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2 Literature Review
The growth and impact of ICT industry competitiveness has become a topic increasingly researched by scholars. Most literature includes scholarly articles, government researched reports and multinational organization reports such as the annual World Economic Forum’s Global Competitiveness Report. ICT industries have largely been measured by the level of productivity, efficiency, profitability, variety and quality. Scholars have studied the
productivity growth and business models of both Taiwan’s and Canada’s ICT industry. Much of the literature on Canada and Taiwan’s ICT industries and innovation is focused on
productivity and growth. Canada and Taiwan, among other countries, have been studied and compared to assess their relative innovation and influence through ICT in the world economy.
There are macro-level studies including the Taiwanese and Canadian economies which compare many countries’ success in their ICT industries along with micro-level studies which compare industries and competitiveness in the world economy. Research related to theory on economic liberalization and international cooperation also frame these industries and global systems that have been created to deal with supply and demand in markets and sectors.
Wang (1999) examined the impact of the ICT industry on economic growth in Taiwan based on longitudinal data over 16 years. The study focused on the impact of national IT capabilities and national investment on its share of gross domestic product (GDP). He argues that ICT is a global catalyst that offers growth opportunities for newly industrialized
economies. Further, the diffusion of ICT throughout all industries has a greater impact than the production and enhancement of the ICT industry alone and is favorable towards economic growth. The study examines the policy measures which can be implemented to stimulate ICT adoption and promote economic growth. Wang’s (1999) findings implied that investment in IT pays off when there is robust national information infrastructure that supports IT adoption and application. In a more recent study, Liang (2011) studies the development and application
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of cloud computing and e-government in driving technology innovation and application in the government and ICT industry. The study identifies that cloud computing is a vital evolution of the Internet which allows new business opportunities to be created.
Studies have examined Taiwan’s ICT industry through its nature and level of competitiveness. In a study on Taiwan’s ICT industry, Chevalerias (2010) describes the restructuring of industry in the 1980s and the political and economic difficulties it has had in more recent years. He explains how the extent of structural weaknesses of the Taiwanese economy hindered its growth during the 2000s. Finally, he examines the relevance of the Economic Cooperation Framework Agreement (ECFA) as a solution to Taiwan’s economic problems and the political implications that arise with it. Tang, Liou and Peng (2008) analyze four electronics companies as case studies to identify the critical role of branding and the capability of manufacturing and product-brand extensions. The authors investigate a consumer’s attitude toward business to business (B2B) brand extension on the business-to-consumer (B2C) market for the ICT industry. Ho, Fang and Lin (2011) investigate the direct effect of an organization’s development of technological and design capabilities in Taiwan on technology commercialization. It used R&D teams in Taiwan developing new ICT products as case studies and determined that both technological and design capabilities have a positive effect on technology commercialization, with design capabilities being the greatest
contributor.
In Canadian literature, a five-year longitudinal study of eight ICT clusters across Canada was conducted by Lucas, Sands and Wolfe (2009). Each case study examines whether the viable clusters could sustain innovation and growth based on the co-location of firms, financial and legal services, research and training institutes, business and civic associations, and public support organizations. The researchers identified the key input and output actors and those that facilitated interaction in the ICT industry. Finally, they identified the linkages between these actors which include formal participation in supply chains.
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N a tio na
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Harchaoui et al. (2002) compares the changing composition of investment and the growth of financial services in Canada during the 1980s to the 1990s. The authors examined the historical trends of investment and capital formation. The study examines and compares the extent that ICT and other types of capital have changed and contributed to economic growth in Canada. Bramwell and Nelles (2005) examine the role of local institutions and actors in supporting the transition to the knowledge-based economy with a focus on the information and technology cluster in Waterloo, Canada.
One macro-level study by Shao and Shu (2004) compares 14 member countries of the Organization for Economic Cooperation and Development (OECD) including Canada over a 13-year period between 1978 and 1990. The study provides an analysis of the productivity level of information technology (IT) capital goods using the Malmquist Total Factor
Productivity (TFP) index. The Malmquist TFP index is decomposed into three components of technological progress, efficiency change and change in economies of scale, to account for the different sources of productivity growth. In their findings, Shao and Shu (2004)
determined that each country’s ICT industry measured differently on the TFP
sub-components. Their focus was on examining the production of IT capital goods within a cross-country analysis. Among the 14 countries, 10 had experienced productivity growth in their ICT industries (Shao and Shu, 2004). In another macro level study, Kauffman and Kumar (2008) measured the impacts of ICT across four development areas in 64 countries using trade flows, agricultural productivity, R&D, and quality of life as measurements. Also,
Frieden (2005) explores the relationships between the public and private sectors in promoting ICT innovation and growth in Canada, Japan, Korea and the United States in which he argues that Canada’s government has created successful support and initiatives to promote its ICT industry and foster relationships with other countries.
Other studies have been performed on trade liberalization in regards to information technology use and production. Joseph and Parayil (2008) study this topic after the signing of
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the Information Technology Agreement (ITA). They argue that complementary trade
liberalization with capacity-building will enable the ITA to become an effective ICT industry building strategy in developing countries. They further argue the case for an agreement involving trade liberalization and capacity-building in order to promote ICT use and its production (Joseph and Parayil, 2008).
Most studies at the firm, industry and economy level suggest that the advancement of ICT contributes significantly to productivity growth. Further access to ICT enhances industry competitiveness, the empowerment of people and improvement of social and government services (Joseph & Parayil, 2008). Liberalization of trade and investment is at the core of technology advancement. Joseph and Parayil (2008) examine the effectiveness of trade liberalization in bridging the digital world in the developing countries. Krueger (1997) defines trade policy and economic development from the 1950s. Krueger and, Bhagwati and Srinivasan (1999) define the connection between international trade, economic growth, reduction in poverty and total factor productivity.
From a micro to macro scale, scholars have identified ICT industry advantages and disadvantages and successful methods of innovation through research and development. A majority of current literature relating to Canada’s and Taiwan’s ICT industries deals with the impact of ICT industries on productivity growth. Cross-national analyses have allowed for the assessment of economic models and industries to be compared in order to identify which policies and strategies promote the most supportive environment for industries to accelerate in. Theory on the product life cycle and competitive advantage allow for a framework in which nations and companies can use as guidelines to create competitive industries and new ideas.
The existing literature will provide this thesis with information on Taiwan’s and Canada’s ICT industries and economies by offering conclusions made on the strengths and weaknesses of both economies. Studies on the cooperation between Canada and Taiwan will
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also provide information on the benefits of their relationship and partnerships. This thesis will contribute to the macro-level literature by assessing Taiwan and Canada’s bilateral relations in terms of ICT.