How Nations Learn Praise for the Book ‘The chapters examine how industrial latecomers have crafted strategic and pragmatic policy frameworks to unleash the universal passion for learning into business organ- izational practices that drive production capability development and foster innovation dynamics. The transformational experiences described in the book offer a multitude of ways in which learning is organized and applied to advance a nation’s productive structures and build competitive advantage in the global economy.’ Michael H Best, Professor Emeritus, Author of How Growth Really Happens: The Making of Economic Miracles through Production, Governance and Skills, Winner of the 2018 Schumpeter Prize ‘The analysis of development and catching-up has finally shifted away from sur- real problems of ‘optimal’ market-driven allocation of resources, toward the processes of learning and capability accumulation. This is an important contribution in this perspec- tive: And yet another nail into the coffinofthe“Washington Consensus”.’ Giovanni Dosi, Professor of Economics, Scuola Superiore Sant’ Anna, Pisa, Italy ‘Industrialisation has always been fundamental to sustained economic growth. It separates the world into high and low-income economies. To create inclusive pros- perity, we urgently need to understand How Nations Learn. State-supported innovation is not only cardinal for catch-up, but also to abate climate breakdown (through crowding in new businesses, nurturing experimentation, and ensuring public benefits). By studying the economic history of technological advancement in Africa, Asia, and Latin America, this book makes a powerful case for industrial policy.’ Dr Alice Evans, Lecturer in International Development, King’s College London ‘How Nations Learn is a book based on big ideas. Why do some nations grow faster than others? How does the process of economic catch-up work? What does the technological learning of firms have in common with the policy lessons of governments? How do the answers to these questions vary across countries and regions of the world? The book provides answers to these queries from a distinguished interdisciplinary and international set of scholars, who draw on an impressive reservoir of both contemporary and historical experiences. How Nations Learn is an essential guide to how to navigate the key dilemmas of 21st century development, which should be particularly useful to latecomer countries and those grappling with the pitfalls of uneven development.’ Gary Gereffi, Professor of Sociology and Director of the Global Value Chains Center at Duke University ‘Arkebe Oqubay and Kenichi Ohno’s important edited book is basically about learning to “catch up”. It focuses on firm level technology learning and policymakers’ learning, including learning by doing, emulation and experimentation, involving innovation and leapfrogging. The volume draws on historical, firm, industry and country experi- ences to identify factors crucial to successful learning for catching-up, including latecomer advantages. The chapters suggest that the intensity, pace, “direction” and context of learning matter, besides stressing the significance of robust industrial policies and long-term strategic vision.’ Jomo Kwame Sundaram, retired Professor, UN Assistant Secretary General, 2008 Leontief Prize ‘The limited capacity of developing countries to catch up the income level of developed countries has continued to be a major feature of international development over the past decades. Professors Oqubay and Ohno have been able to collect a fantastic set of papers on the crucial question of success and failure in achieving convergence: how technological learning takes place at the firm, sectorial and national level, allowing countries to catch up, but also how failure to do so leads to divergence. It considers both the success stories of Meiji Japan, Taiwan, Korea, Singapore and most recently of China, but also the strong challenges faced in other regions, and notably in Latin America and Africa. A must read for academic and policymakers alike.’ José Antonio Ocampo, Member of the Board of Banco de la República (Colombia), Chair of the United Nations Committee for Development Policy, and Professor, Columbia University ‘While debates on the best strategies for development have been protracted and contentious, there is widespread agreement on the salience of industrial policy and technological progress, but a paucity of studies on how this has been accomplished. The few books published have often been regionally or country based, limited in their scope of explanation, and analytically narrowed by their fealty to a single theoretical tradition. In contrast, this timely collection brings new critical insights into the dynamics of learning with a comparative analysis that is richly diverse in its geographic and theoretical focus, multidimensional in its level of analysis, and probing in its evaluation of how countries developed key capacities and transcended exigent histor- ical barriers. A welcome addition to the literature that is highly recommended.’ Howard Stein, Professor, Departments of Afroamerican and African Studies and Epidemiology, University of Michigan ‘“Catch-up” economic development requires technological and policy learning. It increasingly requires unlearning as well. And will and discipline. The editors of How Nations Learn have assembled a stellar group of contributors to share what they have learnt about learning, across time periods and continents, spanning technological learning by companies and policy learning and capability building by states. A most valuable resource for anyone interested in historical lessons applied sensitively to contemporary development challenges.’ D. Hugh Whittaker, Professor of the Japanese Economy and Business, University of Oxford How Nations Learn Technological Learning, Industrial Policy, and Catch-up Edited by ARKEBE OQUBAY AND KENICHI OHNO 1 3 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Oxford University Press 2019 The moral rights of the authors have been asserted First Edition published in 2019 Impression: 1 Some rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical or photocopying, recording or otherwise, for commercial purposes without the prior permission in writing of Oxford University Press. This is an open access publication, available online and distributed under the terms of a Creative Commons Attribution–NonCommercial–No Derivatives 4.0 International licence (CC BY-NC-ND), a copy of which is available at http://creativecommons.org/licenses/by-nc-nd/4.0/. Enquiries concerning use outside the scope of the licence terms should be sent to the Rights Department, Oxford University Press, at the above address Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2019937836 ISBN 978–0–19–884176–0 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. Foreword The process of learning by nations must be situated in historical perspective, for there is the past in our present, and there is much that we can learn from history. Until around 1750, Asia, Africa, and Latin America, now described as devel- oping countries, accounted for three-quarters of world population and more than two-thirds of world income. Of this, Asia alone accounted for almost three-fifths of world population and world income, while China and India together accounted for about one-half of world population and world income. These two Asian giants also contributed 57 per cent of manufacturing production and an even larger proportion of manufactured exports in the world. The next two centuries wit- nessed dramatic changes in the world economy. Between 1820 and 1950, in terms of Maddison PPP statistics, the share of Asia, Africa, and Latin America in world income fell from two-thirds to one quarter, while the share of Europe, North America, and Japan in world income rose from one-third to three-quarters. The rise of ‘The West’ was concentrated in Western Europe and North America, followed by Japan later, whereas the decline and fall of ‘The Rest’ was concentrated in Asia, much of it attributable to China and India, although Latin America was the clear exception. This evolution of the international economic order led to a profound change in the balance of economic and political power in the world. It was attributable to three developments. The first was the Industrial Revolution in Britain in the late eighteenth century which spread to Western Europe, even if slowly, during the first half of the nineteenth century. The second was the emergence of a newer, somewhat different form of colonialism in the early nineteenth century which culminated in the advent of imperialism that gathered momentum through the century. The third was the revolution in