By Rajah Rasiah
With contributions from Geoffrey G. Gachino, Jorge Monge, Henry Tamale, Ganesh Rasagam and Thabo Gopane

Published by Edward Elgar , 2004
ISBN 1-84376-986-7, 240 pages

‘This book fills an important gap in the literature on foreign direct investment and economic development. Based on an excellent review of existing theories, comparative case studies from Africa, Asia and Latin America explore diverse approaches that developing countries can use to benefit from the presence of foreign firms to improve technological capabilities and economic performance. A must read for students interested in contemporary pathways to industrialization.'
– Dieter Ernst, East-West Center, Honolulu, US

This book employs novel techniques to compare technological capabilities and economic performance in seven countries at varying stages of industrial development: Brazil, Costa Rica, Indonesia, Kenya, Malaysia South Africa and Uganda. The author uses a methodology drawn from the technology capability framework, but extensively adapts and simplifies it to extract common cross-industry parameters for statistical analysis. He employs the framework to compare the technological, local sourcing and performance dynamics of foreign and local firms in a variety of industries.

The results offer a common synthesis and fresh ideas on the importance of foreign firms in technological capability building and economic performance in developing countries. They reveal that although foreign firms tend to enjoy higher human resource and process technology capabilities in the most underdeveloped economies, in the more advanced nations this comparative advantage is significantly eroded. The author shows how the institutional and systemic strength of a country can help to explain the level of participation of foreign firms in R&D activities. He also identifies domestic and regional markets, infrastructure, incentives, natural resources and human capital as important factors in stimulating significant R&D investment by foreign firms.

The interesting and well-written book presents an original examination of the dynamic relationship between foreign firms, technology, innovation and economic performance in Asia, Africa and Latin America. Academics, policymakers and NGOs interested in development economics, technology policy and trade will find this to be a extremely valuable resource.