Middle Innovation Trap

Abstract

In the context of emerging economies, long-run economic growth and development encompass mechanisms from technological catching-up to moving forward by one’s upgrading. However, as the economy reaches the middle-income range, economic growth mostly slows down unless adopting strategies for building technological capabilities. To identify the bottleneck in sustainable technological development and the ways to avoid the middle-income trap, therefore, this chapter focuses on the development patterns of two different types of technological capabilities: implementation and concept design capabilities. Our first finding from the empirical study emphasizes the need for the development of the concept design capability, describing the middle-income trap as a “capability transition failure” or “middle-innovation trap”. Secondly, discussing difficulties of the capability transition from the institutional rigidity perspective, this chapter highlights “innovation commons” as a coherent transition platform for the development of concept design capability.