National, sectoral and technological innovation systems: The case of Taiwanese pharmaceutical biotechnology and agricultural biotechnology innovation systems (1945 2000) Chao-chen Chung1 1manchester Business school, University of Manchester, Manchester, M13 9pl, UK. Present address: 10f.7, No. 57, Ln. 136, Xuefu Rd. Tamsui Dist.,New Taipei City 251, Taiwan (R. O. C.;Email: chaochen. chung@gmail. com This paper explores the dynamics of the configuration of the national, the sectoral and the technological innovation systems and defines the configuration of these three innovation systems as the national, sectoral and technological innovation systems (NSTISS). Through comparing the Taiwanese pharmaceutical biotechnology and agricultural biotechnology innovation systems we find that even within the same nation different NSTISS reveal different dynamics, in terms of actors and networks, the application of technology and knowledge and institutions. We conclude that the new research, technology development and innovation policies should be customized according to the differing dynamics of the NSTISS. Keywords: innovation system; Taiwan; biotechnology; pharmaceuticals; agriculture. 1. Introduction Over the last two decades scholars working on innovattio systems have established different ways in which to analyze them. The national innovation system focuses on the innovation process within the geographical space of nations (Lundvall 1992; Nelson 1993), while the sectoral innovation system emphasizes the innovation of a particulla set of products (Malerba 2002). The technological innovation system uses a specific knowledge field to draw the boundary of an innovation system (Carlsson et al. 2002; Bergek et al. 2008. The configuration of the differeen levels of innovation systems has been discussed to a certain extent (Markard and Truffer 2008. However, until now the configuration has not been defined clearly and deliberately probed. Consequently, this paper discusses the configuration of innovation systems at three levels: national, sectoral and technological. We intend to draw the boundary for the‘new'innovation system which is embedded in the configuraatio of the three innovation systems. Moreover, to understand the evolution of the new innovation system we not only examine the components of the innovation system, but follow Malerba's analysis (Malerba 2005) and explore the changes in the relationships between these components over time. Since national institutions, as generally acknowledged by the literature about innovattio systems, play an essential role in shaping and fosteriin the development of an innovation system, in this paper we will pay special attention to the role of national institutions in the development of new innovation systems. Science and Public policy 39 (2012) pp. 271 281 doi: 10.1093/scipol/scs008 Advance Access published on 11 march 2012 The Author 2012. Published by Oxford university Press. All rights reserved. For Permissions, please email: journals. permissions@oup. com The government's research, technology development and innovation (RTDI) policies, which are special forms of national institutions and particularly serve the national technological and industrial concerns, center our discussiio on the national institutions. The Taiwanese biotechnology industry and the two sectors which adopt biotechnology (i e. pharmaceuticals and agriculture) provide an interesting case for our discussiion Historical records for the period 1945 2000 in Taiwan clearly show the process through which the three innovation systems, i e. the national innovation system of Taiwan, the sectoral innovation systems for pharmaceuticcal and agriculture, and the technological innovation system for biotechnology, gradually configured each other. Indeed, the pharmaceutical and the agricultural sectors not only possessed contrasting opportunities for the development of biotechnology, but were shaped extensively by different national institutions. The pharmaceuttica sector, which was composed mainly of local enterpriises that were small-and medium-sized enterprises (SMES), only adopted biotechnology after the 1980s. The Taiwanese government shaped the sector through its policies on pharmaceuticals and biotechnology. On the other hand, the agricultural sector, which was dominated by public research organizations, started to adopt biotechnollog before 1945. The Taiwanese government supported the sector through agricultural policies, which were considered not part of the biotechnology policies. In summary within the same national border of Taiwan differren configurations of the three innovation systems show different dynamics, which are worth further discussion. To set up a more profound discussion of the configurattio of the three innovation systems we structure the rest of this paper as follows: Section 2 reviews the literature on innovation systems. On the basis of the literature we conceptualize the configuration of the three innovation systems. Section 3 analyzes the evolution of the Taiwanese innovation systems for biotechnology, pharmaceuticals and agriculture through the lens of the configuration of the three innovation systems. Section 4 discusses our concepptua and empirical contributions, draws conclusions and makes suggestions for future research. 2. Literature review and the configuration of the innovation systems The conception of the configuration of the three innovattio systems is established on the theoretical foundations of different system approaches. Since each system approach has different focuses before we build the new concept for an innovation system we first review the key concepts of each approach, as well as their analysis of the role of national institutions in the development of an innovaatio system. A national innovation system focuses on the national development of technology and industries. The national frontiers draw the boundary of an innovation system. The institutional actors, such as firms and industrial laboratories, universities and government laboratories, and their networks constitute the national innovation system (Nelson and Rosenberg 1993). Through comparing the similarities and differences across countries the approach illustrates how the institutions and mechanisms of a nation support technological and industrial innovattio within its borders (Nelson and Rosenberg 1993; Edquist and Hommen 2008. From Freeman's perspective (1987) research, technology development and innovation (RTDI) policies extensively shape the national system of innovation. The OECD (1999) also claims that RTDI policies should match the development of the national system. The sectoral innovation system recognizes a system as a set of products which are developed in a global context. A sectoral innovation system, as analyzed by Malerba (2004), should have a set of specific knowledge bases, inputs and demands. A group of actors in the system carry out market and non-market actions for the creation, production and sale of the products. These actors interact through communiccation competition cooperation and commands, and the actors'networks are shaped by institutions, such as national institutions. Indeed, actors and networks, knowledge and technology, and institutions are the three blocks of a sectoral innovation system. National institutioons from the perspective of Malerba (2002), should match the sectoral innovation system within the national borders. The technological innovation system is defined in the sense of a knowledge field which has developed globally. As speculated by Carlsson et al. 2002), within a particular knowledge field the actors, including the buyers and sellers, of a dynamic network interact in a specific economic or industrial arena which is under specific institutional infrastrucctures The interactions of the actors in the network are both market and non-market. Technological generatiion diffusion and utilization are at the core of the analysis. Comparing the energy innovation systems of Germany, Sweden and The netherlands, Jacobsson and Bergek (1998) concluded that national institutions, especiaall government policies, do influence the performance of a nation's technological innovation system. According to the literature an innovation system is composed of actors and networks technology and knowledge, and institutions. However, because a different system approach uses different criteria to draw the boundary of an innovation system, the components and their interactions in the configuration of the different levels of innovation systems remain unclear. Bergek et al. 2008) have specified only that a technological system may be a sub-system of a sectoral innovation system or may cut across several sectoral innovation systems. Malerba (2004) 272. C.-C. Chung has tried also to link the relationships within a sectoral innovation system to a country's international performannce as well as a sector to the technological opportunities which can be mobilized to develop new products and processes for that sector. Markard and Truffer (2008) made one of the first attempts to concretely show the configuration of the three innovation systems within one diagram. From their perspective (see Fig. 1 a national system is delineated on a spatial basis, while a sectoral system usually crosses a geographical boundary, and a technological innovation system typically crosses both geograpphica and sectoral boundaries. Nevertheless, Markard and Truffer did not go beyond their diagram to concretely define and explain the intersections between the three innovaatio systems. Based on Markard and Truffer's diagram (Markard and Truffer 2008), we redraw the relationships of the three innovaatio systems (see Fig. 2) and define the configuration of the three innovation systems as the NSTIS. We assume that the system exists within a particular national border and is embedded in the global context. The actors within the system such as institutional actors, use the knowledge of a particular technological field to produce a set of particcula products. The actors within the system carry out market and non-market interactions in order to generate, diffuse and utilize the knowledge of a particular technologgica field to create, produce and sell a particular set of products. The interactions and networks between the actors are shaped by national institutions. The national government plays an essential role in establishing national institutions. To sum up, an NSTIS, as the three innovation systems, is composed of actors and networks, technology and knowledge, and institutions. The components of the system are shaped by national institutions. We choose the Taiwanese biotechnology and two biotechnology-related sectors as an empirical case because that case is discussed seldom in the existing literatuure Modern biotechnology, as defined by Laage-Hellman et al. 2004), is developed the biotechnology in the post-genetic engineering era in the 1970s and comprised of a broad range of knowledge fields. 1 The biotechnology developed before the post-genetic engineering era is defined in this paper as traditional biotechnology. While the majority of the existing literature on modern biotechnollog focuses on the empirical experiences of European countries and the USA (Mckelvey et al. 2004; Brink et al. 2004; Senker 2004; Mckelvey 1996; Kaiser and Prange 2004; Geseisk 2000; Torgersen and Bogner 2005; Boschert and Gill 2005), only a few papers discuss the develoopmen of biotechnology (both traditional and modern) in Taiwan (Dodgson et al. 2008; Wong 2005. Indeed, the existing literature considers Taiwanese biotechnology to be a‘new sector 'which has emerged only in the last ten years and is guided strongly by a‘set of'government policies. Nevertheless, as we will show in Section 3, Taiwan adopted traditional biotechnology before 1945 and adopted modern biotechnology as early as the 1980s. Biotechnology is not a sector but a technology which is adopted by at least two sectors in Taiwan, i e. pharmaceuticcal and agriculture. 2 Different sectors have their own unique history and use a unique mode to absorb biotechnollogy which differs from the experiences of Western countries. Moreover the Taiwanese government has implemented not a‘set of policies'towards biotechnology, but has adopted different sets of policies towards pharmaceuttica biotechnology and agricultural biotechnology. The evolution of biotechnology and the two sectors before 2000 in fact deeply influences the development after 2000. Since the history of biotechnology and the two sectors in Taiwan is missing, we select Taiwan as our empirical case and focus on the development in the period 1945 2000. By analyzing the historical archives, such as government documents and the historical records of the institutions embedded in the innovation systems, we will discover how the technological innovattio system for biotechnology gradually emerged with the Taiwanese national innovation system, as well as the sectoral innovation systems for pharmaceuticals and agriculture. Figure 1. Potential relationships between national (NSI) and sectoral (SSI) systems of innovation and a technological innovattio systems (TS. Source: Markard and Truffer (2008. Figure 2. Relationship of national, technological and sectoral innovation systems and NSTIS. National, sectoral and technological innovation systems: Taiwan. 273 3. The Taiwanese pharmaceutical biotechnology and agricultural biotechnology innovation systems This section analyzes the history of biotechnology and the two sectors in Taiwan through the lens of the NSTIS. We especially focus on the components of each NSTIS and the changes in their interactions over time. In order to give a relatively precise view to the long history, we particularly single out the years 1945 and 1982 as milestones. 1945 was the year when Japan returned Taiwan to the Republic of china (ROC). 3 After 1945 Taiwan started to have an indepeenden history. The Taiwanese government announced its first biotechnology policy, the‘Eight Key Industries'in 1982. After 1982, Taiwan started to have a biotechnology policy. We discuss the evolution of the pharmaceutical biotechnology innovation system in Section 3. 1 and the evolution of the agricultural biotechnology innovation system in Section 3. 2. 3. 1 The evolution of the Taiwanese pharmaceutical biotechnology innovation system 3. 1. 1 Pharmaceutical companies: networks and knowledge base. Pharmaceutical technology was introduced originalll to Taiwan by Japan. In 1931, some Japanese pharmaceutical companies set up factories in Taiwan to produce pharmaceutical intermediaries and supply the demands of the Japanese army. When Taiwan was returned to the ROC in 1945, there were 312 factories all over the island (Zheng 2001: 195). ) The government of the ROC then unified the 312 factories into one national pharmaceutical company (Taiwan Pharmaceutical company. Later, because of financial deficits, the Taiwan Pharmaceutical company gradually sold all of its factories to different private firms (DCB 2003: 208). ) The sector which was unified once institutionalll by the public sector was then split by the private companies. After the Japanese colonization, some local private pharmacies started to use rough facilities to synthesize simple pharmaceutical intermediaries in their backyards (Zheng 2001: 196). ) These small local pharmacies gradually developed into small family-operated factories. Moreover, since the government of the ROC moved its central governnmen from China to Taiwan in 1949, some Chinese pharmaceutical companies also relocated their factories to Taiwan around 1950. Both the original Taiwanese companies and the newly arrived Chinese companies had limited numbers of employees and capital with which to develop complex products, but they manufactured low-end intermediaries that were highly similar to each other (Ding 2001: 232). ) Besides manufacturing intermediaries, some local firms imported higher-end intermediaries from countries, such as Japan and Germany, and processed them into generic medicines. However, the products of these companies overlapped. The knowledge base of all these firms was chemical engineerrin rather than biotechnology. Even if modern biotechnollog was developed in the USA in the 1970s, these companies did not adopt any modern biotechnology in their products. In 1982, to fit the new‘Good Manufacturing Practice'regulations announced by the government, the manufacturing facilities of local SMES were upgraded (Zheng 2001: 193,229. However, because of their small size, these companies were unable to innovate or to export their products. Instead they competed with each other in the domestic market on the basis of price. Until 2000, knowledge transfer and collaboraatio between companies were minimal. Competition was the mainstream for the interactions between these companies (DCB 2003: 207). ) Multinational pharmaceutical giants who were attraacte by the government's policies of foreign direct investtmen (FDI) and the low cost of manufacturing began to invest in Taiwan in the 1960s. Most of these multinational corporations (MNCS) were from Japan and the USA, such as Takeda pharmaceuticals (from Japan) and Pfizer (from the USA. The MNCS brought advantageous manufacturing technologies to Taiwan, particularly the technologies of chemical engineering for pharmaceuticals. In the 1980s, with advantageous technologies and marketing capabilities, MNCS shared more than 50%of the domestic market (Zheng 2001: 203). ) Nevertheless, since the 1990s, because of the rising cost of manufacturing in Taiwan and the policies of free trade in pharmaceuticals, pharmaceutical MNCS gradually sold their manufacturing facilities to local companies (DCB 2003: 209). ) After these sales, MNCS kept only their marketing divisions in Taiwan to deal with the business of importing medicines, and local SMES gradually became the main force in manufacturing. Yet, as shown by the statistical data in 1995, the sales of local SMES only accounted for 31%of the domestic market, while MNCS accounted for 38, %and the imported medicines had 31%of that market (Zheng 2001: 194). ) A very minor but important sub-sector of the pharmaceuttical was Chinese herbal medicine, and local SMES were the leaders in this sub-sector. In fact, during the colonizzatio by Japan, for political reasons, the development of Chinese herbal medicines was constrained strictly. Only after 1949, when some Chinese herbal pharmacies followed the government of the ROC and moved their pharmacies from China to Taiwan, did Taiwan start to use Chinese herbal medicines. Later, these Chinese herbal pharmacies gradually set up their own herbal factories (DCB 2003: 219). ) Before the 1980s, the main business of the herbal factories was to use modern machinery to process the herbs to be customized into Chinese herbal medicines. 4 Herbs were decocted, pounded and kneaded by modern 274. C.-C. Chung machinery. Several herbs were combined together in fixed proportions and became one medicine. Because of a lack of extraction technologies, these herbs were used usually in their entirety. Furthermore, the functions of each herb were surveyed not in detail by scientific methods. The knowledge accumulated about the functions of each herb was based on the records of traditional Chinese pharmacopooeias The products produced by the herbal factories were the herbal medicines which were documented well in the pharmacopoeias rather than innovative ones. The quality controls in these herbal factories were not consistennt The majority of these factories targeted the domestti market and rarely exported their products (DCB, 2004: 100). ) Only after the 1980s, was modern biotechnology graduaall adopted by the companies producing Chinese herbal medicines. While the majority of companies still focused on manufacturing and followed the Good Manufacturing Practice rules to upgrade their machinery facilities, in the 1990s, some of these companies started to establish networks with academics in order to develop new herbaceeou medicines. At the time, strict clinical trials were applied gradually for the development of new herbaceous5 medicines. Since the Taiwanese government had no regulattion to review the licensing of the new medicines, all the companies producing Chinese herbal medicines followed the regulations of the US Food and Drug Administration (FDA). Each traditional Chinese herbal medicine was made by combining different herbs. To comply with the US FDA regulations, each new herbaceeou medicine was made by a single composition extraacte from a particular herb. Indeed, the companies that invested in the innovation of Chinese herbal medicines only carried out detailed research related to these single herbal extracts. Modern biotechnology was applied to extract the functional ingredients of the herbs. Furthermore, modern biochemistry, which was introduced by scientists trained in the USA, was applied for the deeper analysis of the medical functions (e g. chemical activities) of single herbal extracts. But no new herbaceous medicines were developed successfully before 2000 (DCB 2003: 224 7). 3. 1. 2 Universities and the accumulation of knowledge. The main role of universities until the end of the 1980s was to train qualified pharmacists. The Taiwanese branch of the Imperial University, which became the National Taiwan University after 1945, was the first and only university in Taiwan during the Japanese colonization. Yet there was no pharmaceutical college in the university and no other academic institution to train pharmaceutical experts. Indeed, the first generation of pharmacists was the Taiwanese students trained in Japan. These Taiwanese pharmaciist introduced pharmaceutical knowledge from Japan to Taiwan. Later in the period 1949 66, while some Chinese universities followed the government of the ROC to Taiwan and rebuilt their campuses in the island, some Taiwanese universities also set up locally. 6 Until the late 1970s, there was a total of six pharmaceutical colleges in the universities of Taiwan (Zheng 2001: 3). However, their main purpose was to train qualified pharmacists. Pharmaceutical research in universities was rare, and only some particular universities, such as National Taiwan University, did some initial research into chemical medicines and Chinese herbal medicines (National Taiwan University 2000: 49). ) Only in the early 1990s, with the gradually developed environment for pharmaceutical research, did some universities, like the National Taiwan University, started to provide postgraduaat degrees in pharmacology and train pharmaceutical researchers (Zheng 2001: 80,81. Modern biotechnology was introduced to Taiwan's universities in the 1980s by a group of young scientists. Unlike the old generation of pharmaceutical experts, who were trained by the Japanese system, the younger generation was trained in the USA. These young scientists transferred modern pharmaceutical biotechnology, such as molecular biotechnology and biochemistry, from the universities of the USA to Taiwan and soon became the leaders of the pharmaceutical colleges. Because of the particippatio of these young scientists, modern biotechnology was dispersed quickly among the universities and extensivvel deepened the level of pharmaceutical research for small molecular medicines and Chinese herbal medicines (Zheng, 2001: 242. Nevertheless, from the 1980s until 2000, the networks between the researchers and between universities and pharmaceutical companies were established not fully. The research interests of individual scholars determined the research topics. Collaborations between different academmic were not frequent. Even though the scientists had related research interests, they had limited very cooperattio with each other. Moreover, universities had limited interactions with pharmaceutical companies. Due to the regulations concerning academics, 7 interactions between universities and pharmaceutical firms were forbidden. In fact, the main occasion for academics to practice their knowledge was to support the government in drawing up regulations in order to control the qualities of the pharmaceutiicals For example some scientists of Chinese herbal medicines were funded by the government to survey the herbs of Taiwan. But such surveys were merely to serve policy expectations rather than to lead to commercializatiio (Zheng 2001: 203,242. The public research organizations play an intermediary role between universities and pharmaceutical companies. Since the universities were supposed not to directly interact with firms, the Development Centre of Biotechnology (DCB), a public research organization, was set up in National, sectoral and technological innovation systems: Taiwan. 275 1984 to apply the research into small molecules from the universities to develop new chemical medicines and then transfer such technologies to local firms. However, because the majority of pharmaceutical companies that manufactured pharmaceutical intermediaries or generic medicines were unable or unwilling to develop new medicinnes the DCB gradually became the research center for developing pharmaceutical intermediaries and transferring the technology of chemical engineering to pharmaceutical manufacturing (Ding 2001: 229). ) The Industrial Technology research Institute, another public research organization, also helped local SMES upgrade their manufacturing facilities in order to comply with the Good Manufacturing Practice regulations. But until the late 1990s, there was no institution which could transfer pharmaceutical biotechnology from the universities to pharmaceutical companies. 3. 1. 3 National institutions: Pharmaceutical and biotechnology policies. The Taiwanese government did not strategically promote a‘set of consistent policies'to foster the development of pharmaceutical biotechnologgy Instead, each policy directed towards pharmaceutical biotechnology had its own historical background and changed with the evolution of pharmaceuticals and biotechnnology The Eight Key Industries policy, which was the first biotechnology policy announced in 1982, should be regarded as an important milestone in the change of policies. Before 1982, the main purpose of policies was to encourage and to control the manufacturing activities of the pharmaceutical sector. Thus regulation and FDI policies were very important. After 1982 as policies graduaall turned to encouraging innovation in the pharmaceuticca sector, R&d policies became more and more significant. However, as a milestone, the Eight Key Industries itself was only a general policy announcement. Besides recognizing biotechnology as one of the eight key industries in which the government should invest more resourrces there was no other concrete policy promoted under the framework of the Eight Key Industries. Furthermore, according to the Eight Key Industries policy, the development of biotechnology was almost equal to the development of the pharmaceutical sector whose knowledge base was chemical engineering rather than biotechnology (MOEA 2010). Policies of regulation, FDI and R&d were directed towards the pharmaceutical biotechnology innovation system. The Law of Pharmaceutical Affairs was passed in 1970 and remained the most important regulation controlling the manufacture of medicines until 2000. The Good Manufacturing Practice regulations were launched in 1982 to force the local SMES to upgrade their manufacturing capabilities. In 1950, the government launched the‘Statute for Encouraging Foreign Direct Investment'(abolished in 1990) and gave pharmaceutical MNCS tax exemptions if they manufactured their pharmaceuttica products in Taiwan or transferred manufacturing technologies based on chemical engineering to local companies (Zheng 2001: 202). ) In terms of R&d policies, fundamental biological and pharmaceutical research in universities was funded continuously, and the DCB was found in 1984 to transfer pharmaceutical technology of chemical engineering from the universities to pharmaceuticca companies (DCB 2010). However, there was no R&d policy to encourage universities to transfer pharmaceuttica biotechnology to companies, and before the late 1990s, there was no particular target for the funding of R&d policies. Only after 1998 did the government start to recognize Chinese herbal medicines as the backbone of the pharmaceutical sector. From the perspective of the government, since the knowledge accumulation of biopharmaceuticals in Taiwan was too weak to compete with developed countries, Taiwan should fully activate its strong knowledge base of Chinese herbal medicines to take advantages in the pharmaceutical sector. The R&d policies thus turned to encouraging the development of new herbaceous medicines (NSC 2010. To sum up: before the late 1990s, the government did not have specific policies to encourage the development of modern pharmaceutical biotechnology. It only had policies to foster pharmaceutical chemical engineering. Only in the late 1990s did the government start to support the development of modern pharmaceutical biotechnnolog through supporting the innovation of new herbaceous medicines. 3. 2 Evolution of the Taiwanese agricultural biotechnology innovation system 3. 2 . 1 Agricultural public research organizations and private companies. The institutions for the innovation of seeds were originally set up by the Japanese government and further developed by the government of the ROC after 1945. The research organizations of the system of agricultuura experiments stations (ASS which included the Agriculture Research institute, were the most important organizations for seed innovation. These research organizattion were funded fully by the Japanese government during the Japanese colonization and then by the governmeen of the ROC. Indeed, during the Japanese colonizatiion in order to feed the population of Japan, the Japanese government introduced Japanese rice seeds to Taiwan. The Ass research organizations used the traditional biotechnology of hybridization to improve the genes of Japanese rice with the genes of Japonica, a Taiwanese rice which looked and tasted like Japanese rice but grew well in the subtropical climate of Taiwan. This was representtativ of the new rice. In addition to their work on rice the experts at the ASS also carried out genetic research on subtropical fruits and vegetables, such as sugar cane and tea (Su 2004: 18). ) Before 1945, the Japanese scientists who 276. C.-C. Chung had led the ASS had trained some Taiwanese experts within these organizations (Lin 1995: 2). After 1949, with the exception of the original Taiwanese experts, some Chinese experts who followed the government of the ROC and migrated from Mainland china to Taiwan replaced the Japanese scientists and became the senior researchers in the ASS. The knowledge about hybridization which had been accumulated by the Japanese scientists was developed then further by the Taiwanese experts, especially in rice research (Su 2004: 18). ) When the new seeds had been developed by the ASS they were passed then to the farmers'association, which had been founded by the Japanese government to control the production activities of farmers. One of its main responsibilities was to distribute the seeds from the ASS to individual farmers. After 1945, the government of the ROC replaced the Japanese government in governing the farmers'association. Every farmer had a small farm which was cultivated intensively. The farmers obtained seeds from the farmers'association free of charge. The innovattio institutions regarded the farmers as mere producers who only had limited only knowledge about cultivation. Their experience was fed seldom back to the ASS. The system expected the experts at the ASS to understand the processes involved in cultivation and to improve the next generation of seeds. Furthermore, before the 1980s, most of the crops, especially rice, were exported to foreign markets. Farmers who served the foreign markets only obtained rewards from the sales of their harvests. However, the rewards for farmers were only sufficient for their survival. They were not sufficient for them to reinvest in seed innovation (Liu 1996: 188). ) The institutions for seed innovation remained almost the same until 2000. However, the introduction of modern biotechnology in the 1980s extensively changed the knowledge and technology used for seed innovation. The modern biotechnology of genetic modification was introduced to the ASS through a group of Taiwanese scienttist who were trained in the USA. While the traditional biotechnology of hybridization was retained for the innovattio of seeds and expanded to the innovation of new species of livestock, such as farm animals and aquaculture, the modern techniques of genetic modification were adopted to improve the genes of particular seeds, such as the seeds of subtropical fruits. In 1997, the genetically modified (GM) papayas which were developed by the Taiwanese scientists and successfully grown in the trial fields were milestones in the development of genetically modified organisms (GMOS). In fact, all the papayas were cultivated in the subtropical climate of the south of Taiwan. Since the old types of papayas were infected easily by parasites, their genes were modified to be parasite-resistant. Nevertheless, because of the Taiwanese government regulations, even though the GM papayas were developed successfully, they were allowed not to be cultivated in the normal farms (Science and Technology research and Information Center, 2005: 31,33. Furthermore, all the new hybrid seeds and livestock innovated by the ASS were commercialized not but were transferred to the farmers'association, which then distributed them to the farmers free of charge. There were some small local private seed companies surrounndin the Ass which played supplementary roles in the innovation of seeds. These companies usually focused on specific types of seeds and sold these seeds to farmers. For example, the Known-You Seed Cooperation had specialized in and sold watermelon seeds since the 1960s (Cai 2007). The technology used by these private companies was the traditional biotechnology of hybridizatiio which was used also by the ASS. Only in the 1990s did some local SMES start to transfer the modern biotechnoloog of genetic modification from academic institutions and developed GMOS, especially non-edible GMOS. For example, Taikong which was a trade company selling ornameenta fish has worked with the National Taiwan University to develop GM ornamental fish since the 1990s (Taikong 2010. However, before 2000, the private companies had developed not successfully any new GMOS. Moreover, throughout Taiwanese agricultural history, MNCS such as Monsanto, have not played any role in seed innovation in Taiwan. 3. 2. 2 Universities and their networks. Universities undertook fundamental agricultural research and applied their research through the network with the ASS. The network between universities and the ASS was established before 1945. Until the 1970s, the agricultural college of National Taiwan University was the most important academic institution carrying out fundamental agricultural research, and the ASS were the most important research institutions carrying out applied agricultural research. The headquarters of the ASS was built first next to National Taiwan University. Through the flow of personneel knowledge of the traditional biotechnology of hybridizaatio was transferred between the university and the ASS. In fact, many graduates from the National Taiwan University took important positions in the ASS (Su 2004: 18). ) In the early 1970s, when the headquarters of the ASS was moved next to Chung-hsing University, the agricultural college of that university, which was once an agricultural vocational school, became another important academic institution for agricultural research (Lin 1995: 3; Su 2004: 18). ) A group of Taiwanese scientists trained in US universities introduced modern molecular biotechnology to Taiwanese universities in the 1980s. Molecular biotechnollog greatly increased the depth of basic agricultural research, especially in genetic modification. However, because a network between universities was not establisshed the research topics were chosen usually according National, sectoral and technological innovation systems: Taiwan. 277 to the research interests of individual scholars. The topics studied frequently overlapped and there was very limited coordination between the research teams (Su 2004: 18,20. Until 2000, most results of modern biotechnology research done by the universities were transferred to the ASS for further application (Su 2004: 18,20. The ASS created a microbial gene bank, the Agriculture Gene Resources Center, in order to store the genes of hybrid and GM seeds. But, only some of the seeds from the Agriculture Gene Resources Center were commercialized. While the hybrid seeds were disseminated to farmers without charge, the GM seeds were stored at the ASS and were allowed not to be planted in the normal farms. Even though they held a rich database of genetic resources, the ASS merely charged the cost of handling and shipping for their services (Su, 2004: 18). ) Indeed, until the 1990s, the modern biotechnology innovated by the universities was transferred only occasionally to particular agricultural companies, such as Taikong. 3. 2. 3 National institutions: Agricultural policies. The Taiwanese government supported the development of agriculttura biotechnology through its agricultural policies. The purpose of these policies changed dramatically in the 1980s. Before the 1980s, the agricultural products were export-oriented. The main purpose of the agricultural policies at the time was to direct the agricultural sector to maximize the production of agricultural products, especiaall the primary productions of rice and sugar cane, in order to earn large amount of foreign currencies. The majority of foreign exchanges were used to support the development of manufacturing industries, particularly the information and communication technologies (ICT. Only after the 1980s, when the manufacturing industries were developed well and agricultural products were exported no longer, did the policy objectives of the agricultuura policies turned to upgrading the farmers'living standards (Chang 1982: 238 9). Even though biotechnoloog was used intensively by the agricultural sector, when the first biotechnology policy, the Eight Key Industries, was announced in 1982, agricultural biotechnology was recognized not as a part of the development of biotechnologgy Indeed, since the 1980s, compared with the prosperoou ICT industries, the agricultural sector was recognized gradually as the sector with low productivity. While the government allocated considerable amounts of resources to support ICT, the resources allocated to the agricultural sector were limited relatively. The two main agricultural policies promoting agricultuura biotechnology innovation system were agricultural R&d and regulation policies. For agricultural R&d policies the government continued funding fundamental agricultural research in the universities and applied research in the ASS. Before the 1980s, research into traditional biotechnology was funded in order to increase the productivity of the agricultural sector, and after the 1980s, research in modern biotechnology was funded merely to increase the farmers'welfare (Chang 2004: 151). ) Treating agricultural R&d policies as a type of welfare policy, modern agricultural biotechnologies innovated by universities and public research organizatiion were commercialized not but were transferred to farmers on a nonprofit base. In the 1990s, when the Taiwanese government was preparing to participate in the World trade organization and to open its domestic market for foreign agricultural products, the R&d funding for modern agricultural biotechnology was decreased even slightly (Wong 1998: 115), and at the same time, the Farmers'Insurance was launched (CLA 2010. 8 Another important agricultural policy promoted by the government was agricultural regulation. Before the 1980s, there was no policy regulating the innovation of seeds. With the developmmen of GMOS in the 1980s,‘Genetic Modified Safety Rules'were implemented in the labs. Yet, besides field trials, none of the GM seeds were allowed to be traded in the domestic market. Moreover, until 2000, there was no regulation for non-edible GMOS. Therefore, non-edible GMOS, such as GM ornamental fish, could be traded in the domestic market without permission. In sum, besides its agricultural policies, the Taiwanese government did not have particular policies to support the development of agricultural biotechnology. Even though the technological level of the agricultural biotechnollog innovation system was very high due to the governmment'policies, these biotechnologies were commercialized seldom. 4. Discussion and conclusion The Taiwanese pharmaceutical biotechnology innovation system and agricultural biotechnology innovation system reveal different dynamics. The three innovation systems, i e. the Taiwanese national innovation system, the two sectoral systems of pharmaceuticals and agriculture, and the technological innovation system for biotechnology, were configured differently. Different NSTISS not only had different components, but also evolved differently. Based on the empirical case of Taiwan we raise four interesttin issues which deepen our understanding of the concept of NSTISS. Firstly, the actors and networks of different NSTISS may differ from each other and evolve differently over time. As shown by the case of Taiwan in the pharmaceuticca biotechnology innovation system local SMES led the innovation and manufacturing. MNCS were involved only once in the manufacturing activities of the system and then gradually withdrew their investments in the 1990s. After that there were fewer and fewer large firms involved in pharmaceutical manufacturing. Competition 278. C.-C. Chung was the main mode of interaction between local SMES. Because of the regulation of human resources in universities the networks between universities and pharmaceuttica companies were established not clearly. Only after the 1980s did some Chinese herbal medicine companies occasionally cooperate with the universities to develop new herbaceous medicines. And in the majority of cases it was the public research organizations such as the DCB, which played an intermediary role between the universities and pharmaceutical companies. However, in the agricultuura biotechnology innovation system the public research organizations, the ASS, were the foundations on which innovation was built. Local private agricultural SMES only played a supplementary role in innovation and targeted those products which were innovated not yet by the public organizations. Universities were involved mainly in the innovation through the network with the public research organizations. Only in the 1990s did some universities occasionally transfer modern biotechnology to agricultural SMES. In brief, within the same nation different NSTISS may involve different groups of actors and the networks of the different groups of actors may not only be quite distinct, but may also change differently over time. Secondly, different NSTISS may adopt the same knowleedg base to develop different products and provide contrasting opportunities for the development of the knowledge. In the Taiwanese pharmaceutical biotechnoloog system the main knowledge base of both local SMES and MNCS was chemical engineering. The system only adopted modern biotechnology and did not produce any opportunities for the development of traditional biotechnollogy Modern biotechnology was introduced only to the system after the 1980s and was used to extract and analyze the medical ingredients of herbs. Modern biotechnology was integrated with the traditional Chinese knowledge of herbal medicine to produce new herbaceous medicines. In contrast, in the agricultural biotechnology system both the public research organizations and private SMES adopted biotechnology as their main knowledge base. The system provided the chance for the development of both traditional and modern biotechnology. The traditiiona biotechnology of hybridization had already been used before 1945 in order to improve the genes of rice and subtropical vegetables and fruits. Since the 1980s the modern technique of genetic modification was applied to improve the genes of subtropical fruits (such as papayas) and non-edible organisms (such as ornamental fish. In summary, the two NSTISS in Taiwan used different processes to adopt biotechnology and produced different sets of products. Thirdly, the national institutions which shape various NSTISS may differ and may each have a characteristic path of co-evolution with the NSTIS. In the case of Taiwan there is no‘set of national institutions'directed towards the overall national innovation system. The two NSTISS were shaped by different sets of policies. The policies directed towards the pharmaceutical biotechnology system were regulations, FDI and R&d. Before the 1980s, while pharmaceutical manufacturing was the main activity of the system, the main policies were regulation and FDI, which aimed to control the manufacturing facilities and the quality of the medicines. After the 1980s, when the pharmaceutical companies graduaall adopted biotechnology to innovate new herbaceous medicines, R&d policies became more and more importannt Indeed, the Eight Key Industries, the first biotechnoloog policy, targeted the development of the pharmaceutical sector, rather than biotechnology. Whilst the public organizations such as the DCB transferred technologies to pharmaceutical companies, they supported pharmaceutical companies to adopt more chemical engineerrin rather than biotechnology. On the other hand the agricultural biotechnology system was supported only by agricultural policies. Before the 1980s while agricultural products were exported, the agricultural R&d policies focused on the quantity of agricultural products. However, after the 1980s, once the agricultural products only served domestic demands, the government promoted agricultural R&d and regulation policies, merely to increase the welfare of farmers or to control domestic food safety. Even though the system certainly adopted biotechnnolog for innovation, the commercialization of agriculttura biotechnology was encouraged not by policies. In summary, the development of the NSTIS is shaped deeply by national institutions such as national RTDI policies. The national institutions directed towards different NSTISS may differ and co-evolve with different NSTISS over time. Our final issue is the implications of RTDI policies. With the new concept of an innovation system the NSTIS, the RTDI policies which can appropriately foster the development of an innovation system, can be reanalyzed. As shown above different NSTISS may have different actors and networks, as well as different applicatiion of a particular technological field for different sets of products. Thus, appropriate RTDI policies which foster the development of NSTISS should cluster the network of actors, support the underlying logic of knowledge accumulaatio and exploitation in a particular technological field, and encourage the production and innovation of a particular set of products. Indeed, new RTDI policies should be customized to deliberately match the different dynamics of different NSTISS rather than the dynamics of the national, sectoral or technological innovation system alone. Moreover, since the national institutions of different NSTISS may have different origins, the new RTDI policies should take account of the different historical backgrounds of different policies. In the case of biotechnollogy a government should have different sets of policies for the development of pharmaceutical biotechnology and agricultural biotechnology. Since each NSTIS is unique, National, sectoral and technological innovation systems: Taiwan. 279 RTDI policies copied from foreign countries or copied from another NSTIS will find it very difficult to appropriattel support the development of a specific NSTIS. However, in this paper we have not answered the question:‘‘how'could a government make appropriate RTDI policies to foster the development of NSTISS? The question should be analyzed further in future research. Acknowledgements The author particularly wishes to thank Prof. Jakob Edler and Prof. Andrew Mcmeekin at the Manchester Business school. Their rigorous and constant support fundamentaall incentivized the writing of this paper and considerabbl increased the depth of the analysis of the innovation systems. Notes 1. These knowledge fields include: DNA (the coding), proteins and molecules, cell and tissue culture and engineeering process biotechnology, and sub-cellular organnism (Laage-Hellman et al. 2004). 2. The medical device sector also adopts biotechnology through the development of bio-chips whose knowleedg base is across electronic engineering and biotechnollog (Dr. Chip 2010). However, since biochips are very minor in the sector, we do not discuss the developmmen of medical devices in this paper. 3. Internationally, the official name of Taiwan is the Republic of china (ROC). In the years 1890 1945, Taiwan was colonized by Japan. After WORLD WAR II, in 1945, as a defeated nation, Japan was forced to return Taiwan to the government of the ROC. However, soon after Taiwan was returned, the governmeen of the ROC lost its battles with the Chinese Communist party in China. In 1949, the Chinese Communist party successfully set up the central governnmen of the People's republic of china (PRC) in Beijing, China. In the same year, the central governmeen of the ROC was moved to Taipei, Taiwan. 4. The Chinese have used herbs as medicines and health food for five thousand years. A rich knowledge of herbs was accumulated. The knowledge also spread to adjacent countries including Japan and Korea. Compared with herbal medicine, the Chinese have used only Western pharmacology for a hundred years. The traditional Chinese herbal medicines were usually compound prescriptions. In other words, multiple herbs were used for one disease. Both the medical functions of single herbs and particular prescripption were recorded in the traditional pharmacopoeeias While herbal doctors deliver herbal medicines, the proportion of different herbs may vary according to the specific symptoms of each patient or according to the particular prescriptions. Therefore, the traditional Chinese herbal medicines could be very specific to a person or be fixed of composition. The ways to take the Chinese herbal medicine include decocctin medicinal herbs pounding the herbs into a powder and kneading the powders to make pills. The Chinese herbal medicine factories were only able to produce the herbal medicines according to the particulla prescriptions, and the personal herbal medicines should be delivered by herbal doctors. 5. This article distinguishes herbal medicines from herbaceous medicines. While we use the term herbal medicines to refer to the traditional Chinese herbal medicines, we use the term herbaceous medicines to refer to the new medicines which are developed by herbs. 6. The Chinese universities included the National Defense Medical Centre. The Taiwanese universities included Taipei Medical University Kaohsiung Medical University and China Medical University. 7. The majority of universities doing pharmaceutical research were the public universities. The scientists who worked in the public universities were considered to be civil servants who should obey the Civil service Act and should not have any interactions with private companies. Therefore, interactions between scientists in the public universities and pharmaceutical companies were forbidden (LY, 2010. 8. Farmers'Insurance is a special kind of insurance particularly for farmers. The government would fund 60%of the insurance premium, and the farmers only need to pay for 40%of the insurance premium (CLA, 2010). References Bergek, A.,Jacobsson, S.,Carlsson, B.,Lindmark, S. and Rickne, A. 2008)‘ Analyzing the functional dynamics of technological innovation systems: A scheme of analysis',Research policy, 37: 407 29. Boschert, K. and Gill, B. 2005)‘ Germany's agri-biotechnology policy: Precaution for choice and alternatives',Science and Public policy, 32: 285 92. Brink, J.,Mckelvey, M. and Smith, K. 2004)‘ Conceptualizing and measuring modern biotechnology'.'In: Laage-Hellman, J.,Rickne, A. and Mckelvey, M. eds. The Economic Dynamics of Modern Biotechnology, pp. 20 42. Cheltenham: Edward Elgar. Cai, H.-Q. 2007) The King of watermelon: the story of Wen-Yu, Chen(:.Taipei: Little Bookzone(.Carlsson, B.,Jacobsson, S.,Holme'N m. and Rickne, A. 2002)‘ Innovation systems: Analytical and methodological issues',Research policy, 31: 233 45. Chang, M.-Y. 2004) The Change of Taiwan's Agricultural Community(.Taipei: Council of Agriculture. Chang, Y.-T. 1982) The Development of Agricultural Companies(.Taipei: Linking(.280. C.-C. Chung CLA. 2010),‘The introduction for the Clause of Farmers'Insurance Council of Labor Affairs'<http://www. bli. gov. tw/sub. aspx? a=Rxe1rbebazo%3d>accessed 14 december 2010. DCB (2003) Yearbook of Pharmaceutical industry 2003 (2003. Taipei: Development Center of Biotechnology. DCB (2004) The Yearbook of Chinese Herbal Medicine Industry 2004. Taipei: Development Center of Biotechnology. Ding, Y.-X. 2001)‘ The history, current condition and future of pharmaceutical industry('.'In: Zheng, S.-J. ed.)The History of Pharmacology in Taiwan(),pp. 227 32. Taipei: Zheng Culture and Education Foundation(.DIT (2009) Yearbook of Medical Devices 2009 2010 (2009-2010. Taipei: Department of Industrial Technology. Dodgson, M.,Mathews, J.,Kastelle, T. and Hu, M.-C. 2008)‘ The evolving nature of Taiwan's national innovation systems: the case of biotechnology innovation networks',Research policy, 37: 430 45. Dr. Chip. 2010), Products. Dr. Chip:<<http://www. bio-drchip. com. tw/HOME2ENG/06products. asp>accessed 14 december 2010. Edquist, C. and Hommen, L.,eds,(2008) Small Country Innovation systems: Globalization, Change and Policy in Asia and Europe. Cheltenham: Edward Elgar. Freeman, C. 1987) Technology policy and Economic Performance: Lessons from Japan. Pinter: London. Giesecke, S. 2000)‘ The contrasting roles of government in the development of biotechnology industry in the US and Germany',Research policy, 29: 205 23. Jacobsson, S. and Bergek, A. 1998)‘ Transforming the energy sector: the evolution of technological systems in renewable energy technology',Industrial and Corporate Change, 13: 815 49. Kaiser, R. and Prange, H. 2004)‘ The reconfiguration of national innovation systems the example of German biotechnoology'Research policy, 33: 395 408. Laage-Hellman, M.,Mckelvey, A. and Rickne, A. 2004)‘ Introduction'.'In: Laage-Hellman, J.,Rickne, A. and Mckelvey, M. eds. The Economic Dynamics of Modern Biotechnology, p. 319. Cheltenham: Edward Elgar. Lee, S.-J. and Hua, J. 2004)‘ The economic evaluation of the food industry using biotechnology'(.'Taipeij: Food Industry Research and development Institute. Lin, J.-Y. 1995)‘ The experiments and research of Taiwan's Agriculture Experiment Station within recent one hundred years'(.'Taichung: Agricultural Experiment Station. Liu F.-S. 1996)‘ Taiwan's farmers, countryside and famers'organizzation(.Taipei: Mao-chang(.Lundvall, B.-A.,ed.,(1992) National systems of Innovation: Towards a Theory of innovation and Interaction. London: Pinter. LY. 2000), Civil service Act. Legislative Yuan<http://law. moj. gov. tw/Lawclass/Lawall. aspx? PCODE=S0020038>accessed 10 december 2010. Malerba, F. 2002)‘ Sectoral systems of innovation and productioon'Research policy, 31: 247 64..(2004)‘ Sectoral systems of innovation: basic concept and issues'.'In: Malerba, F. ed.)Sectoral Systems of Innovation: Concepts, Issues and Analyses of Six Major Sectors in Europe, pp. 9 35. Cambridge: CUP..( (2005)‘ Sectoral innovation systems: how and why innovattio systems differs across sectors'.'In: Nelson, R.,Mowery, D. and Fagerberg, J. eds. The Oxford Handbook of Innovation, pp. 380 406. Oxford: OUP. Markard, J. and Truffer, B. 2008)‘ Technological innovattio systems and the multilevel perspective: Towards an integrated framework',Research policy, 37: 596 615. Mckelvey, M. 1996) Evolutionary Innovations: The Business of Biotechnology. Oxford: OUP. Mckelvey, M.,Orsenigo, L. and Pammolli, F. 2004)‘ Pharmaceutical analyzed through the lens of a sectoral innovaatio system'.'In: Malerba, F. ed.)Sectoral Systems of Innovation: Concepts, Issues, and Analyses of Six Major Sectors in Europe, pp. 73 119. Cambridge: CUP. National Taiwan University (2000)‘ The history of Medical College in National Taiwan University'(.'Taipei: National Taiwan University. MOEA 2010. Taiwan's Biotechnology Policy and Promotion Status. Biotechnology & Pharmaceutical industries Program Office<http://www. bpipo. org. tw/en/policy. html>accessed 14 december 2010. Nelson, R.,ed.,(1993) National Innovation systems: A Comparative analysis. Oxford: OUP. Nelson, R. and Rosenberg, N. 1993)‘ Technical innovation and national systems'.'In: Nelson, R. ed.)National Innovation systems: A Comparative analysis, pp. 3 20. Oxford: OUP. NSC 2010. Background of National science and Technology Program for Bio agriculture. National science and Technology Program for Bio agriculture<http://dpiab. sinica. edu. tw/intro. php>accessed 14 december 2010. OECD. 1999) Managing National Innovation systems. OECD: Paris. Senker, J. 2004)‘ An overview of biotechnology in Europe: firms, demand, government policy and research'.'In: Laage-Hellman, J.,Rickne, A. and Mckelvey, M. eds. The Economic Dynamics of Modern Biotechnology, pp. 99 134. Cheltenham: Edward Elgar. Science and Technology research and Information Center (2005)‘ Strategic planning on the development of Taiwan agricultural biotechnology industry'(.'Taipei: Science and Technology research and Information Center. Su, J.-C. 2004)‘ Global perspective of Taiwan's agricultural science and technology: A review of the past and projectiio for the future',Forum for Agricultural Innovation and Development Council of Agriculture, 26 nov 2004, pp. 15 21. Taikong. 2010),‘Company statement'.'Taikong<http://www. azoo. com. tw/azoo tw/instruction/004. php>accessed 14 december 2010. Torgersen, H. and Bogner, A. 2005)‘ Austria's agribiotecchnolog regulation: Political consensus despite divergeen concepts of precaution',Science and Public policy, 32: 277 84. Wong, J. 2005)‘ Remaking the developmental state in Taiwan: The challenges of biotechnology',International Political science Review, 26: 169 91. Wong, J.-W. 1998)‘ The relationship between bureaucratic organizzatio and agricultural innovation: Taking Agricultural Experiment Station as example'(:'Taipei: National Taiwan University. Zheng, S.-J. 2001)‘ The history of pharmacology in Taiwan'(.'Taipei: Zheng Culture and Education Foundation(.National, sectoral and technological innovation systems: Taiwan. 281

< Back - Next >

Overtext Web Module V3.0 Alpha
Copyright Semantic-Knowledge, 1994-2011