Schumpeterian Analysis of Economic Catch-up and Catch-up Cycles
Professor Keun LEE
Professor of Economics
Seoul National University
His seminar combines two topics. The first is about his book, and the second is his recent research on ‘successive changes in industry leadership and catch-up cycles.”
One of the puzzles about why some countries have stronger economic growth than others revolves around the so-called 'middle-income trap'. This book explores the reasons why examples of successful catching-up are limited and in particular, why the Asian economies, including China, have managed to move, or are moving, beyond middle-income status but economic growth has stalled in some Latin American countries. This is one of the first studies to demonstrate using patent analysis that the secret lies in innovative systems at the firm, sector and country levels which promote investment in what the author calls 'short-cycle' technologies and thereby create a new path different from that of forerunning countries.
His paper on catchup cycles proposes an explanation of successive changes in industry leadership (which we call catch-up cycles) in which new firms and countries emerge in international leadership of a sector and others decline, and in which also the new leaders are then dethroned by other newcomers. This paper proposes to take a sectoral system view and to identify windows of opportunity in the evolution of a sectoral system. Three windows are proposed: one related to changes in knowledge and technology, the second to changes in demand and the third to changes in institutions and public policy. It is the combination of the opening of windows, the presence of capabilities and the appropriateness of responses/strategies by the actors that determines the changes in industrial leadership, eg in nine sectors, such as camera, semiconductors, mobile phones, aircraft, steel and shipbuilding, IT services, and wine.