Windows of Opportunity for Catching Up in Formative Sectoral Systems: The Rise of China in the Concentrated Solar Power Sector

Catching-up is a process that has proven to be both highly complex and very time consuming in most cases. Countries often manage to close in but never quite overtake the global leaders in particular sectors. A recent contribution suggested that big shifts in relative competitiveness of incumbents and latecomer countries may occur when a sector experiences abrupt changes to either technological, market, or institutional characteristics (Lee and Malerba, 2017) . These have the potential of disrupting the status quo and provide a window of opportunity for catching up. Much of the current empirical basis for these observations was derived from relatively matured global sectors such as car manufacturing, steel making, or consumer electronics; sectors in which technologies, markets, and firm-level leadership have all relatively well developed. In formative sectors, the playing field, by definition, is decidedly more level for incumbents and latecomer countries, as most sectoral characteristics are more fluid. This is likely to influence the types of windows of opportunity, and the resulting possibilities for catching-up that could emerge. This article sets out to review the characteristics of mature versus formative sectors and how these influence barriers and opportunities, and further highlights what these differences mean for the potential for catching-up by emerging economies. This framework is applied to a case study of the global Concentrated Solar Power sector. It is found that that Chinese catch-up has been rapid, with strong technological capacities vis-à-vis global forerunners, potential inroads into global markets, and active participation by Chinese entities in determining global technical standards for CSP projects and components. Although this rapid rise required relatively strong domestic capabilities for industry formation, much of the apparent success and pace of China’s catching up in this sector can be explained as due to the formative nature of the sector. Particularly, the limited number of companies active in the global CPS sector, their ongoing recovery from financial difficulties resulting from earlier home market collapse (in the US and Spain), and the limited experience of the incumbents with decidedly different technologies demanded in current and future markets (notably tower type plants and molten salt receivers and storage), have provided a much more level playing field for Chinese latecomer firms to enter in and challenge leadership status in this sector. These results suggest that emerging economy governments should pay attention to formative sectors for the opportunities for path creating catch-up strategies they may provide. These may provide better opportunities for forging ahead and escaping the middle-income trap that is often associated with persistent gaps to a global technological forefront. Simultaneously, such formative sectors provide fewer transnational learning mechanisms typically employed in catching-up strategies, and depend to a greater extent on extant domestic capabilities. These strategies are also associated with higher risk as future technological pathways and market demand are difficult to predict. 1) Lee, K., Malerba, F., 2017. Catch-up cycles and changes in industrial leadership: Windows of opportunity and responses of firms and countries in the evolution of sectoral systems. Res. Policy 46, 338–351. https://doi.org/10.1016/J.RESPOL.2016.09.006