Demand-led catch-up: A history-friendly model of latecomer development in the global green economy

Fabio Landini*, Rasmus Lema, Franco Malerba

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

6 Citations (Scopus)
80 Downloads (Pure)

Abstract

This article examines the role played by demand in catching up and in leadership changes in green industries, motivated by the belief that demand-led catch-up is a prevalent pathway in such industries. The article first examines stylized cases of sectoral green catch-up by China in which the local market and domestic demand played an important role before the sector started expanding globally. In particular, the focus is on three industries: wind, biomass and hydropower. Then, it uses a history-friendly model to study the effects of a major increase in domestic demand (a “demand window”) in a green industry. The baseline simulation first examines the effects of a demand window in promoting learning and capability building by latecomers and in triggering a catch-up process. Then, the counterfactual simulations show that (i) a technological discontinuity which takes place after the demand window could reduce the effectiveness of the demand window in the catch-up process; (ii) the specific timing of the demand window could significantly alter the dynamic patterns of catch-up; (iii) protectionism is a necessary condition for the demand window to have its effect; and (iv) regimes of slow capability accumulation could turn out to be beneficial for the latecomer when a technological discontinuity follows the demand window. These results can help policymakers in identifying key conditions related to demand-led catch-up strategies.
Original languageEnglish
JournalIndustrial and Corporate Change
Volume29
Issue number5
Pages (from-to)1297–1318
Number of pages22
ISSN0960-6491
DOIs
Publication statusPublished - 2020

Bibliographical note

Funding Information:
The research was supported by AAU Grant 771107 and the Sino-Danish Centre for Education and Research (SDC).

Publisher Copyright:
© 2020 The Author(s). Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.

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