¹Department of Management Science, National Chiao-Tung University, Hsinchu, Republic of China

Correspondence: T-S Jan, Department of Management Science, National Chiao-Tung University, 1001 Ta Hsueh Road, Hsinchu, Republic of China.
E-mail: jts@cc.nctu.edu.tw

Received October 2002; Accepted April 2004; Published online 2 June 2004.

Abstract

Developing countries often nurture the automotive industry as a path to technological and economic development. Initially, the government often sets up policies to protect the industry, but eventually the industry must face global competition. The process of industrial development for developing countries is complex and dynamic because many roles are involved in the development process. This study analyses the characteristics of the automobile industry in developing countries and the structure of the automotive industry system in Taiwan to explore the system behaviour using system dynamics methodology. The study proposes a four-role model to identify the structure where consumers play an important and subtle role in the development process. The implications for international leading automotive firms, the survival strategies of domestic companies, and the policies for developing country governments are also discussed.