Feb 14, 2008 Special USAPC Presentation - Dieter Ernst

TOP: Dr. Mark Borthwick, Director of the U.S. Asia Pacific Council, introduces Dr. Dieter Ernst, Senior Fellow at the East-West Center.


(WASHINGTON, DC) Feb. 14 – Over the past decade, the rise of Asia as an important location for “innovation offshoring” has begun to challenge the notion that policies which encourage strong investment in research and development (R&D) and innovation are the critical ingredients for economic growth and competitiveness.  Increasingly, Asian governments and firms are playing an active role as promoters and new sources of innovation. Dr. Dieter Ernst, Senior Fellow at the East-West Center, discussed the implications of what he has termed the “new geography of innovation” in a seminar at the East-West Center in Washington.

Dr. Ernst suggested that many countries in Asia, while eager to develop their capabilities for innovation, tend to neglect the linkages between their own regional and national innovation systems and those that exist beyond national borders.  Yet, many innovation systems are embedded within more global organizational arrangements, and it is precisely these arrangements that deserve to be studied more carefully. Dr. Ernst noted that Asia’s role—especially China’s and India’s—in these networks is increasing, though established centers in the U.S. and Europe retain their considerable dominance and most econometric analyses are unable to demonstrate the true extent of such “innovation offshoring” using data alone. Numerous surveys, however, indicate clearly that China and India are becoming increasingly competitive with regard to R&D, and that Asia’s global share in R&D spending is rising.

Dr. Ernst concluded with remarks about the uncertainty of the future and challenges for Asia. When it comes to this “new geography of innovation,” he noted, the world is not flat, but rather hierarchical. There are a growing number of nodes or hubs that will become increasingly important as they compete for their share of the global innovation network, particularly those in Asia. Today, countries with advanced innovation systems such as Israel, Ireland, and South Korea are being pushed by “catching up” locations such as China.  One of the challenges in the years ahead will be to counter the domestic “brain drain” that occurs when the most knowledgeable individuals leave their home countries and do not return, and subsequently the need to strengthen linkages with local universities. It will be imperative for policymakers to design policies that address these challenges and foster increased network integration, both within and beyond borders.

Dr. Ernst is a senior fellow in the Economics Study Area of the East-West Center Research Program. He is a former senior advisor to the OECD, Paris; a former research director at the Berkeley Roundtable on the International Economy; and a former research professor at the Copenhagen Business School.  His recent and forthcoming books including Innovation Offshoring and Global Knowledge Networks , International Production Networks in Asia: Rivalry or Riches , and Technological Capabilities and Export Success: Lessons from East Asia .