The “developmental state” refers to a lesser-developed country in which a cohesive, expert bureaucracy forcefully pilots the economy along a path of rapid industrialization and modernization. The developmental state once produced economic miracles in several East Asia nations; but its power is now fading, if not already extinguished. This is the conclusion of Joseph Wong's thorough study of the massive investments being made in biotechnology by South Korea, Taiwan, and Singapore. Wong's findings are based on more than 200 in-country interviews taken during more than 20 research trips, as well as extensive archival and library research. Betting on Biotech is an important scholarly achievement, relevant to scholars in the fields of economics, political science, public policy, innovation studies, country and region specialties, and perhaps even sociology. It is likely a must-read for scholars of the developmental state, those interested in science and technology (S&T) policy, and for investors in East Asia and biotechnology.
The book is useful for several purposes. First, although it focuses mostly on three East Asian countries, it provides a useful overall survey of the economic, business, and policy aspects of the global biotechnology industry. It briefly discusses the history of the biotech sector, outlines the major successes and failures, and, most interestingly, describes current obstacles and opportunities. For example, Wong explains how large, diverse economies like China and the United States can make proportionally large, diverse investments in biotech in order to achieve economies of scale and scope; but smaller economies, with their more limited resources, must place far more selective bets. Hence, the problems faced by policymakers and businesses in the biotech sector can vary widely across countries, as can strategies to solve them.
Second, the book provides a basic outline of the competitive advantages of, and national strategies taken by, several major participants in biotech. It then provides a thorough survey of the investment and policy strategies pursued by South Korea, Taiwan, and Singapore. South Korea is “going big,” with large investments across the entire innovation cycle (from upstream research to downstream technology transfer), and with pride of place given to a few established chaebol groups (large, diversified, family-controlled business groups). Taiwan is “going small,” with targeted investments in a large number of small and medium enterprises focused on technology development rather than on basic research. This more diffuse approach gambles that while some of Taiwan's “many sprouts” will fail, some will survive and flourish. Singapore is “going global” by trying to lure foreign multinational corporations to establish research and development centers within the country, so as to transform the island nation into an S&T hub for the entire region. The author explains the details of each nation's approach, discussing the most important government institutions, policy actions, and private-sector players, as well as the relationships among them.
Third, the book contributes to theories of the developmental state and its evolution over time. Wong's novel contribution is to theorize that changes in national economic and business risks are forcing the developmental state to retreat. During the Cold War, the lesser developed countries in East Asia could play “catch-up” to the United States and Europe. This was not an easy task, but the risks were relatively well-defined. After all, the advanced Western nations had already beaten the initial path by creating new S&T-based industries: chemicals, steel, shipbuilding, automobiles, electronics, computers, telecommunications, and so on. The problem for the developmental states in East Asia during the Cold War was to follow in these footsteps. The costs and risks were in coordinating national actors so as to escape the relative poverty of an agricultural economy, and direct the national economy down an established route to rapid industrialization and modernization. But by the 1990s, these East Asian nations had caught up to the West; they no longer had established models to follow. And the uncertainties of creating new S&T-based industries are so great that they cannot be estimated by policymakers. Wong calls this new risk, in which actors have little or no knowledge on which to base their investment choices, “primary uncertainty.” States can no longer pick and make winners because, in biotechnology, no one knows what a winner is supposed to look like. Therefore, the developmental state has stepped back from picking winners and is instead seeding the entire field, then letting the private sector figure it out. The allocation of resources is less monolithic and more contested. Especially in South Korea and Taiwan, the once-powerful state is now decentralizing and horizontalizing.
Perhaps one of the more surprising, but necessary, revelations of the book is how badly global investments in biotech have performed during the past several decades. In East Asia, these failures have soured public support for biotech, forcing the developmental state to defend itself. This is a new problem for these governments, which had for years achieved serial successes in “catch-up” industries and then basked in the glow of public adoration. But in the absence of blockbuster products, national champions, and scientific breakthroughs, the developmental states in East Asia have been forced to redefine what “success” means. They now emphasize publication and patent statistics, or manufacture images of star scientists, labs, and firms, in order to fulfill public expectations of success. When businesses engage in this practice, investors deride it as “putting lipstick on a pig,” but it is now a common tactic of the developmental state in a bid to buy time for the real success stories to occur.
Wong also spends a chapter discussing how the East Asian developmental states deal with regulatory uncertainty. Regulatory issues are inherent to the story because of biotechnology's ethical aspects, negative and positive spillovers, and property rights issues, as well as the centrality of the state in determining and enforcing any kind of regulatory regime. Wong finds that where private- and public-sector interests align (e.g., clinical R&D), then regulatory clarity and certainty results. However, when interests clash (e.g., the creation of health-care markets), not even the developmental state can impose a clear and consistent set of regulations, which only exacerbates the “primary uncertainty” of biotech research.
If there is a problem with Betting on Biotech, it is that it presents a snapshot of an evolving process, and one taken during its early stages. That is, the developmental state is rapidly changing from its Cold War mode into something entirely new. It is on a voyage away from its original harbor described so well by Alice Amsden, Chalmers Johnson, Peter Evans, Stephan Haggard, T. J. Pempel, Meredith Woo-Cummings, and others. But where the developmental state is headed is not yet clear. Therefore, one gets the sense that the author wishes he could be writing 20 or 30 years from now so as to describe the developmental state's final resting point and why it arrived there. But cataloging this voyage as it happens is valuable; Wong and his fellow scholars should continue to investigate this process. It is a bet that will likely pay off.
