Competitiveness, FDI and Technological Activity in East Asia

Competitiveness, FDI and Technological Activity in East Asia

Edited by Sanjaya Lall and Shujiro Urata

This book addresses this imbalance with new country studies on the interaction between foreign direct investment (FDI) and technological activity in building export competitiveness. The book covers China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand, highlighting different strategic approaches to building capabilities in industrial enterprises. The book also includes a general overview and studies of Japanese multinationals overseas.

Chapter 2: Foreign direct investment, technology development and competitiveness: issues and evidence

Sanjaya Lall

Subjects: asian studies, asian business, asian innovation and technology, business and management, asia business, international business, economics and finance, international business, innovation and technology, asian innovation, technology and ict


Sanjaya Lall1 This chapter provides the conceptual and empirical setting for the country studies on foreign direct investment (FDI), local technology development and competitiveness. International competitiveness is more than ever before at the core of industrial success, and it is taking new forms. Trade liberalization is forcing enterprises to face unprecedented global competition in domestic as well as foreign markets. The falling ‘costs of distance’ make this competition more immediate and intense than in the past. Rapid technical change forces producers constantly to upgrade their process technologies and introduce new products. It also changes patterns of trade, with product segments based on research and development (R&D) growing at the expense of less technology-intensive segments. Innovation itself is more costly and often more risky than before, with continuing high concentrations of advanced R&D spending by country and enterprise.2 As a result, there is greater inter-firm and cross-national collaboration and networking in innovative effort. One important consequence of liberalization and technical change is that technology and capital are far more mobile than before. This allows economic activity to be organized more rationally across national boundaries, with production linked across countries and functions and processes previously located together now separated and placed in far-flung sites to take advantage of fine cost, capability, logistic and market differences. Some of these changes in location and organization take place under market forces, with independent enterprises linking up in arm’s length contractual relations. Others take place in a hierarchical manner, with...

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