Comparative study on TNCs and technology spillovers completed

The first phase of a major UNU-INTECH study into the role of transnational corporations and foreign direct investment in building up technological capabilities of local firms in developing countries has been completed. The study, coordinated by Prof. Rajah Rasiah undertook extensive research in Africa, Asia and Latin America between February 2002 and August 2003. Case studies of seven countries - Indonesia, Malaysia, Brazil, Costa Rica, Kenya, South Africa and Uganda - examined differences in technological and performance indicators between foreign and local firms. The analysis covered six industries, namely; autoparts, textile and garment, food processing, machinery, metal and related engineering, pharmaceuticals and electronics.

The findings have been compiled into two books by Prof. Rasiah. The first, titled "Foreign Firms, Technological Capabilities and Economic Performance: Evidence from Africa, Asia and Latin America", presents the case studies and is published by Edward Elgar. Researchers that contributed to the country case studies are: Geoffrey Gachino (Kenya), Thabo Gopane (South Africa), Henry Tamale (Uganda), Ganesh Rasagam (Malaysia) and Jorge Monge (Costa Rica).

A second book, "Network Trajectories, Technological Intensities and Economic Performance: A Study of Foreign and Local Firms in Africa, Asia and Latin America", is a synthesis of the results, in order to paint a broader picture of emerging trends and implications for learning and innovation in developing countries. Whereas the first publication focuses on ownership differences within economies, this book examines the influence of institutional and systemic variables on firms' technological intensities and economic performance.

A follow up study is underway to examine differences in technological capabilities and economic performance between foreign and local firms in four developing economies at varying stages of industrial development - Cambodia, India, Malaysia and Sri Lanka. The study has refined the analytical framework employed in the first study and incorporated arguments from the newly emerging evolutionary theory. Prof. Rasiah employs the new framework to compare the technological, local sourcing and performance dynamics of foreign and local firms in the auto parts, electronics, oil palm, rubber products, textile and garments, and pharmaceutical industries. The results are expected to strengthen further the importance of systemic and institutional governance in stimulating FDI-related learning and innovation synergies in developing economies.

The study is funded by UNU-INTECH, with supplementary funds from the World Bank , DFID and OECD . Partner institutions supporting the on-going field research are: The Asia-Europe Institute at the University of Malaya, Kuala Lumpur; Institute of South Asian Studies, New Delhi; University of Cambodia , Pnom Penh; Institute of Policy Studies , Colombo.