Growth And Industrial Organisation

The bicycle industry is an interesting case where East Asian firms have made a considerable impact, but where Taiwan has outperformed Korea. In the Korean sector, none of the well-known chaebol such as Samsung have become involved, and the incumbent firms experienced slow growth until there was government intervention in the 1980s. In Taiwan, small dynamic firms responded to large export orders in the early 1970s, and established a lasting lead which has been regenerated through technological upgrading. The paper argues that both countries’ bicycle industries have a vertically non-integrated structure, with extensive internal sub-contracting, and that the differences between the countries can be attributed to the timing and effcacy of industrial policy interventions.