State firm coordination and upgrading

Generating sustainable growth and reaching advanced economy status Political economy; state depend on the ability of countries to host local, globally competitive activism; business firms in skill-, capital-, and knowledge-intensive industries. However, few government relationships; countries succeed. This paper asks whether state activism is necessary to industrial upgrading; late development foster economic transformation at high levels of complexity in the globalisation era, and if so, what strategies are effective. Using evidence from Spain’s and Korea’s ICT industries since the 1980s, the paper argues that state-firm coordination remains necessary to reach the efficiency frontier in complex industries. However, coordination has shifted from hierarchical structures to nonhierarchical models in which states and firms develop mutually agreed-upon working rules to reach beneficial outcomes. Nonhierarchical coordination may involve adopting different institutional configurations, depending on the identities and capabilities of firms and national governments and on the nature of linkages with other nations. These linkages may lead to alternative pathways to upgrading and diverse productive specialisations.