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The co-evolution of production and technological capabilities during industrial development

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  • Eum, Wonsub
  • Lee, Jeong-Dong

Abstract

This study examined the national-level co-evolutionary paths between closely interconnected production and technological capabilities during industrial development. In particular, this study suggests that these co-evolutionary paths do not result in smooth and path-following evolution of the industrial structure, as simple assembly often obscures path-dependence during industrial diversification. Rather, these paths include frequent diversification to less related products based on technological capabilities during its industrial development. This study suggests a framework to understand these co-evolutionary paths, and identifies three patterns behind successful industrial development: path-defying diversification towards core products, knowledge accumulation by production, and knowledge-based diversification. Analyses through the linkage between product and knowledge spaces visualize co-evolutionary paths. A case study of the Korean experience further identifies policies and patterns of capability development during industrial development. Based on these discussions, this study suggests different policy implications for countries at different stages of a successful transition to the next stage.

Suggested Citation

  • Eum, Wonsub & Lee, Jeong-Dong, 2022. "The co-evolution of production and technological capabilities during industrial development," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 454-469.
    • Handle: RePEc:eee:streco:v:63:y:2022:i:c:p:454-469
    DOI: 10.1016/j.strueco.2022.07.001
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