The name is absent

Neumayer (2005) argue the importance of the neoclassical school’s emphasis on the role of
market liberalization among developing countries including the removal of institutional barriers,
the positive environment for foreign investment and the internationalization of trade which both
stimulate and accelerate technological diffusion and internal innovation.

Some of the literature on the emergence of the Asia economies - the so called ‘little
tigers’ - embodies this catch-up process of latecomer economies, particularly in manufacturing
where many of these economies have reduced or eliminated the gap in production related
capabilities and in other cases have surpassed their advanced economy counterparts (Kim, 1980
and 1997; Ernst and O’Connor, 1992; Hobday, 1995 and 2001; Lall, 2000; Mathews and Cho,
2000; Mathews, 2002; Liu, 2005). In many cases technological innovation has played a central
role in this catch up process in these latecomer regions (Ernst, 2004). Specifically, innovation in
electronics manufacturing is often cited in that literature and is based on advantageous
production capacity, efficiency from low cost production, rapid model changes to fit changing
customer needs and tastes, available investment for technological change and refitting and
skilled engineering adaptation in production processes and in final product design (Ernst, 2004;
UNIDO, 2002; David, 2002).

The central idea is that international knowledge diffusion from leading regions to lagging
regions can be expressed as a latecomer innovation strategy with respect to new innovations in
process technologies, critical component development or in rapid changes in final product
design. This is the basis of Solow’s (1956) neoclassical growth school where free technological
spillovers produce long-run economic convergence. Theories in the regional economic
development literature, such as growth pole theory or trickle down effects, can also be seen as

China's Mobile Handsets FINAL DRAFT 2006.sph ERSA2006 Greece

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