The Taiwan system of innovation in the tool machine industry: a case study

Recent evidence suggests that the Taiwan’s machine tool industry as a whole is prominent in the world, ranking sixth in output and fifth in exports. This paper explores the current status and features of Taiwan’s national systems of innovation (NSI) for its machine tool industry. It is suggested that five major elements of the NSI explain the extensive diffusion of new technologies in the industry, namely: industry clusters, educational system, bridging institutions, government policy, and global business environment. Further, the structural and institutional problems of the innovation system are identified. Future directions of technology development are also discussed.