Betting on Biotech: Innovation and the Limits of Asia's Developmental State

2. Reorganizing the State

43 Chapter 2 Reorganizing the State The postwar economic miracles in Korea, Taiwan , and Singapore were facilitated by the developmental state’s strategic capacity and willingness to coordinate the allocation of resources in order to mitigate risk. By mitigating the risks of industrial upgrading, the state encouraged otherwise risk-averse entrepreneurs to develop new industrial competencies and competitive advantages in global markets. This chapter looks at the state in the specific context of biotech innovation and examines the extent to which earlier patterns of state intervention and state organization have endured in the current era of knowledge-based industrial development . The short answer is yes and no. On the one hand, the state in Korea, Taiwan, and Singapore continues to allocate tremendous amounts of resources to the biotech sector and sciencebased industrial development. In terms of public sector inputs,the state’s role has not diminished. With respect to biotech development, the state’s share of the total R&D resource pie is disproportionately larger than in other technology sectors. In other words, patterns of state intervention have endured in terms of committing resources to facilitate the development of new industries such as commercial biotech. Current patterns of resource allocation by the state also reflect earlier state strategies distinctive to each of the three cases, an indicator of strategic continuity among them. Korea has continued to “go big,” Taiwan has chosen to “go small,” and Singapore has continued to “go 44 BETTING ON BIOTECH global.”In Korea,the state has maintained its strategy of providing a wealth of resources up and down the technology chain, from basic research to downstream commercialization. The government in Taiwan has stayed focused on midstream R&D, most notably in public research institutes (PRIs) such as the Industrial Technology Research Institute (ITRI). And the Singaporean state has continued to allocate public R&D resources to accentuate the city-state’s locational advantages and to strengthen its domestic bio-industrial capacity with the goal of becoming an R&D hub for transnational biomedical firms. Decision makers tend to adhere to cognitive scripts and existing strategic repertoires when making difficult choices, especially when they are confronted with extraordinarily uncertain circumstances. On the other hand, we see significant change and discontinuity in how resources are allocated, that is, the processes by which state-level stakeholders decide where resources are to be allocated and for what purposes. Unlike in the past, when decision-making processes and the strategic rationalizations for public resource allocation were centralized and concentrated among a few actors, the allocative process in biotech has become considerably more contested among stakeholders. This pattern is especially clear in Korea and Taiwan and is becoming increasingly evident in Singapore as well. The transformation is not insignificant with respect to the notion of strategic state leadership. Specifically, examining changes in how resources have been allocated for the development of biotech allows us to see how the state’s coordinative capacity has diminished and how rationalizations about the state’s “guiding” role have been transformed. Even in Singapore, where conventional wisdom suggests that decision-making processes remain concentrated and centralized, emerging conflicts over resource allocation in biomedical industry development are reshaping the state apparatus and the strategic role played by state-level decision makers; even there, the state is being reorganized in profound ways. Dan Breznitz, in his study of innovation-based industrialization, asserts that the “state should no longer methodically plan the development of strategic industries by choosing specific products and product niches.”1 His observation is not merely an assertion about the IT sector; it also reflects the empirical evidence about biotech. But whereas Breznitz argues the state should not pick winners, my argument suggests that the diminishing coordinative capacity of the state in Korea, Taiwan, and Singapore means that it cannot pick winners any longer. More specifically, this chapter demonstrates 1. Dan Breznitz, Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan and Ireland (New Haven, Conn.:Yale University Press, 2008), 29. REORGANIZING THE STATE 45 how the reorganization of the state’s apparatus and its retreat from coordinating the biotech sector stems from (1) the decentralization of expertise among state-level actors, (2) the absence of institutional leadership inside the state apparatus, and (3) the articulation of new strategic rationalizations about the state’s more modest role in managing biotech industry’s technological, economic , and temporal uncertainties. Laggard to Leader We can get a better sense of patterns of continuity...