Innovation as Competitive Advantage in South East Asia | The Struggle of the East to be Western

Introduction

This essay is my follow-up on the essay called “Developing the Creative Class in Singapore – Investigating the conditions for Development”. It’s main topic also covers the creative class, however in this essay I will focus more on South East Asia in general. To illustrate my argument for South East Asia I will be using examples from China, Singapore, Taiwan, South Korea and Japan, where appropriate. This will not mean that I will provide an in depth analysis of these five countries, they merely serve to illustrate the bigger picture.

Although the five countries are all together different from each other, I argue that by looking at some of the characteristics of these countries can explain the struggles these countries (with the exception of Japan) (will) experience to modernize and diversify their economies. I will argue that competing in the global markets, based on innovation, will sooner or later also become critical in order to raise the standard of living. The role of low cost competitor will be taken over by other countries in the region or elsewhere in the world.

I will argue that it will take these countries some time to develop this innovation power, because the necessary creative workers, the creative class, is underdeveloped. I will argue that the main reasons for this is the role of the state in these countries, as well as the cultural mindset.

In building my argument firstly I will use Castells work to argue my case for the need for innovation in a global market, and of a creative class to exist. Also I will discuss the two models for improving innovation. The first (American) model is to attract creative workers externally, in this case internationally, the second (Finnish) model is to educate the creative workers locally.

I will discuss the theories and analyses of Richard Florida on the concept of the creative class. I will explain who are in this class, and what their characteristics are. I will also discuss their lifestyle, and what drives their decision to live in certain places, and not in others.

I will take the two indicated models and the issues that I see for Asian countries in applying these both models. I will be arguing that the creative class’s mobility has certain ‘cultural’ limits, that the power of place plays a crucial role in attracting creative workers, that these (mostly western) workers bring with them a ‘western’ mindset that does not always sit well in an Asian society, and that external workers will be temporary in nature. I will also discuss societies’ opinions on intellectual property, as especially can be found in China. Lastly I will discuss the Confucian mindset prevalent in the Chinese population, and the impact of the developmental state on the development of a creative class.

The Welfare State and the need for Innovation

Castells (1) discusses the role of the state within the changing context of the global economy. He argues that the state, because of the interdependency of international (financial) markets is increasingly powerless in controlling monetary policy, deciding its budget, organizing production and trade, and increasing the ‘standard of living’ of its population, unless it assures the competitiveness of its economy in the global context.

One of the main roles of the state is to ensure the (increased) standard of living of it’s citizens. Although powerless, states can exert a great deal of influence to ensure increased standard of living and a social framework, by focusing on innovation and increased productivity of its population. Exactly in this field the so-called creative class plays an increasingly important role.

Castells goes on to identify two general models in which innovation and productivity increases can be accomplished. The first is ‘the American knowledge economy’ model, where massive import of highly skilled labor functions as a source of productivity and innovation. The second model is the ‘Finnish’ model (to some extent Northern European) of investing in home-grown, human capital, and improving standards of living that support productivity improvement.

In short a focus on innovation, productivity increases and renewal enable a higher standard of living. Attracting talent externally to bring this innovation or by educating talent locally are two ways to improve this capability.

Describing the Creative Class Florida (2) argues that creativity – “the ability to create meaningful new forms” is now the decisive source of competitive advantage in a globalizing context. Asian countries, like China, but also Taiwan, Korea, and India have significantly lower cost structures (and standard of living), enabling them to compete on cost very successfully. In the West competition on productivity, quality, and the creation of new products and services are now critical strategies to safeguard and increase the standard of living. Creativity and innovative power is a key factor in gaining a competitive edge in these areas.

The economic need for creativity in the West, has manifested itself in the rise of a new class, the creative class (3). I would argue that sooner or later innovation power will also become an important competitive edge for countries in Asia, most notably the ones I’m looking at in this essay. Singapore for instance, is already actively looking at diversifying it’s economy, and attract and train creative workers in industries other than finance, law and business services. In China I would argue this need is currently less prevalent, because of the still huge potential in increasing standard of living just by attracting cheap production capacity.

Japan is a good example of an economy that has already matured and shows considerable innovation power. Unsurprisingly, Japan’s industrialization began way before any of the other countries in South East Asia, so they have had a considerable time advantage. The transition towards a capitalist market economy is believed to have been completed by the 1890’s, with a concurrent reduction in the role of the state in developing the economy.

Florida distinguishes a ‘core’ of this class to include people in science and engineering, architecture and design, education, arts, music and entertainment, whose economic function is to create new ideas, new technologies or new content. Around this core the creative class also includes a group of creative professionals in business and finance, law, health care and related fields.

The key difference between working class, service class and creative class workers lies in what they are primarily paid to do. While working and service class workers are paid to execute according to plan, creative class workers are paid to create and have considerably more autonomy and flexibility to do so.

What are some of the key values, norms and attitudes that prevail in this class, and why do we find concentrations of creative class people in one location and not in another?

Florida identifies three basic value categories (4). Firstly individuality and self-statement rank high within the creative class. Resistance to conformity to organizational and group norms has become a pervasive value. The second important value is reward based on merit. Working hard, getting ahead based on abilities and effort, receiving respect of peers are the key motivating drivers for creative workers. While the amount of money made does not define the creative worker, it is an important factor in the sense that it may be looked upon as a marker of achievement. The third value strain is diversity and openness. While diversity may be an indication of meritocratic norms at work, I postulate it also indicates a welcoming attitude towards people of different backgrounds, and indicates an openness and interest in other viewpoints.

Lifestyle, social interaction, diversity, authenticity and identity are key characteristics of a place in determining whether or not it will attract creative workers. In contrast this is not believed to be dependent on the location of businesses or other infrastructural elements. The power of any place is determined by what is there (the combination of built and natural environment), who is there (diversity of people, access to communities) and what’s going on (street life, café culture, arts, music and people engaging in outdoor activities).

Florida (5) summarizes his analysis in his so-called human capital theory, which states that, in order to attract creative people, and generate economic growth through innovation, a place must have the 3 T’s: Technology, Talent and Tolerance. Not only is it important to have a high concentration of (high) tech firms, but it is equally important to have a large pool of talent (people with a Bachelor’s degree or higher). Florida’s findings show that both innovation and high-tech industry are strongly associated with locations of the creative class and of talent in general.

Attracting Creative Talent Abroad

The countries I am considering in this essay are in very different stages of their economic development. Earlier on in this essay I have argued that innovation power for certain countries (example Singapore) has already become a key competitive advantage, where in other countries cost competition still provides enough potential to increase the standard of living of it’s citizens (as, in my view, is the case in China).

One characteristic of the five mentioned countries, is that the state plays a key coordinating role in focusing efforts in economic development in certain areas and not in others. The so-called development state has played a key role in bringing the standard of living up to the level at which it is now. Investing in the creative industry in these countries can be regarded as a (more or less) conscious choice, and is not something that just develops.

I am emphasizing the pivotal coordinating role of the state for South East Asia because firstly the need for developing innovation power needs to be recognized by the state before I see any steps being made in this direction. Secondly, the quickest way to get the necessary talent pool available is to attract creative talent abroad. The idea of attracting creative talent and cross-fertilizing knowledge and skills to local people is a very valid one. One of the disadvantages though is that these creative workers need to be willing to come, and that their stay in general does not exceed 2-3 years or so.

Whether or not creative workers from the West are willing to relocate to Asian countries for a while depends on whether they feel they can benefit and learn from the experience. This goes back to the values Florida describes as individuality, merit and diversity and openness. Secondly the power of place will be a determining factor. Will the (mostly Western) creative worker be able to find the lifestyle, social interaction, diversity, authenticity and identity he or she is looking for in these Asian countries?

While certainly in the group of creative professionals for instance Singapore has been able to attract enough creative talent, I question whether the same willingness is apparent in the creative core. Financial, Law, and Business Services professionals have indeed found it interesting to move to Singapore, however does the same hold true for musicians, game developers, architects and so on? I argue that for this set of creative workers the value set and the power of place are much more important than for the mentioned group of creative professionals.

Individuality, reward based on merit, diversity and openness are all values that I would call ‘western’ in the context of the Asian countries described in this essay. Conflict avoidance, reward based on seniority, and group cohesion are an integral part of the cultural mind set in South East Asian societies.

Looking at the elements of the power of place I can again conclude that the atmosphere one encounters socially in South East Asia, is very different from the western mind-set. Lifestyle, social interaction, diversity, authenticity and identity are concepts, which are given a different meaning in the South East Asian societies. State control over its population and public domain are to this date very real.

While in and of itself this ‘otherness’ to the West is something that will attract some creative workers, in many cases this otherness will be a repellant.

Bracken (6) mentions in his dissertation the often-blatant disregard for intellectual property in China, something which is much less prevalent in the rest of South East Asia. In a country where there is an old saying that ‘to steel a book is an elegant offence’, the role of piracy plays an important role, which to the creative worker does not indicate a respect for individual creations. Other countries, because of their colonial occupation or postwar close linkages to the west, have modeled their law systems according to western law systems.

In summary I have argued that the creative class in the way described by Richard Florida conveys largely western value sets and a western notion of what constitutes an ‘interesting’ place to live. In many cases the state still has a strategic and pivotal role in determining the direction of economic development for the countries mentioned. For a creative class to develop the state will need to see the benefit in building it, or the state will need to let this creative class develop naturally, which I will argue in the next section poses some difficulties.

Educating creativity “the Confucian way”

In this section I will argue that for creating a home grown creative talent pool it is necessary for the Asian society to adopt an increasingly western mindset, besides diminishing the role of the state as the driver for economic development.

Bracken (7) in his dissertation provides an explanation of philosophy of Confucius, who sought to guide people in how to live ethically. In his book The Analects Confucius outlines the five human relationships: parent and child, husband and wife, friends, old and young and ruler and subject. Interestingly, professional relationships are not considered by Confucius in his writings. Unlike religions, Confucius propagated no reward for living in this way, neither in this world nor in the next. This morality is then something that must be pursued for it’s own sake. Another conclusion I can draw from looking into Confucianism is that it has been around, and lived by, since 500 BC. In my view it will be very difficult to change this mindset, and will at a minimum take considerable time.

The Confucian mindset amongst the Chinese in South East Asia not only permeates society in general, it also influences the education system specifically. Anna Craft (8) mentions in her book on teaching creativity in Asian societies that also in education the focus is very much on conflict avoidance and group cohesion by emphasizing discipline and conformity to tradition, and the expectance to respect and obey elders / teachers.

Individuality, reward based on merit, and diversity and openness are values that are not really recognized, let alone nurtured in this way of living. Perhaps the combination of creativity and the Confucian way of living will lead to a new (Asian) interpretation of creativity, with accompanying value set, that will enrich the competitiveness of the Asian society in the global economy.

Lastly I would like to make some remarks on the role of the state in economic development. The development of the economies of particularly post war South Korea, Taiwan, China, and Singapore has been astonishing, and I do believe that the state has played a pivotal role in this development. Nationalistic projects to raise the standard of living of it’s population meant focusing efforts in a few key industries, mobilizing the working power of the population while pacifying their voices of criticism. Recently we have seen a relaxation of the role of the state in the sense that there is a gradual move towards letting growth and development happen ‘naturally’, with less state intervention. This relaxation of the role of the state will be beneficial for the development of a creative class and creative industries. One example of this is Singapore where the need to grow a creative class is perhaps most urgent. The government takes an increasingly relaxed stance against otherness in public life, and is now for instance allowing gay pubs to establish oneself in a certain area near China Town. This in an effort to improve the diversity of Singapore and enhance the power of place.

Summary and Conclusions

In this essay I have argued that the characteristics of the creative class as defined by Richard Florida are fundamentally western in origin. I have also argued that the competitive global economy has forced the developed western world to focus on innovation as a competitive advantage, as cost competition is no longer feasible. I have also argued that East Asian countries at some point will also need to invest in innovation as a competitive strategy, as other countries will take their role as low cost producers. The extent to which a creative class will develop will depend on whether the state recognizes the need to grow this innovation capacity, or on the extent to which the role of the developmental state is relaxed.

Attracting foreign creative talent from the creative core will be more difficult than attracting creative professionals from the creative finance, law, and business services industries. I have argued that both the creative value set as well as the power of place are important factors for a creative worker in choosing where to live. Asian culture, I argue, poses real barriers on both these two items.

In home growing a creative class I see the controlling role of the state on it’s population and public life, and the Confucian mind set of the population in South East Asia as important barriers. We have seen in recent years a relaxation of the states approach to ‘otherness’, this firstly under the influence of the increased standard of living in many South East Asian countries, and secondly under the influence of an increased awareness that society to a certain extent needs to find its own way.

Lastly, changing the education system, and society in general, to adopt a more western value set will be a very complex process, requiring time. At best I foresee a mixture between Asian and Western values, providing a new and interesting environment for the development of innovation power, and creativity.

Footnotes:

1 Manuel Castells, The Power of Identity, page 315

2 Richard Florida, The Rise of the Creative Class, page 5

3 Richard Florida, The Rise of the Creative Class, page 8

4 Richard Florida, The Rise of the Creative Class, page 77/78

5 Richard Florida, The Rise of the Creative Class, page 249

6 Gregory Bracken, Thinking Shanghai, page 187

7 Gregory Bracken, Thinking Shanghai, page 232/233

8 Anna Craft, Creativity in Schools, Tensions and Dilemmas, page 88

Bibliography:

– Gregory Bracken, Thinking Shanghai, A Foucauldian Interrogation of the Postsocialist Metropolis, TU Delft, Delft, The Netherlands, 2009

– Manuel Castells, The Network Society , Blackwell Publishing, Malden, USA, 2000

– Manuel Castells, End of Millenium, Blackwell Publishing, Malden, USA, 2002

– Manuel Castells, The Power of Identity, Blackwell Publishing, Malden, USA, 2004

– Anna Craft, Creativity in Schools, Tensions and Dilemmas, Routledge, New York, USA, 2005

– Richard Florida, The Rise of the Creative Class, Basic Books Publishing, New York, USA, 2002