All of the four catch-down innovations described in the previous section had signifi cant economic impact. Th ese technologies provided a cheap alternative for watching movies, communicating, transportation, and making animation. Catch-down innovations made it possible for the low-income population to enjoy the benefi ts of contemporary technol- ogy at a low cost. In the discussions on intermediate and appropriate technology in the 1970s, ILO emphasized that these technologies should contribute to satisfying the ‘basic needs’ of the low-income population.
However, the needs satisfi ed by the four innovations given here are quite
4 Zhejiang Zhongnan Animation Co. Ltd, a huge studio employing more than 1000 animators, said during the author’s interview at the company on 25 August 2014 that 30 % of their produc- tion was made using Adobe Flash.
far from the basic needs identifi ed by ILO. Th erefore, I think it is necessary to invent a new concept.
It is also noteworthy that catch-down innovations made use of mul- tiple tracks of technological development. Chinese manufacturers chose a diff erent track from the dominant technologies in the case of video CDs and animation. Th e products made by catch-down innovations have cultivated vast markets in China and other developing countries and have partially eaten into the market of the dominant technologies from developed countries. At the same time, from a global perspective, they remain local technologies and have not yet become ‘disruptive inno- vations’ (Christensen 1997 ).
Th is chapter only introduced fi ve (Nano and four Chinese) cases of catch-down innovations, so it is hard to argue about the conditions that give rise to such innovations. However, comparing this with the situation in Korea and Taiwan discussed in this volume, I hypothesize that in coun- tries like China and India, with their vast domestic markets stratifi ed by urban–rural and regional disparities, catch-down innovations have a higher chance of success. As Sawai ( 1987 ) pointed out in his discussion of the Japanese machine tool industry in the 1920s, a stratifi ed domestic market works as a non-tariff barrier against imported goods and leaves room for domestic fi rms who cannot reach the technological level of forerunners to gain a certain market share. In large, stratifi ed markets like India and China, foreign goods, and leading domestic fi rms cannot cover all levels of demand, leaving room for the ‘guerrillas’ to take advantage of these gaps.
Kiyokawa ( 1995 ) pointed out that if the gap between imported tech- nology and indigenous technology is too wide, intermediate technologies developed by domestic fi rms will not be successful. He argues that suc- cessful intermediate technologies can be developed only when the gap is relatively narrow. Th is argument suggests that it is necessary to pay atten- tion to the technological foundations that lead to the creation of catch- down innovations. Indeed, Nano was developed by Tata Motors, which has extensive experience in producing cars. Although the manufacturers of video CDs and guerrilla mobile handsets were mostly new entrants, they depended on the existing supply chain within the electronics industry in China. Most of their engineers formerly worked for multinational fi rms or domestic brand fi rms. Th e Chinese animation industry had a long history
of domestic production and technological learning through the subcon- tracting of foreign animations before they started using Adobe Flash.
Although the main drivers of catch-down innovation are domestic fi rms in developing countries, some foreign fi rms can play a vital role.
In the establishment of the guerrilla mobile handset industry, MTK, a Taiwanese company, was the largest contributor. A Japanese bicycle parts manufacturer made a big contribution to the technological evolution of Chinese electric bicycles. It is true that domestic fi rms are in a better position to uncover the potential demand in developing countries, but without the fi rms, regardless of their nationality, that assume the risk of trying a new technological approach to serve the potential demand, catch-down innovation will not occur.
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Curse or Opportunity? A Model of Industrial Development for Natural
Resource–Rich Countries on the Basis of Southeast Asian Experiences
Yuri Sato