The manufacture of high-end optoelectronic
components for communications
shows how policy can shape cutting-edge
technologies for firms facing the most constraints.
First, manufacturing and product
innovation are bound together. Production
yields are low, and the process is more an
art than a science, with engineers regularly
called to the shop floor. Second, the market
is small relative to the production volumes
required to achieve economies of scale.
Firms can afford only one manufacturing
facility, and there are not enough engineers
in developing East Asia with capabilities to
support local production of the new technology