Catch-up with Generative State: Lessons from Chinese Telecom Equipment Industry

Neoliberal catch-up policies are definitely useless to create suitable environment for latecomers in order to close the gap with forerunners. This paper investigates an alternative policy to the neoliberal development policies in the scope of the high-technology industrial catch-up of the latecomers with guidance of the state and the state-led development policies. By this approach, 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. The suggested model is managed by the state and “transfer of modern 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 (State-owned enterprises) in these industries” are the major characteristics of the model. This system is named in this paper 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. On the contrary to “passive and regulative role of state” in neoliberal policy suggestions, state actively manages all these phases with state-owned instruments. General finding of the study is noteworthy, China succeeded significant catch-up in a high tech industry- telecom equipment industry in 21st century with state-led policies of “state capitalism”.