Show-Long Janga and Simona Sungb

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Taiwans patent performance and the impact of
industry structure

• Show-Long Janga and Simona Sungb
• aDepartment od Economics, National Taiwan
  University, No.21, Hsu-Chow Road, Taipei, 100
  Taiwan
• bSchool of Business, The College of Saint Rose,
  Albany, NY 12203, USA

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OUTLINE
1.Introduction 2.Structure of Taiwanese
industry 3.International comparison of Taiwanese
patenting 4.The effect of industry structure on
patenting a comparison between Taiwan and
South Korea 5.Summary and conclusions
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1. Introduction
This paper takes a look at Taiwans
innovation path and compares her innovation
performance to the technology frontier of the
world. We also look at the effect of Taiwanese
industrial policy and the impact of the resulting
market structure on Taiwanese innovation.
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2.Structure of Taiwanese industry
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2.1 SMEs

• Taiwanese economy developed within an industrial
  framework where small and medium-sized
  enterprises made up more than 95 of total number
  of firms for decades.

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2.2 Role of government in innovation

• In the early 1970s, in an effort to emulate
  Californias Silicon Valley, the government
  established two institutions in Hsinchu, Taiwan
  The Industrial Technology Research Institute
  (ITRI) and the Hsinchu Science-Based Industry
  Park together with two existing nearby ST heavy
  universities
• ITRI is the primary driving force in Taiwan for
  the leveraging of advanced technologies from
  abroad, and for their timely dissemination to
  local firms.
• Public RD in Taiwan has served the function of
  elevating the technological capability of the
  private sector relatively successfully, but its
  own research productivity has not matched the
  patent records achieved by the private sector.

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• Table 1 Technology Transfer AgreementsNumber of
  firms participated in ITRI projects in Taiwana

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Table 2 Comparison of patent counts and
propensity to patent between the public sector
and private enterprises (Taiwan)
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3.International Comparison of Taiwan Patenting
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3.1 Patent count

• The comparison of patent data with G7 nations
  should allow us to assess the strength and
  weaknesses of Taiwans technology capacity
  relative to the worlds leading technologically
  developed nations.
• The inclusion of South Korea follows from her
  similarity to Taiwan in terms of culture, per
  capita GDP, export-heavy development design, and
  the rapid transcend from a technology latecomer
  to a technology generator.

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Table 3 Patent awards and average growth rates
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Table 4 Patent composition by category and share
(in parentheses) for 1985 and 2001
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3.2 Patent quality

• We examine the patents quality by
• generality
• originality
• number of claims
• science linkage
• new fields

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Table 5 Comparison of patent quality by
generality, originality, and claims
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Table 6 Comparison of patent quality by science
linkage and new fields
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4. The effect of industry structure on
patenting a comparison between
Taiwan and Korea
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• By the 1990s, two very different forms of market
  organization have taken shape in Taiwan and South
  Korea.
• While the proportion of SMEs in total
  manufacturing (in terms of number of firms) was
  similar, the concentration of market shares is
  significantly different between the two
  economies.

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Table 7 share of the number of SMEs in total
manufacturing Taiwan v.s. South Korea
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• The clear contrast in market structure between
  Taiwan and South Korea has produced very
  different innovation outcomes.
• Two problems stand out sharply for Taiwan
  currently the proportion of Taiwans unassigned
  patents is too high, and a stagnation problem now
  exists, inhibiting the persistence of innovative
  research and development in Taiwan.

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Table 8 Statistics on patent assignees Taiwan
vs South Korea
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Table 9 Regression of patent quality on assigned
patents
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Table 10 Patent performance of top three
assignees,1997-2001
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Table 11 Distribution of patenting spell
lengths, 1975-2001
Taiwan vs Korea
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Table 12 Entry and exit rate
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5. Summary Conclusions
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1.Our analysis credits Taiwanese governments
effort in the last three decades to have
successfully used public RD resources to
mitigate some of the constraints posed by the SME
market structure 2.However, we find all G7
nations superiorly surpass Taiwan in patent
quality. 3.Taiwan has a larger number of
patent awards than South Korea, but South Koreas
patent quality also appears to be superior than
Taiwan.
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4.How to unleash and mobilize the creative energy
of the small private enterprises with limited
resources should be an important public policy
concern for Taiwan. 5.Emulating the U.S.
experience to stimulate the incentives of public
research institutions in patenting, redirecting a
portion of the states research resources to the
more competent private sector may be a policy
shift worth consideration in order to maximize
Taiwans patenting and innovation potential.
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Thank you for your listening
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