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Paper short abstract

Digitalisation does not automatically produce technological upgrading. Using Thailand’s semiconductor sector, this paper argues that capability building occurs only when global upgrading opportunities align with domestic capacities to exploit them.

Paper long abstract

Digitalisation is widely considered a pathway for latecomer economies to develop productive capabilities and move into higher-value activities. Yet participation in digitally intensive industries does not necessarily generate technological upgrading. Many countries have attracted investment in high-technology sectors while remaining concentrated in lower-value segments of global production networks, with digital transition reproducing, rather than disrupting, patterns of technological dependency. The key questions are whether digitalisation leads to technological capability building or technological dependency, and under what conditions.

This paper examines these questions through the case of Thailand’s semiconductor sector. Despite growing investment and sustained policy support, Thailand remains concentrated in assembly, testing, and packaging activities, while higher-value functions such as chip design and wafer fabrication remain concentrated among lead firms and advanced economies. This concentration reflects not merely technological distance but the governance structures of global production networks.

The paper argues that digital transition creates opportunities for learning, but technological upgrading depends on the interaction between global production structures and domestic institutions. It proposes the concept of “double contingency”: capability building occurs only when opportunities for upgrading generated by global-sectoral dynamics converge with domestic capacities to exploit them.

The findings suggest that the key challenge for latecomer economies is not simply access to digital technologies, but the political-economic conditions that enable technological knowledge to be internalised and transformed into indigenous capabilities.