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This paper aims at investigating the impacts of
Taiwan*s governmentinnovation policies on the development of
the petrochemical industry. Ananalytical model was
established for evaluating the effectiveness of
theinnovation policy for the industrial development. This
model was assimilatedfrom five major theories, namely, Porter''s
"Competitive Advantage of Nations",Freeman''s "National
Innovation System", Carlsson''s "Technological System",
Rothwell and Zegveld''s "instruments of assessing innovation
policy", and theconcept of critical success factors in
industrial competition. To verify the
validity of this model, we investigated the impact of
policyinstruments on the development of the petrochemical
industry. This modelhelped correlate government*s innovation
policies and economic performance.The results show that there
is an interdependency between global industrytechnology and
national technological infrastructure, and this
interdependencyinfluenced the effectiveness of national
innovation system, the key successfactor at the firm level,
resulting in economic growth of the industry. It was
found that there was a correlation between national
innovationsystem and KSFs of the firms in the industry. The
critical policy instrumentsfor the development of Taiwan*s
petrochemical industry were the financialsystem, factor
conditions, and the private R&D organization in
nationalinnovation system and these factors affecting Taiwan*s
petrochemical firm*sKSFs such as production and procurement
of raw materials, capability ofproduction process, efficiency
of production, and capabilities of verticalintegration.
It was assumed that there was a link between global and
nationalindustrial technology developments,and the linking
mechanism the nationalinnovation system, which included
the government policy, nationaltechnological
infrastructure, and national competitive environment. It is
thenational innovation system that strengthens the competitive
advantage of thefirm, leading to the industrial growth. It was
also found that the success ofindustrial development depends on
the establishment of KSFs, which in turn area function of both
government*s innovation policy and industrial structure. Itis
those policies that help establish industry*s KSFs, and
strengthenindustrial structure, and contribute most to the
successfulness of industrialdevelopment.
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