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Factors determining supply linkages between transnational corporations and local suppliers in ASEAN.

By Hafiz R. Mirza and Axele Giroud

Abstract

NoA significant potential beneficial impact of foreign direct investment arises from a foreign affiliate's propensity to purchase inputs from suppliers in the host economy. This issue is of particular interest where the host is a developing country and the linkage is likely to contribute to the development of local suppliers. We compare variations in local input linkages across four countries: Cambodia, Malaysia, Thailand and Viet Nam, all member countries of the Association of South-East Asian Nations (ASEAN). Using multiple linear regressions, our findings indicate that the degree of local input linkages is highest when foreign affiliates perform a strategic role in the transnational corporation network and are embedded in the host economy. Non-firm factors are also important determinants, especially the industry of investing firms and the existence of a supply base. Building on the findings, a series of policies to enhance supplier-foreign affiliate linkages are proposed

Topics: Transnational corporations, Supply linkages, ASEAN, Regionalisation, Electronics industry, Garments industry JEL
Year: 2006
OAI identifier: oai:bradscholars.brad.ac.uk:10454/3287
Provided by: Bradford Scholars
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