Abstract
While the significance and effectiveness of patents in the chemical industry has been demonstrated in many industrialized countries, this study examines the role of the chemical industry and knowledge diffusion in building the innovative capacity of a nation in latecomer country Taiwan. The development of process innovation plays an integral role in the strategic industries of Taiwan, but few attempts have been made to address how the efficiency of process development can be enhanced. As a latecomer, Taiwan has built its national innovative capability on strategic industries such as semiconductors, consumer electronics and flat panel displays. Through patent data analysis, this study demonstrates the significant and indispensable role played by the chemical industry in technological interdependence and knowledge diffusion with other Taiwanese strategic industries. This study suggests that while the public resources of Taiwan are focused on accelerating the development of emerging sectors and technologies, the chemical industry serves as an effective linkage and catalyst in problem-solving. © 2006 Elsevier Inc. All rights reserved.