This study analyses the sources of changes in industrial leadership and catch-up by latecomers in the world steel industry since World War II. The successive shifting of leadership is explained, such as from the United States to Japan, from Japan and Korea, and partly from Korea to China, with a single theoretical framework. We suggest calling this a theory of industry catch-up cycle, which is suggested as a new alternative, based on our criticism against the existing theories, such as Venon's (1966) product life cycle theory and Markusen's (1985) profit cycle theory, such that they are either about global location of site of production not about changes in the leadership of an industry or about within-a-country shift of industry location. We rely on Neo-Schumpeterian concepts of windows of opportunity for latecomers in catching up with the forerunning countries, and the windows are changing techno-economic paradigm (Perez and Soete, 1988), business cycles and demand shifts (Mathews, 2005), and regulation and government interventions (Lee, Mani and MU, 2011). We find that one or more of these windows have been involved in the successive changes in the leadership in the steel industry. For Japan, the window was first opened up with the appearance of the new technologies, namely basic oxygen furnace and continuous casting, and subsequently grabbed by promotion by the Japanese government. For Korea, the downturns in the global steel industry in the 1970s and 80s served as a good timing for entry with low costs for facilities and technologies, which were taken advantages of by the determined Korean government. We also analyze why other latecomers failed to grab such opportunities. Given that such exogenous windows tend to open always and the incumbent often tend to respond to them later, with good reasons, than new entrants or latecomers, we predict that changes in the industry leadership also tend to happen again and again, with a skillful coordination by the latecomers, such as China recently. About the speaker Dr. Keun Lee is professor of economics at the Seoul National University, and a director of the Center for Economic Catch-up. He holds a Ph.D. degree from the University of California, Berkeley. He was a consultant at the World Bank, lecturer at the University of Aberdeen, Scotland, and a research fellow at the East West Center, Hawaii. He is also the Vice-President of the Asia-Pacific Innovation Network. Recently he served as the President of the Korean Association for Contemporary China Studies, and the direct for Institute for China Studies of Seoul National University. The main area of his research is economics of catch-up with focus on innovation, corporate organization and growth, and industrial policy. He is the editor of Seoul Journal of Economics, and also one of the editors for Research Policy, and for Asian Journal of Technology Innovation. One of the most widely cited articles of his is the paper on Korea's Technological catch-up published in Research Policy (2001). He sits in the editorial boards of the following journals: Asian Economic Journal; Global Economic Review; Evolutionary and Institutional Economics Review; Korean Studies; Korean Economic Review; International Journal of Technological Learning, Innovation and Development; China Economic Journal; International Journal of Institutions and Economies; Innovation and Development; African Journal of Science, Technology, Innovation, and Development;

• published: 09 Dec 2011
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