Persistent Developmental Limits to Devising Policy Innovation for Innovation Policies in Emerging Economies

Promising industrial profiles of Southeast Asian emerging economies have met their developmental limits in the face of the Asian Financial Crisis in the late 1990s. However, following the crisis, they have not been successful in upscaling the technological competitiveness of their industries. By applying the national innovation system approach originally developed in advanced western economies as an institutional mechanism of policy innovation in light of developmentalism, I seek to explain these persistent developmental limits in Malaysia and Indonesia. My qualitative research examines literature discussing policy coordination mechanisms in innovation policies and policy documents containing coordination mechanisms involving firms, universities, and government agencies; then, how these issues implicate innovation policies in the two countries. I employ a comparative institutional analysis between them focusing on institutional characteristics of the national innovation systems, specifically their institutional obstacles occurring within development paths amidst prevailing political environments. I suggest that persistent developmental limits in Malaysia and Indonesia result from systemic failures of achieving developmental aims regardless of their politico-administrative regimes. Existing institutional frameworks of the national innovation systems, entrenched in the socio-economic prevalence of the two countries, have not fit the nations’ developmental aims pursued upon innovation upgrading.

Southeast Asian countries are diverse in many ways which prevents them from being generalized as a similar or simplified model of polity and governance (Hill, 2014). Croissant  (Göbel & Maslow, 2013;Shair-Rosenfield, Marks, & Hooghe, 2014).
Yet, neither Malaysia nor Indonesia has been recognized as an entrepreneurial state or a developmental one (Carney and Witt, 2014). The two countries, however, have made institutional changes of the state to some extent. Both countries have also promoted entrepreneurship to advance the growth of the small-and medium-sized enterprises (SMEs) under their condition of high dependency on foreign direct investment (FDI), low-end technology used, and pressures to face in regional and global free-trade competition (Pepinsky, 2012).  (Rasiah, 2011;Thee, 2006 (Johnson, 1982). The institutional framework of government-firm-university relations has taken a central place in the national systems of innovation approaches. Its complexity has been recognized since early studies (Edquist, 1997;Freeman, 1987;Groenewegen & van der Steen, 2006;Nelson, 1993). Experiences of technology-heavy industrial buildings and developments in advanced economies have underpinned this sophisticated conception with Japan as a departing case studied by Freeman (1987) in formulating the approach, which can also be traced back to List's (1856) "national system of political economy" that emphasized coordination of nurturing complexities of national productive power amidst societal conflicts in a developed economy. Related to the micro-level process, innovation dynamism at an empirical situation is driven by interactive learning between actors (Lundvall, 1992).
All of those theorizations mentioned above suggest that the system of innovation approach has offered a new, nonlinear, and systemic lens in addressing innovation affairs, spanning from financing and managing to cluster and governing issues (Godin, 2009;Kastelle, et al., 2009).
This national system of innovation approach implies that there are developmental limits to countries' capability to achieve their desired developmental goals. Countries attempting developmentalism through a similar path to former Japan and Korean regimes strive to boost their economic development by harnessing hightechnology, knowledge-driven industrialization, including commercialization and export of the end-products to other countries, to be competitive against other countries in regional and global supply chains. This developmental orientation and patterns require an institutional setting that guarantees strict policy discipline.
Upon possessing distinguished-monopoly or oligopoly-rights and concession in the industrial fields and marketplace granted by the government, the firms are obliged to achieve overarching hightechnology industrial policy goals desired by the government. Any underachievement would lead to consequences, from revoked rights and concessions to the disestablishment of the firms. The policy discipline as an ingredient is a glass-ceiling that any countries following this developmentalist path are required to put into effect strictly, otherwise they will suffer from failed efforts. Therefore, it also implies a sort of developmental limit, as Pepinsky (2012) and Carney & Witt (2014) suggest, in terms of insufficient institutional capabilities to achieve desired developmental goals within which the government and firms interact upon industrial innovation generating activities.
Addressing the developmental limit, existing literature (see, for instance, Carney & Witt, 2014;Pepinsky, 2009;Tipton, 2009) (Kastelle, et al., 2009;Sartika, 2019;Teixieira, 2014;Zanello et al., 2015). Nevertheless, these are not necessarily the case in policymaking processes (Fagerberg, 2016;Meissner, et al., 2016). The numbers of policy-related studies have recently decreased (Teixieira, 2014). In contrast, different types of coordination mechanisms underpinning policy innovations have in particular been a missing issue in mainstream research on innovation systems and innovation policies (Andhika et al., 2018;Magro, et al., 2014;Watkins et al., 2014). The national innovation system is intrinsically political (Carayannis & Campbell, 2014;Watkins et al., 2014), for it initially is conceptualized in terms of and provides an institutional framework for coordination and negotiation across actors for innovative policies affecting innovation policies between governments and firms (Metcalfe, 1997). In this regard, the state manifests its coordination capability by providing a suitable institutional framework and conditional support for the private sector to innovate (Wade, 2003).
An institutional framework serves to maintain policy coordination while preventing dilemmas of being trapped in a state predatory system and captured by the private sector (Haggard, 2015;Springer, 2009). Thus, regardless of the political regime types, the ability of the bureaucracy to enforce the private sectors represents specific state capacities insulated from the market. However, this role is also embedded in a constructed social system of institutional changes (Evans, 1995). Consequently, systemic innovation processes and policymaking activities are mutually shaping one another (Foxon et al., 2004). Interactions between actors and their institutional environment make a national innovation system socially embedded in political and economic institutions (Fagerberg & Verspagen, 2009). An orientation to collaboration between actors deals with formal and informal rules in an institutional framework that reflects knowledge and bargaining positions between actors in an innovation system (Ebner, 2008;. In this circumstance, actors remake choices and realign their interests to each other by modifying the institutional environment to enhance economic performance (Bates, 2014). Applying a coherent national innovation system can be successful when coordination stems from commitments by and contributions from various innovation actors; they do not come solely from or are predominantly directed by a government (Cai, 2015;Boland et al., 2012). As a collective action, interactions between industries, universities and research institutes, and government agencies in coordination and giving feedback to each other consequently need a political system that enables them to do so (Carayannis & Campbell, 2014).  (Soumitra, et al., 2015).

My analysis is
Malaysia merits a very good proportion of innovation sectors, between knowledgeintensive sectors, such as electronic products, automotive manufacturing, telecommunication, and the agricultural sector, which has earned a very high profile of research (Rasiah, 2008;. The open economy of Malaysia, through the escalation of knowledge-intensive exports, plays a significant part in regional and international supply-chain electronic commodities (Rasiah, 2015).
The country has neither shown innovativeness nor competitiveness in regional and global economies, despite notable economic growth and its political transformation (Tijaja & Faisal, 2014;Degelsegger et al., 2014). Although it has successfully maintained its economic resilience throughout the crises, Indonesia's annual gross domestic product has slightly decreased from Tracing back industrialization processes, the rapid industrial growth in Indonesia had begun since the oil boom period in 1970s through trade liberalization and foreign investment, enabled by import-substituting policies toward a stateled initiative to harness large-scale industrial manufacturing projects (Tijaja & Faisal, 2014;Thee, 2006). However, the end of the oil boom period in the early 1980s had forced Indonesia to tighten its fiscal policy in financing the previous initiative and begin to concentrate on exportpromotion policies in cooperation with big firms.
As a result, offering protection, subsidies, and various political favours to domestic and foreigncontrolled firms have expanded exports along with the growing manufacturing as the leading technology-heavy sector at that time (Thee, 2006).
Nevertheless, without policy discipline imposed on these private sectors, Indonesian economic growth was not sustainable in the 1990s and subsequently collapsed from the 1997 Asian Financial Crisis (Pepinsky, 2009;. Indonesian import activities to date are superior to exports in terms of their proportion to the GDP; the latter still relies on natural resources, marking the absence in the regional and global supply chain of technology-intensive industries (Aswicahyono & Hill, 2014;Shetty et al., 2014). Following the initial establishment of the Indonesian national innovation system in 2002 and subsequent science and technology policies (Lakitan, 2013), the government has furthermore attempted to boost its national  (Tijaja & Faisal, 2014;Martini et al., 2012).

Persistent Developmental Limits to Devising Policy Innovation for Innovation Policies
The industrial clustering problems have continued even though the government attempted institutional delineation of the innovation system in regional space like Indonesia's Science and Technology Park (ISTP)/ PUSPITEK built in 1976, the new Bandung Raya Innovation Valley (BRIV), as well as the existing "Jabodetabekjur" regional collaboration which are also still fragmented (Soenarso et al., 2013;Yananda et al.,2017). The

Jabodetabekjur comprises interlinkage across
Greater Capital Territory Jakarta, and adjacent cities and regencies: Bogor, Depok, Tangerang (and the new formed Tangerang Selatan), and Cianjur; and this regional cooperation has proven unsuccessful to date in coping with urban socioeconomic challenges in this megalopolitan region.
Therefore, this large-scale, cross-territorial cooperation failed to provide a conducive ecosystem for breeding prosperous technology and innovation. It has not come close to solving its fundamental problem, for which it was formed in the first place.
The efficacy of Indonesian NIS is once suggested by Lakitan (2013) (Moeliodihardjo et al., 2012;Putera & Jannah, 2012). Recent business permit and investment service reforms implemented by the government have also not sufficed to improve the ease of doing business (Shetty et al., 2014).

Discussions
The findings of empirical evidence in  Edquist (1997;2005 (Basri, 2013;Hill et al., 2012). In addition, an impediment to the growth of innovation and entrepreneurship comes from the state regulations that create a high barrier to market entry (Touchton, 2015), while any significant efforts to ensure the regulations are effectively enforced are missing.
Against considerable economic growth of Southeast Asian middle-income economies, policymakers have seemed to attempt to make credible commitments with firms and investors that compensate adequate political institutions in enforcing the rule of law (Touchton, 2015).
However, problems in applying the national innovation systems in the two countries persist, for they are reinforced by the prolonged Malaysian political transition (Ufen, 2013) and the entrenched political stagnancy in the Indonesian state institutions (Mietzner, 2015).  Haggard (2015), and Kohli (2004). Thus, this concern raises a need for a further translation into a coherent institutionalized governmentbusiness relation embedded in a social system that affects technological innovation for economic development.