世界银行-通过应用共同进化框架实现多样化：韩国和越南Diversification through the Application of the Co-evolutionary Framework Korea and Viet Nam

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Diversificationthroughthe

ApplicationoftheCo-evolutionaryFramework:KoreaandVietNam

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Diversificationthroughthe

ApplicationoftheCo-evolutionaryFramework:KoreaandVietNam

SeoulCenterforfinanCeandinnovation

march2024

Acknowledgments

ThenotewaspreparedbyateamledbyAnwarAridi(SeniorPrivateSectorSpecialist,WorldBank)andJeong-dongLee(Professor,SeoulNationalUniversity),whichincludedKibumKim(PrivateSectorSpecialist,WorldBank),KyeyoungShin(Consultant,WorldBank),andDawoonJeong(Re-searcher,SNU),WonsubEum(AssociateProfessor,UniversityofKitakyushu),andTaewonKang(Professor,ChungnamNationalUniversity).

ThenotebenefitedfromtheguidanceoftheWorldBankManagement,ZaferMustafaoglu(PracticeManager)andJasonAllford(CountryManager),andfromfeedbackandcommentsprovidedbyJaimeFrias(SeniorEconomist,WB)andCristianQuijadaTorres(SeniorPrivateSectorSpecialist,WB).

ThisknowledgenotewasmadepossiblebyagrantfromtheMinistryofEconomyandFinanceoftheRepublicofKorea,providedthroughtheSeoulCenterforFinanceandInnovationandtheWorldBankGroupKoreaOffice.

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Contents

Acknowledgments 4

AbbreviationsandAcronyms 6

ExecutiveSummary 7

01.

Introduction 10

02.

ConceptualBackground 13

2.1.Theprincipleofrelatednessanalysis 14

2.2.Relationshipbetweenproductspaceandtechnologyspace 17

2.3.Diversificationstrategiesinmultiplexnetwork 21

2.4.Co-evolutionaryframeworkforproductionandtechnology 23

03.

ComparingKorea’sandVietNam’sDiversificationPathsusingtheCo-evolutionary

Framework 27

04.

PotentialDiversificationPathforVietNam 41

0.5

Conclusion 4

7

References 5

1

Appendices 5

6

A

1.Dataandmethodology 5

7

A

2.Diversificationpatternsforselectedcountries 6

2

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AbbreviationsandAcronyms

FDI

ForeignDirectInvestment

FIE

Foreign-investedEnterprise

GDP

GrossDomesticProduct

GERD

GrossDomesticExpenditureonR&D

GVC

GlobalValueChain

HS

HarmonizedSystem

ICT

InformationandCommunicationTechnology

IPC

InternationalPatentClassification

MNEs

MultinationalEnterprises

OECD

OrganisationforEconomicCo-operationandDevelopment

PATSTAT

PatentStatisticalDatabase

R&D

ResearchandDevelopment

RCA

RevealedComparativeAdvantage

RTA

RevealedTechnologyAdvantage

SNU

SeoulNationalUniversity

STEM

Science,Technology,Engineering,andMathematics

TFP

TotalFactorProductivity

UNCOMTRADE

UnitedNationsCommodityTradeStatisticsDatabase

USPTO

UnitedStatesPatentandTrademarkOffice

WB

WorldBank

WIPO

WorldIntellectualPropertyOrganization

6

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ExecutiveSummary

Industrydiversificationisadriverofeconomicdevelopment.Manydevelopingcountriesareattemptinginvariouswaystodiversifyawayfromlower-value-addedindustriesandintohigh-er-value-addedones.Theseeffortsarebasedonthebeliefthateconomicdevelopmentcanbeachievedbydiversifyingintohigher-value-addedindustries.Duringthisprocess,variousindustri-alpoliciesaredeployedtofosterthetargetindustries,includingattractingforeigndirectinvest-ment(FDI).However,evidenceshowsthatdevelopingcountriesfacechallengesinsustainingthediversificationoftheirindustryportfolio,andasaresult,manystagnateeconomically.

Theprincipleofrelatedness,whichcanbeusedtounderstandthepathofdiversification,hasbeenwellestablishedtheoreticallyandusedempiricallytomakepolicyrecommendationsfordevelopingcountries.Thisprinciplesuggeststhatdiversificationtendstooccurintoprod-uctsthataremorecloselyrelatedtotheproductsinwhichacountrycurrentlyhasacomparativeadvantage.However,manycountriesthattransitionedfromdevelopingtoadvancedeconomiesproceededwithdiversificationintounrelatedproductsthroughjumpsthatcontradicttheprinci-ple.Thus,althoughtherelatednessprinciplecangenerallydescribethediversificationpatternsofmanycountries,itfailstoaccountforthemarkedandostensiblydisconnectedleapsofothercountriesthatsuccessfullytransitionedintothehigh-incomecategory.

Theprimaryaimofthisstudyistoexaminetheindustrydiversificationprocessbyconcep-tualizingaco-evolutionaryframeworklinkingproductionandtechnologyandapplyingtheframeworktothecasesoftheRepublicofKorea(Korea,hereafter)andVietNam.Thenotionthatproductioncapabilitiesandtechnologicalcapabilitiesareinterrelatedallowsustoidentifyfourdifferentdiversificationpatterns:(i)unrelateddiversification,(ii)production-baseddiversifi-cation,(iii)technology-baseddiversification,and(iv)complexdiversificationthatisbothproduc-tion-basedandtechnology-based.Koreaischosenasacasestudybecauseithasbeenoneofthemostsuccessfulexamplesofrapiddevelopmentthroughtechnologicalprogress,whileVietNamischosenbecauseitencountersmanyofthediversificationchallengestypicallyfacedbyecono-miesthatareonlynowbeginningtocatchup.ThisresearchaimstocontributevaluableinsightsnotonlyforVietNambutalsofordevelopingcountriesembroiledinthechallengesofprogressingbeyondproduction-baseddiversification.

Theco-evolutionaryframeworkhasnotablestrengthsinexplainingKorea’sdiversificationjourneyfrombasicproductstocomplexandhigh-value-addedproducts.Korea’sdiversifica-tiontomorecomplextaskswasdrivenbydomesticfirmsandfacilitatedbythegovernment’s

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deliberateeffortstodeveloptechnologicalcapabilities,inparticularbyencouraginginvestmentsindomesticresearchanddevelopment(R&D)andinhumancapital.Theseinvestmentsenableddomesticfirms,mainlylargemanufacturingexporters,toachievecomplexdiversificationthroughthegenerationofadvancedtechnologiesandproducts.Thus,theco-evolutionaryprocesswasinducedandcatalyzedbypolicyinterventions,updateddiversificationstrategiesasthecountrydeveloped,andalignedindustrialandinnovationpolicies.

InVietNam,bycontrast,diversificationwasledbyFDIfirmswithapparentlyfewspilloversoftechnologicalcapabilitiestodomesticfirms.Domesticproductionwasfocusedonassemblyactivities,withlittleprocessingtakingplaceinthecountry.TheanalysisofVietNam’sproductandtechnologyspacesshowsaweakrelationshipbetweenVietNam’stechnologicalcapabilitiesanditscurrentproductionportfolio.Thus,VietNamhasyettosecurethetechnologicalcapabilitiestosupportitscurrentproductionactivities.Underthesecircumstances,VietNam’sfuturediversifi-cationpotential,especiallyintotechnologicallysophisticatedproducts,isbynomeansassured.

Basedontheresultsfromapplyingtheframeworktothetwocountrycases,thereportoffersthefollowingpolicyrecommendations.Ifactedupon,thesecouldcontributetotherealizationoftheVietNam2045visionofbecomingahigh-incomecountry.WhiletherecommendationsaretailoredforVietNam,theycouldalsobeappliedtootheremergingeconomiesfacingdiversifica-tionhurdlessimilartoVietNam’s.

First,VietNamcouldusetheco-evolutionaryframeworktoidentifythetechnologiesbestplacedtoenhancenationaldiversificationprospects.AlthoughVietNamhasbeensuccessfulindiversifyingitseconomythroughFDI,itfaceslimitationsinassimilatingtechnologicalcapabili-tiesunderpinningitscurrentproduction.FindingsfromthesimulationconductedinthisresearchshowthatVietNamcanpotentiallydiversifyinto233products,including92newproductsthroughtechnology-basedandcomplexdiversifications,ifitaccumulatescapabilitiesinthe12identifiedtechnologies.ThispotentialshifttowardmoresophisticatedproductsalignswithVietNam’sstra-tegicgoalofmovingupthevaluechainandachievingfurtherdiversification.

Second,thecountrywouldneedtoinvestmoreintensivelyintechnologyandcapabilitiesupgradingtodiversifyintonewcomplexproducts.ThetopfiveVietnamesetechnologieswithahighrevealedtechnologyadvantage(RTA)—butoflowproductcomplexity—havenotchangedsignificantlyfrom2000to2018.Korea’sexperienceofshiftingthelocusofR&DfromthepublictotheprivatesectorandsubsequenttransitionstocomplexproductssuggeststhatVietNam’sprivatesectorcouldamplifyitsR&Dinvestmentsandengageincapabilitybuildingactivities.Ef-fectivepublicpoliciessupportingtechnologicaldevelopmentandR&Dinvestmentsmayplayacrucialroleinovercomingthesechallenges.Inaddition,intensifyinglinkagesandfacilitatingcol-laborativeR&Dprogramswithhigh-techmultinationalenterprises(MNEs)maypromotespilloversandhelplocalfirmsupgradetheirtechnologicalcapabilities.

Third,VietNamneedstoevolveitsdiversificationstrategyalongsideitseconomicgrowthandcapabilitybuildingprocess,recognizingthatdiversificationpathwaysevolvewithacountry’sdevelopment.Ananalysisof99countriesfrom1980to2018showedthatascountries’GDPpercapitaincreased,therewasagreatertendencytopursuetechnology-basedandcomplexdiver-sification.Alargeshareofunrelatedandproduction-baseddiversificationwastakenupbytech-

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nology-basedandcomplexdiversification.Korea’sexperienceoftransitioningfromunrelatedandproduction-baseddiversificationtotechnology-basedandcomplexdiversificationalsosuggeststhatacountrywithrelatedtechnologicalcapabilitiesmaybebetterpositionedfordiversificationintoseeminglydistant,unrelatedproducts,evenbeyonditscurrentindustrialstructure.Thus,ifVietNamintendstofurtherdiversify,itmaydosobyaccumulatingtechnologicalcapabilities,asthismaybecomeaviablediversificationrouteasthecountrydevelops.

Fourth,toenhancediversification,thecountrycouldalignitsindustrialpoliciesfocusedonaccumulatingproductioncapabilitieswithinnovationpoliciescenteredonknowledgeaccu-mulation.Korea’sexperienceshowedhowindustrialandinnovationpolicieswerecoordinated,aligned,andconsideredinparalleltoaccelerategrowthandeconomicdiversification.Ontheotherhand,thereisindirectevidenceindicatingthatthetechnologicalcapabilitiessupportingVietNam’sproductionremainweak;innovationpolicyisfragmented,underperforming,andlackscoordinationwithamoredevelopedandactiveindustrialpolicy.EffectivecoordinationbetweenindustrialandinnovationpoliciescanincentivizelocalfirmstoinvestinR&D,upgradetechnologi-calcapabilities,andleverageknowledgespilloversfromMNEs,consequentlyenhancingindustrialcompetitiveness.

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01

Introduction

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1.Introduction

Diversificationisconsideredessentialforsustainablelong-termgrowthandforbuildingre-siliencetotheshocksthatperiodicallyaffecttheeconomicperformanceofacountry(UNCT-AD2018).Economicgrowthisusuallyachievedthroughdiversificationintohighervalue-addedin-dustries.However,developingcountriesfrequentlyfindthemselvesconfinedtolow-value-addedsectorssuchasagriculture,ordependenceontheirnaturalresources.Theyconsequentlyenactvariousindustrialpoliciestofacilitatethediversificationoftheireconomicbase.Inparticular,theyoftenrelyonFDItoacquirescarcetechnologiesandcapital.

Theprincipleofrelatednesshasprovidedastrongtheoreticalfoundationforthequestionofwhichindustriestotargetfordiversification.Theprincipleisderivedfromtheempiricalob-servationthatwhendiversifyingintoanewindustry,countriestendtofindareascloselyrelatedtoindustriesinwhichtheyalreadyenjoyacomparativeadvantage.Thisunderpinsananalyticalframeworkcalledproductspaceanalysis(Hidalgoetal.2007).Itsunderlyingtheoryinvolvestheidentificationofmorecomplexproducts,1thatis,productswithhighervalueadded,relatedtothoseinwhichthecountryalreadyhascomparativeadvantages.Recently,thisanalyticalframe-workhasbeenextendedfromitsoriginalconception—targetingproducts—toselectionoftargettechnologiesconducivetodiversificationbasedontechnologyspaceanalysis(Boschmaetal.2015;Kogleretal.2013;Colombellietal.2014;Ballandetal.2019).

Acountry’scomparativeadvantagecanbeexplainedusingtwointerrelatedcapabilities—productionandtechnological(knowledge)capabilities.Recentstudieshavescrutinizedtheconcurrentdynamicsbetweenthetwo(Puglieseetal.2019;EumandLee2022a;Patellietal.2023).Thisreportappliestheprincipleofrelatednesstoexamineacountry’sdiversificationpathwithinandbetweentheproductandtechnologyspaces.Theapproachallowsdiversificationintounrelatedproductstobeunderstoodasaprocessdrivenbytechnologicalcapabilities.

ThisstudycomparesKorea’ssuccessfuldiversificationexperiencewithVietNam’srecentdi-versificationpathtoidentifyhowthelattercountrycouldfurtherdiversifyintomoreval-ue-addedproducts.Tothisend,wefirstpresenttheconceptofamultiplexnetworkinwhichproductspaceandtechnologyspaceareconnected.Second,wepresentfourtypesofdiversi-

1Inthepresentresearch,theterm‘product’isusedtoencompassbothgoodsandservices,aligningwiththeclassificationusedbytheUNComtradedatabase.

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ficationpatterns,namelyunrelateddiversification,production-baseddiversification,technolo-

gy-baseddiversification,andcomplexdiversification.Third,weshowhowdiversificationpatterns

differbythelevelofeconomicdevelopment.Fourth,wecomparethediversificationpathsofKorea

andVietNamusingtheco-evolutionaryframeworkandsuggestaviablediversificationroutefor

VietNamgoingforward.Thereportconcludeswithpolicylessonsthatcouldinformpolicymakers

inVietNamandotherdevelopingeconomiesfacingdiversificationhurdles.Thetargetaudience

ofthisresearchincludespolicymakersandresearchersinterestedinleveragingtherelatedness

analysisandapplyingtheco-evolutionaryframeworkindevelopmentstudies.

Korea’sexperienceprovidesexemplaryevidenceofhowindustrialandinnovationpolicies

werecoordinated,aligned,andconsideredinparalleltoaccelerategrowthandeconomic

diversification.Whileindustrialpolicytendstofocusonpromotingspecificindustries,innova-

tionpolicyaimstocultivatetechnologicalcapabilities.Korea’scaseshowsthatthediversification

potentialisgreaterandmoresustainablewhenindustrialpolicyaimedatbuildinganindustrial

baseiscomplementedbyinnovationpolicyaimedatbuildingtechnologicalandhumancapitalca-

pabilities.TherecentWorldBank(2023a)publication,InnovativeKorea,concludesthatoneofthe

lessonsfromKorea’ssuccessfultransitionintoahigh-incomecountryisrelatedtothenecessary

evolutionofitsgrowthparadigm,particularlythetransitionfromtargetedindustrialpoliciesto

technologyandinnovationpolicies.Nevertheless,Korea’sdevelopmentexperienceisunique,and

thusitmustberegardedasoneofmanypossibledevelopmentalpathways.Still,theapplicationof

thisframeworkhasimplicationsforseveraldevelopingnationspursuingeconomicdiversification

intomorevalue-added,complexproducts.

Thisstudyisorganizedasfollows.Section2introducestheconceptualbackground—theprin-

cipleofrelatednessanalysisandtherelationshipbetweenproductandtechnologyspaces,diver-

sificationstrategiesandhowdiversificationpatternsdifferaccordingtothestagesofeconom-

icdevelopment.Section3comparesthediversificationpathsofKoreaandVietNamusingthe

co-evolutionaryframework.Section4suggestsprioritytechnologieswhereVietNammayneedto

focustodiversifyintocomplexproductsusingasimulation-basedapproach.Section5summariz-

estheimplicationsofthisstudy.

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ConceptualBackground

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2.ConceptualBackground

2.1.

Theprincipleofrelatednessanalysis

Theproductspace,anetworkstructureconsistingofnodes(products)andedges(prox-imity),representstherelatednessbetweenproducts.Theconceptofrevealedcomparativeadvantage(RCA)describedbyBalassa(1965)andHidalgoetal.(2007)suggestedtheconceptofproximitybasedontheconditionalprobabilityofthecomparativeadvantageoftwoproductsappearingsimultaneously.Themoretwoproductssharecommonproductioncapabilities,thehighertheconditionalprobabilityis,andtheseproductsareconsideredasneighboringproducts.Aproductspacecanbeconstructedusingthisconceptofproximity.Theproductsinthecenterofaproductspacearecalledcoreproductsbecausetheyarehighlyrelatedtootherproductsandproducedbyonlyafewadvancedcountries.Conversely,productsintheperipheryarelessinter-relatedwithotherproductsandarecharacterizedaslow-value-added,low-complexityproducts.

Theprocessofeconomicdevelopmentcanbeunderstoodasaprocessofconstructingacomplexproductportfolio,startingwithcomparativeadvantageinperipheralproductsandgraduallyacquiringcomparativeadvantageincoreproducts.Intheproductspace,develop-ingcountriestendtohaveacomparativeadvantageinlow-complexityproductsintheperiphery,whiledevelopedcountriestendtohaveacomparativeadvantageinhigh-complexityproductsinthecore(Hidalgoetal.2007).Asdevelopingcountriesarelocatedattheperiphery,specializinginlow-complexityproductswithfewerrelatedproducts,theytendtofacedifficultyindiversifyingintocoreproducts.

Theprocessoftechnologicaldevelopmentcanbedescribedasaprocessinwhichthecom-

parativeadvantagegraduallyadvancesfromperipheraltechnologiestocoretechnologies

(Hidalgoetal.2007;EumandLee2022a).Technologyspacerepresentstherelatednessbetweentechnologies.FollowingthesamelogicasRCA,RTAmeasurescomparativeadvantageofacoun-tryforagiventechnologyataspecifictime.RTAcanbeusedtoconstructthetechnologyspace,whichisagraphicalrepresentationofthelinkagesbetweentechnologies.Similartothecountriesintheproductspace,countriesthathavecomparativeadvantageinperipheraltechnologiesarelesslikelytodiversifyintocoretechnologies,asthesetechnologieshavefewerconnectionswithothertechnologies.

Theprincipleofrelatednesscanbeusedtoexplainthediversificationpathofacountry—whatproductsandtechnologiesaremorelikelytobedevelopedinrelationtothosethata

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countryalreadypossessesacomparativeadvantage.Anewcomparativeadvantageismorelikelytoariseinaproductthatislocatedclosetothecurrentproductionportfolio,becausetherequiredproductioncapabilitiesresembletheexistingones.Thesameargumentcanbemadefortechnologyspace,wherenewcomparativeadvantagesaremorelikelytoemergeintechnologiesthatresembleexistingones.Forexample,acountryactiveintextileproductionislikelytoexpandintoapparelmanufacturing,leveragingsimilarskillsandsupplychains.Similarly,aneconomywithrelativestrengthinsemiconductormanufacturingmightdiversifyintorelatedfields,suchasadvanceddisplaytechnology,givenitssharedexpertiseinmaterialscienceandprecisionengi-neering.Thesetransitionscapitalizeonexistingcomparativeadvantages,enablingmoreefficientdiversification.

Theprincipleofrelatednessmayshowthediversificationpotentialthatmayoccurincremen-tallytonearbyproductsandtechnologies.Arecommendedproductdiversificationstrategybasedontheprincipleofrelatednessistoidentifyanddevelopproductsthatarehighlyrelatedtoproductsinwhichacountryalreadyhasacomparativeadvantageandahigherlevelofproductcomplexity(Hidalgoetal.2007).Similarly,inthetechnologyspace,arecommendedtechnologydiversificationstrategybasedontheprincipleofrelatednessistotargettechnologiesthatarehighlyrelatedtotechnologiesinwhichacountryhasacomparativeadvantage,thatis,ahigherdensityofcomparativeadvantagesinneighboringtechnologies,andconcomitanttechnologicalsophistication(Boschmaetal.2015;Ballandetal.2019).

Onelimitationoftheprincipleofrelatednessisthatitdoesnotexplainhowsomecountriesgainedcapabilitiesinunrelatedproductsandtechnologieswheretheylackedanypreviouscomparativeadvantage.Forexample,agriculture-basedcountriesareadvisedtoproduceprod-uctsthatarehighlycorrelatedwiththeirexistingagriculturalproducts,makingitdifficultforthemtomoveawayfromagriculture-relatedproducts(Pinheiroetal.2018;EumandLee2022b).How-ever,countriessuchasKorea,withitssuccessfuldevelopmenthistory,showapatternof‘jump-ing’fromagriculturetounrelatedproducts,forexample,theautomobileindustry(LinandChang2009;EumandLee2022a).

Tofillthisresearchgap,thisreportproposesaco-evolutionaryframeworkthatconsidersbothproductionandtechnologicalcapabilities.Adiversificationstrategybasedonproductlinkagesmaycapturetheaveragecharacteristicsofdiversificationpatternsacrosscountries,butitmaynotbehelpfulinidentifyingstrategiesforsuccessfuldiversification,especiallythosethatinvolvejumpingfromproductswithexistingcomparativeadvantagetounrelatedproducts.

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Box1.

KeyConcepts

Theconceptsbelowunderpintheco-evolutionaryframeworkdescribedinthisnote.Themeasures

usedinthisreportarenormalizedindicesthatcanbecomparedtoeachother,astheabsolute

valuesmaynotbemeaningful.2Inaddition,becausethesemeasuresindicatedynamicchangesin

acountry’sproductionortechnologicalcapabilities,theymaydifferbytimeperiod.Foradetailed

explanationoftheseconcepts,seeAppendix1.

—Technology:Technologycanbedescribedasthecomprehensivemethods,processes,orsys-

temsusedtocreateproductsorservices.Inabroaderinterpretation,itencompassesvari-

oustechnologicalcapabilitiesbeyondcodifiedknowledge,includingtacitformsofknowledge,

know-how,andspecializedcomplementaryfactors.Inthisresearch,technologicalcapabilities

areproxiedbypatents,ameasurementofinnovationoutput,highlightingonlytheexplicitand

codifiedaspectsoftechnologicalcapacity.

—RevealedComparativeAdvantage(RCA):FollowingBalassa(1965),RCAmeasurescompara-

tiveadvantageofacountryforaproductataspecifictime.Usinginternationalexportdata,it

measurestheexportintensityofacountrybycalculatingtheratioofaproduct’sshareinthe

country’sexportbaskettoitsshareintherelevantglobaltrade.IftheRCAvalueisgreaterthan

1,thecountryisconsideredtohaveacomparativeadvantageinthatproduct.

—RevealedTechnologyAdvantage(RTA):RTAmeasurescomparativeadvantageofacountry

foratechnologyataspecifictime.FollowingthesamelogicofRCA,itusesinternationalpatent

datatoidentifyacountry’scomparativelyadvantageoustechnologies.Normally,technology

withRTAgreaterthan1isconsideredtohaveacomparativeadvantage.

—Production-baseddiversification:Production-baseddiversificationindicatesacountry’sin-

troductionofanewproductthatwasnotpartofitsexportbasketintheprevioustimeperiod.

Thisrepresentsgainingacomparativeadvantageinaproduct,morespecifically,production

know-howacountrydidnotpreviouslyhave.Inthisresearch,wesaythatacountrydiversified

inacertainproductiftheRCAchangedfrombelow1attimettoabove1attimet+5.