Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective

FDI has attracted increasing interest from developing countries because of the perceived benefits in terms of the injection of capital, technology and knowledge. This article analyses the main analytical underpinnings concerning the inter-relationships between FDI and host country economic development. We undertake a brief review of empirical studies on the issue of FDI-led growth process. We highlight a very basic point emerging from the literature, that FDI is not a sine qua non for development. FDI-led growth is not a process that occurs automatically in the host country, and this reflects the complex nature of the interrelationships between multinational enterprises (MNEs) and host country economic agents. A vast majority of the existing empirical studies indicate that FDI does not always make a positive contribution to either economic growth and factor productivity. This is often because host countries are not able to capture the bulk of benefits associated with FDI without a certain threshold level of absorptive capabilities.international economics and trade ;

Technology upgrading of middle income economies: A new approach and results

We explore issues of measurement for technology upgrading of the economies moving from middle to high-income status. In exploring this issue, we apply theoretically relevant and empirically grounded middle level conceptual and statistical framework based on three dimensions: (i) Intensity (ii) breadth of technological upgrading, and (iii) technology and knowledge exchange. As an outcome, we construct a three-pronged composite indicator of technology upgrading based on 35 indicators which reflect different drivers and patterns of technology upgrading of countries at different income levels. We show that technology upgrading of middle-income economies is distinctively different from that of low and high-income economies. Our results suggest the existence of middle-income trap in technology upgrading - i.e. countries' technology upgrading activities are not reflected in their income levels. Based on the simple statistical analysis we show that the middle-income trap is present in all three aspects of technology upgrading, but their importance varies across different aspects. A trap seems to be higher for 'breadth' of technology upgrading than for 'intensity' of technology upgrading and is by far the highest for the dimension of knowledge and technology interaction with the global economy. Finally, our research shows that technology upgrading is a multidimensional process and that it would be methodologically wrong to aim for an aggregate index

Determinant Factors of FDI Spillovers – What Do We Really Know?

Empirical evidence about FDI spillovers to domestic firms has provided mixed results. This global evaluation has recently been complemented with the analysis of the factors that determine the existence, dimension and sign of FDI spillovers. We survey the arguments that support these factors and analyze the empirical evidence already produced. FDI spillovers depend on many factors, frequently with an indeterminate effect. Absorptive capacity of domestic firms and regions are a precondition for incorporating the benefits of FDI spillovers. Concerning the remaining factors, the results suggest opposite effects or, in some cases, are still insufficient to legitimate decisive conclusions.productivity; spillovers; FDI; determinant factors.

Drivers and Impacts of R&D Adoption on Transport and Logistics Services

Actually, technologies and applications in industries are changing via business restructuring, new business models, new knowledge and supply chains. So R&D is not focused primarily on manufacturing industry as it used to be, but on different kinds of industries as logistics and transport (TLS). Nevertheless, the characteristics of the TLS industry determine the introduction of specific R&D solutions accordingly to sectors operations. The objective of this paper is to describe the R&D opportunities in the TLS industry and how managers use them to make their businesses more innovative and efficient. Using the Structure-Conduct-Performance (SCP) model the paper identifies the links between R&D adoption and innovation dynamics. Relating the findings, on the driver’s side there are three points that are worth mentioning: increasing market competition, the relationships of firms interacting with each other and the availability and quality of complementary assets such as employee skills and IT know-how. On the impacts’ side, firms advanced in terms of implementing R&D solutions are more likely to implement organizational changes. Finally, a set of recommendations on how to further improve the continuous innovation in the TLS industry is presented

Conceptualising an Organisational Innovation Capability

Innovation is regarded as the principal source of sustainable competitive advantage, yet many firms approach innovation haphazardly and without discipline. These firms appear poorly equipped to implement a comprehensive innovation strategy as they focus only on incremental innovation and are committed to preserving the status quo. A dynamic capabilities approach was selected because of its focus on the development of management capabilities. This research has answered the call for fine-grained qualitative case studies to look at the detail of how dynamic capabilities are deployed to better understand how these capabilities work in practice and whether and how they might differ across firms. By the analysis of three embedded business units in the one case organisation this research has opened the innovation “black box” and provided a capability framework for strategic managers to build, systematise and replicate within their organisations. It is a higher order capability which provides managers with the capacity to manage the component capabilities of the Organisational Innovation Capability framework together with their linkages and interdependencies to impact the firm’s existing resource base. It also identifies strategic entrepreneurship, organisational learning capability and alliance building capability as the essential preconditions for innovation capability renewal. In summary, this research is part of the increasing momentum in understanding the “how” of dynamic capabilities. It provides learning for management practice on how dynamic capabilities originate, how firms built and deployed their Organisational Innovation Capability and how distinctive processes support the creation, modification, reconfiguration and augmentation of firm resources to achieve competitive advantage. Most importantly, it has provided a framework for an Organisational Innovation Capability which can be applied in practice

Knowledge Management through the Lens of Innovation and Labour Productivity in a Knowledge Based Economy

The 21st century brings along the recognition for the necessity to understand and measure the activity of knowledge management, for which reason organizations and system organizations, together with decisional governmental factors, do their best in order to develop policies that would promote these benefits. Knowledge management (KM) implies any activity regarding the capture and the diffusion of knowledge within the organization. In our study we analyze the impacts and dimensions of KM upon the innovation and labour productivity within the organization, and how KM affects the firm’s innovative performance. A key component of knowledge management is to provide access to stored knowledge components to improve decision making and to facilitate knowledge acquisition by the user.knowledge-based economy, knowledge management, knowledge, explicit and implicit knowledge, innovation, productivity, diffusion of knowledge

Innovation Policies for Small and Medium Size Enterprises in Asia: An Innovation Systems Perspective

The point of departure for this chapter is that in developing countries SMEs2 are responsible for the largest part of employment and a significant share of added value. And that innovation policy supporting the particularities of SMEs has been widely ignored (occasionally SMEs have even been discriminated). This chapter aims at shedding soe light on the immensely complicated issue of innovation policy for SMEs in developing countries, or more specifically Asian SMEs. The chapter applies the so-called regional innovation systems approach. In this paper, we analyze four clusters of SMEs that have been especially successful in entering the global market; special attention is paid to the so-called soft infrastructure, the industry specific needs for cluster (e.g. interaction) and RIS dynamics/polices (e.g. needs for devolution; industry specific needs for building knowledge creating institutions).The chapter is structured as follows. After introducing stylized facts on SMEs innovative performance attention is turned to the theoretical framework. Taking into account the localized nature of SMEs economic activity, our level of analysis is the regional system of innovation (RIS). We provide a general introduction, contextualize this to Asian situation, and introduce the industry differences (inspired by Pietrobelli and Rabelotti’s typology). Then we turn to the empirical section where special attention is paid to the four cases. Finally, we turn to drawing general conclusions on innovation policies and need for restructuring of Asian innovation systems (the accent is on the former).Innovation Policy; Developing countries; Innovation systems

Potential and realized absorptive capacity as complementary drivers of green product and process innovation performance

Nowadays, companies need to absorb new knowledge from external sources to grasp environmental issues. However, the internal mechanisms through which external knowledge is turned into green innovations remain scarcely addressed. Hence, this paper aims to investigate the relationships between the two dimensions of absorptive capacity (potential and realized) with green products and process innovation performance. This study contributes to the literature by disentangling how companies need to acquire, assimilate, transform and exploit external environmental knowledge to develop green innovations. To this aim, this empirical study is based on a sample shaped by 112 firms belonging to the Spanish automotive components manufacturing sector. The results provide evidence to show that potential and realized absorptive capacities are positively related to both green product innovation performance and green process innovation performanc

A framework for interactive learning in emerging technologies

Innovation is an interactive learning process which is of special interest for emerging technologies in which complex complementary knowledge from heterogeneous stakeholders is combined. In the emerging phase of technology development a lot of knowledge is tacit and can only be transferred face-to-face. At the same time a shared vision between stakeholders is being formed that acts as a driver for innovation. Although the importance of interactive learning is widely acknowledged, an adequate framework for studying interactive learning processes in emerging technologies is still missing. Therefore we formulated the leading research question: How to understand and conceptualize interactive learning in the context of emerging technologies? We did not only take the outcome of interactive learning into account, but also focused on opening the black box of the interactive learning process. We developed a framework based on characteristic elements of the interactive learning process in emerging technologies (i.e. prime mover, intermediaries, network formation and knowledge flows), influencing conditions (geographical, cognitive, regulatory, cultural and organisational proximity), and the outcome of the interactive learning process (single-loop and double-loop, tacit and codified knowledge). Clarifying examples are taken from the empirical field of the development of novel food products (functional foods).