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Challenges and Optimization Strategies of Industrial Development Capabilities for Local Governments

Challenges and Optimization Strategies of Industrial Development Capabilities for Local Governments

Yuan-Fung Dai, Yu-Chueh Tien


The central government formulates national development strategies, promotes industrial innovation policies, and develops critical industries. The key to effectively achieving goals is the local governments’ capabilities to promote the development of local industries. This study adopts exploratory research to investigate the practical experience of local governments in promoting industrial development. The research questions include: What kind of capabilities are related to the promotion of industrial development by local governments? What challenges did local governments face in developing such capabilities? Which strategies can optimize them? Based on the literature, the author proposes that strategic capability, dynamic capability, resources and management capability, and policy capability constitute the industrial development capability of local governments. The semi-structured in-depth interview method was used to interview local officials with practical experience. This research finds that optimizing these capabilities can help drive local industry development. However, it is not easy for local governments to effectively promote complex industrial development alone. Many efforts require the support of the central government and external experts and scholars, and various models and strategies are used flexibly to interact, coordinate, and cooperate with internal and external actors. When the central government can pay attention to local opinions or needs, strengthening linkages, and joint participation, it will help promote critical national industrial policies. In the future, case studies can be used to explore the relationship between different capabilities, and based on the four capabilities, the capabilities evaluation and development tools can be made. The analysis results can provide reference to the central and local governments in industrial policy promotion, civil service training, intergovernmental cooperation, and policy communication.

Keywords: industrial development capability, strategic capability, dynamic capability, resource and management capability, policy capability