Jumping over latecomers´ upgrading barriers: The exploration of China´s upgrading opportunities by Taiwan´s machine tool industry

Most existing studies of late industrialization emphasize that latecomers´ successful catch-up were driven by the learning mechanisms embedded in their linkages with advanced firms and regions in industrialized countries. It is through such linkages the latecomers were able to source critical technological knowledge and market information for further upgrading and higher competitiveness. This paper argues that such literature neglects to consider the possibilities that latecomers could also obtain learning and upgrading capabilities through their linkages with other late industrializing counterparts. By using the investments of Taiwan´s machine tool (MT) industry in China as the example, this paper analyzes how Taiwanese MT firms advanced their technological capabilities through exploring and exploiting China´s technological and market resources. More specifically, it discusses the significance of China in enabling Taiwanese industrial firms to acquire complementary knowledge and skills that have been not available in their existing business and relational networks.