Competitiveness, FDI and Technological Activity in East Asia (original) (raw)
It is often believed that transfer of technology and know-how resulting from foreign direct investment (FDI) goes beyond the actual projects undertaken by foreign investors and, spills over to domestic firms affecting their knowledge base and productivity. This paper is an endeavour to investigate the existence of spillovers and their impact on the innovative performance of domestic firms active in the manufacturing sector of India. By employing data on FDI by industry and merging it with information on time-variant buyer–supplier linkages obtained from a series of national input–outputs tables, the study develops intra-industry and inter-industry measures to capture the effects of FDI on innovation performance of the incumbent firms' active in the same sector as the MNC and in upstream and downstream sectors. The econometric analysis after accounting for endogeneity issues reveals that FDI has a moderate impact on innovative performance of firms residing in identical industries. However, impact on the innovative performance of firms in supplying sectors appears to be statistically strong.
Technological Capability as a Determinant of FDI Inflows - Evidence from Developing Asia & India
2007
During 2006-07, FDI inflows into India were more than double than those in 2005-06. Indeed, during April-January 2006-07, inward FDI into India at US$16.4 billion, was far higher than the annual average inflow of US$2-3 billion during the late 1990s. In recent years, India has also emerged as one of the leading FDI destinations in Asia. On the whole, the pattern of FDI inflows to developing Asia itself has changed significantly over the years. Some leading Southeast Asian economies (for example, Malaysia, Indonesia, Thailand and Philippines) no longer attract as much FDI as they used to in the past. This is in sharp contrast to some East and Southeast Asian economies that continue to draw large FDI (for example, China, Hong Kong and Singapore). In the above context, this paper attempts to explain the country-wise variations in the pattern of FDI flows to developing Asian economies by empirically identifying locationspecific features influencing such flows. The paper argues that some...
High Tech Competitiveness: Spotlight on Asia
Beginning in the late 1980's the Technology Policy and Assessment Center (TPAC) at Georgia Tech has been measuring the capability of nations to compete in technology-enabled exports. The resulting "High Tech Indicators" (HTI) contribute to the U.S. National Science Foundation (NSF) Science & Engineering Indicators. 1 Our focus has been on the rapidly industrializing countries; we include a number of highly developed countries as benchmarks.
In view of the economic liberalization process taking place with great speed in a large number of developing countries, the question of attracting foreign direct investment (FOI) has come into sharper focus. In fact, policy makers now consider FDI inflows as an index of the effectiveness of their international business regimes. This paper examines and analyses evidence pertaining to FOI in some low-income emerging economies of Asia. It is argued that the process of opening up of an economy creates external pressures to enhance competitiveness. This kind of pressure is actually in the interest of the country seeking to compete in international markets. Based on evidence, the paper goes on to identify the determinants of FDI in some oft-quoted low-income countries of Asia. While most of the determinants identified in the paper are in line with conventional wisdom, it is argued that their hierarchical importance is context specific.
JDE (Journal of Developing Economies) , 2017
High-technology product is highly depend on science and technology innovation that leads to renewal or improvement of products and services. Foreign direct investment has spillover effects in the form of transfer of foreign technology, managerial capabilities, and improved international competitiveness for domestic companies. The objectives of the study is to analyze the impact of innovation and Foreign Direct Investment (FDI) on the export of high-technology products Asian-10 countries. This study utilize the gravity model framework and panel dataset from 10 countries in Asian and 29 trading partners country with the period from 2006 to 2013. The results show that innovation of exporter countries, FDI of exporter and importer countries, as well as the interaction between FDI and innovation of exporter countries have a positive and significant impact, and the interaction between FDI and innovation of importer countries have a negative and significant impact on exports of high-technology Asian-10. In this study also found that the innovation of importer countries do not have a significant impact on the export of high-technology products Asian-10 countries from 2006 to 2013
Technological dynamism in Asia
Research Policy, 2003
We analyze innovation in emerging and newly industrialized economies over the past 30 years, with the emphasis being on Asian economies. We use US patent data to study how the innovative capabilities of Taiwan, Korea, Hong Kong and Singapore have expanded in relation to emerging economies in Asia and Latin America. We then carry out a sector-level analysis of innovation for Korea, Taiwan, Singapore, Hong Kong, India and China. We also study the relative importance of foreign multinationals, business groups, individuals, domestic firms and research institutes in innovation. Finally, we study the overall concentration of innovative activity in Asian economies.
FDI and Innovation as Drivers of Export Behaviour: Firm-Level Evidence from East Asia
SSRN Electronic Journal, 2000
This paper examines the links between ownership, innovation and exporting in electronics firms in three late industrializing East Asian countries (China, Thailand and the Philippines) drawing on recent developments in applied international trade and innovation and learning. Technology-based approaches to trade offer a plausible explanation for firm-level exporting behavior. The econometric results (using probit) confirm the importance of foreign ownership and innovation in increasing the probability of exporting in electronics. Higher levels of skills, managers' education and capital also matter in China as well as accumulated experience in Thailand. Furthermore, a technology index composed of technical functions performed by firms emerges as a more robust indicator of innovation than the R&D to sales ratio. Accordingly, technological effort in electronics in these countries mostly focuses on assimilating and using imported technologies rather than formal R&D by specialized engineers. JEL Codes: F23, O31, O32, L63, O57 . I am very grateful for comments from Pierre Mohnen, Peter Petri, Garry Jefferson, Xingmin Yin and for research assistance from Rosechin Olfindo. I would also like to thank other participants of The Second Conference on Micro Evidence on Innovation and Development (co-organized by UNUMERIT and Renmin University in Beijing) and the International Conference on Investments, Technology Spillovers and East Asian FTAs (co-organized by Fudan University and Brandeis University in Shanghai). The views expressed here are solely mine and not to be attributed to the ADB. 4 5 I.
South–South FDI and Development in East Asia
SSRN Electronic Journal, 2000
This paper attempts to measure the size of South-South FDI in developing East Asia and the trends in it, and the characteristics of the investing countries and the investments themselves. It also summarizes the findings of studies in individual countries of the effects of these investments. The studies of individual countries will be used to try to find some consensus on differences between South-South FDI and North-South FDI. Among the comparisons of the two types of FDI we try to summarize are be findings about their industrial composition, their effects on their host countries and their host-country firms' productivity, wages, and employment, and how these differ across industries.
Technological Upgrading in East Asia
2017
There has been considerable discussion on the drivers of economic growth in East Asia. While most studies recognize that capital accumulation and macroeconomic management were critical in hastening growth, few have examined systematically and comparatively how policy frameworks – spearheaded through selective interventions – stimulated technical progress and the different performance outcomes achieved by these countries. This article attempts to address the gap by systematically analyzing the investment regimes, sources of finance, technological upgrading and policy frameworks of Indonesia, Malaysia, the Philippines, South Korea and Thailand with a view to explaining their economic growth performance.
Innovation in East Asia: Editors' Overview
Asian Economic Policy Review, 2015
Innovation is attracting a lot of attention from policymakers. Policymakers' increased interest in innovation stems mainly from the recent slowing down of economic growth, which is experienced by many economies. Faced with an economic growth slowdown, policymakers think that innovation is a key to recover from the economic slowdown and to achieve sustained economic growth. It should also be noted that the business sector has always had a keen interest in innovation, as innovation plays an important role in improving the competitiveness of the firm. The world economy has been slowing down since 2010 after achieving a recovery from the global financial crisis. East Asian economies, which performed favorably compared with the rest of the world, were not exceptions, as their economic growth rates have also been on the decline. Middle-income East Asian economies, including China, Malaysia, Thailand, and Indonesia, which recorded high economic growth in the past, appear to have now fallen into a "middle-income trap," as they find it difficult to reach high income levels. Japan and the Asian newly industrializing economies (NIEs) (Korea, Taiwan, Hong Kong, and Singapore) overcame the middle-income trap and have been able to join the high-income country group, but their economic performance has been quite lackluster. There are several common factors that are responsible for the economic slowdown in many economies. One is sluggish investment, which is attributable to the cautious attitudes of investors and financial institutions. Another factor is the aging of the population, leading to a decline in the proportion of the productive population in the total population. Faced with sluggish investment and demographic change, policymakers in many economies find that an increase in productivity, more specifically total factor productivity (TFP), is the only way to achieve sustained economic growth. They believe that innovation is a key to increase TFP. Innovation generally means the creation of a new idea, technology, product, or process, which generates new value. As such, innovation is a rather broad concept, compared with invention, which refers directly to the creation of the idea, technology, or product, but not a process. In the context of economic growth or development, innovation may be interpreted as an activity leading to an increase in TFP, which
U.S. and Japanese Foreign Direct Investment in East Asia: A Comparative Analysis
Policy Studies Journal, 2008
East Asia has led the world in economic growth and export expansion in recent decades. The phenomenal rate of economic growth among the so-called "four little tigers"-Hong Kong, Singapore, South Korea, and Taiwan-enabled them to achieve newly industrializing country (NIC) status in the 1980s, followed by Indonesia, Malaysia, and Thailand. Earlier studies explained the development from the government-led development paradigm, or the so-called the statist approach. Scholars also argue that foreign direct investment (FDI) played an important role in the economic development, thanks to technology transfers. Kojima and Ozawa and later Kohama, however, argue that Japanese FDI help East Asian economies while U.S. FDI do not because Japanese technology transfer practices are appropriate for East Asian countries but not the United States'. Thus, we revisit the issue of East Asian economic development and test the economic effects of FDI from the United States and Japan. Using a Barro-type growth model, we test the effects of FDI from the United States and Japan on economic growth in East Asian NICs. We find that FDI from both the United States and Japan helped economic growth in the "four little tigers," but not in Indonesia, Malaysia, and Thailand.
Foreign Direct Investment in East Asia
This paper surveys research on foreign direct investment (FDI) in East Asia. The pattern of FDI in the region has changed over time. Outward FDI from Asia began in earnest when Japanese multinational corporations (MNCs) shifted production to other Asian economies following the 60% appreciation of the yen that started in 1985. The major destinations for Japanese FDI initially were South Korea and Taiwan. However, as labor cost in these economies rose, Japanese FDI shifted to Association of Southeast Asian Nations (ASEAN) economies. MNCs from South Korea and Taiwan responded to the increase in labor costs by also investing in other Asian economies. Following the 1997-98 Asian financial crisis, China became a favored destination for FDI. As noted, one of the striking features of East Asian FDI is its complementary relationship with trade. The complementary nature of trade and FDI in Asia is partly due to the rise of regional production networks. Parts and components rather than final products are traded between fragmented production blocks. To understand the slicing up of the value chain, it is helpful to compare the production cost saving arising from fragmentation with the service cost of linking geographically separated production modules . This has been called "networked FDI" by . It is a complex form of FDI in which horizontal, vertical, and export platform FDI take place to differing degrees at the same time. The fragmentation strategy adopted especially by Japanese MNCs is to allocate production blocks across countries based on differences in factor endowments and other locational advantages. The paradigm example of this type of production fragmentation is the electronics sector, where parts and components are small and light and can easily be shipped from country to country for processing and assembly. In this sector, the quality of a country's infrastructure plays an important role in its ability to attract FDI.
The Effect of Foreign Direct Investment and Innovation on High Technology Product Imports In Asean 6
International Journal of Scientific Research in Science, Engineering and Technology, 2019
Current technological development changes the people's lifestyle becoming progressively modern. Technological development encourages the rapid digitalization that occurs in all countries. The incapability of a country to meet domestic demand for digital products that are closely related to high technology content drives the import of high technology products. On the other hand, the development of Foreign Direct Investment (FDI) is essential in order to support the development of domestic technology of a country due to its spillover effects. ASEAN 6 is a highly attractive for foreign investors as it has strategic location, large market share and abundant resources. This study examines the influence of FDI and innovation on imported high technology products in ASEAN 6. This research employed the panel data analysis from six ASEAN countries during the period of 2007 to 2016. The results of this study indicated that FDI and innovation have a positive effect on imports of high products technology in ASEAN 6.
Industry, Technological Progress and Development: The Case of Southeast Asia
International Journal of Advances in Management and Economics, 2020
Asian countries as Singapore, South Korea, Singapore, Taiwan, China, Vietnam, Malaysia, among others in the Southeast Asia and East Asia have been implementing industrial projects, which are accompanied by a clear process of progress and training human capital in terms of technology and innovation. These countries opted for development processes with a significant degree of direct or indirect state action, with strong investments in education and technology and innovation. This whole process would eventually promote an upgrade of these countries in terms of the system-world economy. Keyword: Asia, Technology, Innovation.
Competitiveness in India and China: the FDI puzzle
Asia Pacific Business Review, 2012
Given their growth records, large markets, and reformed economic systems, both China and India appear to be equally likely candidates for foreign direct investment (FDI). Yet, China has received substantially more FDI. The literature comparing FDI in these two countries is small, and does not provide conclusive evidence to explain this puzzle. Applying the Porterian framework of the competitiveness of nations to compare China and India, we garner evidence that differences in demand, factor conditions and firm strategy, structure and rivalry are not sufficient to explain the differential in the two countries' FDI flows. Differences in related and supporting industries, as well as Porter's other two factors-government and chance factors-are more compelling. We identify China's early entry into East Asian production networks in the 1980s as a key factor pushing China ahead of India in terms of FDI. We argue that this coincidental mix of timing and geography (Porter's 'chance' factor), pushed forward in China by establishing special economic zones, gave China a sustainable competitive advantage for the following two decades. What is implied from these findings is that China's FDI sources have been much larger and heavily slanted towards East Asia and manufacturing, while India, having missed this particular historical phase, needed to find an alternate route to development and global competitiveness. Competitiveness in India and China: The FDI puzzle