAL INDIGENOUS CAPABILITIES ............................................................... 112 4.1 Spillover Effect of Foreign Direct Investment ................................ 115 4.2 Determining Factors of Spillover ...................................................
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