Joseph Wong

In a nutshell

Everyone is talking about innovation. In the current era of the global knowledge economy, it is generally agreed upon that innovation is the engine of economic growth. Making new things and devising novel processes are presumed to generate added-value, be it measured in terms of economic development and returns, industrial diversification, and societal benefits more generally.

Biotechnology in particular has for many years been touted as the cutting-edge of industrial technology innovation and a potential industrial blockbuster. And yet, after decades of patient waiting and with billions upon billions of dollars of investment into the sector, the biotech revolution remains unrealized.

Precisely this tension, the trade-offs in high-risk / high-reward endeavors, is at the heart of Betting on Biotech.

Asia’s industrial dynamos, postwar newly industrialized countries (or NICs) such as Taiwan, South Korea and Singapore began to bet big on biotech in the 1990s.  This book examines how government over the past two decades has been re-organized in each place to foster upstream research in the life sciences. It sheds light on the ways in which industry has re-invented itself and its relationship to the state, as firms face the challenges of developing and commercializing uncertain biotechnologies, as they navigate dynamic regulatory regimes and deal with an increasingly impatient investment community.

Betting on Biotech illuminates new global linkages not just between firms but between R&D labs, universities and public-private research institutes. It reveals a new political economy of innovation and industry technology development that I suggest is a significant departure from the postwar model of “guided” or “state-led” industrial growth in Asia.

At the core of the book’s argument is the distinction I draw between strategic decision-making under conditions of “risk” versus “primary uncertainty.” In the past, when places such as Taiwan, Korea and Singapore began ramping up their domestic capabilities in the information technology and electronics sectors, they confronted risk scenarios and risky investments, to be sure. However, because they were essentially reverse-engineering existing technologies developed elsewhere, they were also able to mitigate risk rather effectively through government subsidies, investment and protection. There were unknowns (Could a Taiwanese firm make semiconductors at globally competitive prices?), but there were also many things that stakeholders did know (how semiconductors were made).

Conditions of primary uncertainty, which characterize first order innovation in the biotech sector, are situations in which decision-makers must make bets on things about which they know very little, if anything at all. Indeed, conditions of primary uncertainty are those in which “you don’t know even know what you don’t know.”

In making industrial winners in biotech, one is essentially betting blind, a logic of industry development, I contend, that has frustrated policymakers and bio-industry stakeholders in these otherwise technologically advanced and rich Asian economies (hence the subtitle of the book is “Innovation and the Limits of Asia’s Developmental States”).