ABSTRACT
This chapter explores the capabilities and limits of the Taiwanese state in achieving such objectives in two key sectors of the information technology (IT) industry, software and integrated circuit (IC) design. It presents the evolution of these two subsectors and analyzes their strengths, capabilities, and innovational systems, and the business models employed by private firms in these sectors. The chapter presents a detailed micro-level understanding of the industry's evolution, as well as of industry-financial sector, industry-university, and industry-state interactions. It reviews the literature and lays out theoretical issues involved in Taiwan's experience of rapid IT growth. The chapter presents an account of the IC design industry, its development, strengths, and limits. It focuses on the software industry, and argues that the almost adversarial relationship between private industry and Institute for Information Industry (III) has played a major role in the weak growth of the sector.
