This essay reports on a development of a comprehensive model for analyzing the effectiveness of government innovation policy for industrial technology development, particularly for developing regions. This model intends to characterize Taiwan's Regional Innovation System (RIS) and Industrial Innovation System (IIS), and the industrial portfolio. While the RIS and IIS systems were crafted to identify the critical relationships between the RIS and industry's key success factors (KSFs) that contribute to firm's competitiveness and economic growth, the model of industrial portfolio was aimed to characterize Taiwan's industrial structure. This model provides the government with a systemic thinking that helps policymakers formulate a group of optimized policies that match the true demand of the industry. The RIS model integrates five relevant theories, namely, Porter's Regional Diamond System, Freeman's "Regional Innovation System", Carlsson's "Technological System", Rothwell and Zegveld's "Instruments of Assessing Innovation Policy", and the concepts of the Regional Industrial Portfolio and the critical success factors in industrial competition. This model assumes that, for developing regions, there are three key elements in the RIS, namely, government policy instruments, regional technological systems, and regional innovation environment. While Porter's. National Diamond System is chosen to represent regional innovation environment, Carlsson's "Technological System" is used to diagnose the effectiveness of the regional capability of technological system. The function of the government policy is to act as a facilitator and promoter to strengthen the Diamond and the technological systems. It is also assumed that the RIS is the predominant component that nurtures and promotes firm's competitiveness, leading to economic growth in the global market. For the model of regional industrial portfolio the work aims at constructing a model, for analyzing region's industrial structure, especially for developing regions. Traditional concepts of competitive advantage emphasize the important factors that affect its regional innovation environment, and thus competitiveness. Nevertheless, this study argues that, for developing regions, governments' supports should be based on the life cycle stages and technology capabilities of the firms in the industry, and the best policy practices should be designed in such a way that matches the region's capability and operating environment for innovation. This model was then used to study the Integrated Circuit (IC) industry. of Taiwan. The results show that there is interdependence among technological system, regional environment, KSFs, and industrial portfolio of the industry. The successfulness of the industrial development depends on the strengths of firm's KSFs, which in turn are determined by both government's innovation policy and industrial innovation system; or Taiwan's RIS. Those innovation. policies those that help nurture industry's positioning and associated KSFs for "Operational Excellence" and "Customer Intimacy", and strengthen the RIS, are the major contributors to the successfulness of industrial development.
