ABSTRACT
This chapter summarises the situation regarding innovation and technological upgrading in selected Southeast Asian countries based on surveys and case studies of selected industries, sponsored by the Economic Research Institute of ASEAN and East Asia (ERIA) from 2008 to 2017. As time passed, firms in Southeast Asia innovated more and upgraded their technological capabilities. They conducted more R&D, though most were done informally. They leveraged more with external actors like transnational corporations (TNCs) and, more recently, universities. They performed better in key industrial sectors, namely, electronics, automotive and resource-based industries. However, in machinery industry, technological upgrading is still limited. Being part of production networks of TNCs helps these firms, especially in automotive and electronics sectors, jump-started their businesses and enabled them to acquire production capabilities. Nonetheless, to upgrade their technological capabilities to more sophisticated levels, firms had to pursue independent technological learning paths. This has an implication for future collaboration with Taiwanese firms, well known for design and advanced engineering capabilities, both in existing and new industries.
