Innovation systems and industrial upgrading: the Southeast Asian experience

Rajah Rasiah

Chapter 12 in A Research Agenda for Innovation and Development, 2026, pp 177-192 from Edward Elgar Publishing

Abstract: Latecomer catch-up explains successful industrialization, but not much work exists to enlighten on several countries facing premature deindustrialization. This chapter examines this problem in Southeast Asia. Driven by an agile state, Singapore managed to achieve significant industrial upgrading through leveraging strategies. Malaysia, Indonesia, the Philippines, Thailand, and Vietnam introduced industrial policies to reach middle-income status. Brunei shows signs of following Singapore's leveraging strategies to promote high-value-added industries since 2018. Cambodia, Lao PDR, and Myanmar opened up industrial zones to drive low-value-added, export-oriented industries. Timor-Leste has remained a sedentary economy. Foreign capital has played a major role in stimulating manufacturing expansion in these economies. Singapore's deindustrialization has been accompanied by strong technological upgrading, but Indonesia, Malaysia, Philippines, Thailand, and Vietnam have experienced slow industrial upgrading. Cambodia, Lao PDR, Myanmar, and Timor-Leste remain at the crossroads with little effort to build the science, technology, and innovation (STI) infrastructure to stimulate industrial upgrading.

Keywords: Industrialization; Deindustrialization; STI Infrastructure; Industrial Upgrading; Industrial Policy for Development; Southeast Asia (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035344338
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