The Absorptive Capacities of South African Automotive Component Suppliers

Innovative firms in developing countries have the odds stacked against them in more than one way. They must contend with the objective difficulties of all sorts of capital shortages and deficient infrastructures. Highly-trained scientists, well-endowed labs, seed funding, and institutions that test and certify prototypes and protect the resulting intellectual property are few and far between in the South. They must also come to terms with global value chains in which for different reasons both multinational corporations and smaller, knowledge-intensive firms typically keep R&D close to home. And finally, they are up against the broad brush of academic thought on industrial development which essentially holds that because of the technology gap between developed and developing countries, innovation proper can only really happen in the North. Thus if innovative firms appear on the radar screen at all, they are likely to register but an errant blip, the exception to the rule, that do not warrant systematic analysis. This paper analyses the absorptive capacities of automotive component suppliers in South Africa. It shows that some firms design and manufacture innovative products, while others upgrade their technological capability or merely strive to attain execution competence. It suggests that the reason for the differential performance lies in the strategic use of advanced technical skills and the kind of learning about frontier technology engendered by R&D. It further discusses the ways in which foreign-owned technology is internalised more or less easily depending on whether or not it is controlled by multinational firms or by passive investors. Section 2 reviews the literature on absorptive capacities in developing countries. Section 3 discusses innovation and the technology frontier in the automotive industry, and Section 4 briefly outlines why this is relevant to firms in South Africa. Section 5 presents data and methodology. Section 6 discusses the findings. Section 7 concludes with suggestions for further research

Exclusive Safeguards and Technology Transfer: Subcontracting Agreements in Eastern Europe's Car Component Industry.

We study the rationale for the use of exclusivity to protect transfer of technology in subcontracting agreements. The legal possibility arises through the EU Notice on Subcontracting. Empirically, the link between exclusive agreements and technology transfer among firms in the automotive supply industry in EU candidate countries is surprisingly weak, although with exclusive-supply or exclusive-buying clauses in subcontracting agreements upstream transfer of technology is more likely. Exclusive agreements are often reciprocal, and are typically passed on. Downstream firms are more likely to face and use vertical restraints. Technology trickles upstream: Multinational final assemblers transfer more technology than lower-tier suppliers.vertical restraints: technology transfer; automotive supply networks; competition policy

Competition Compliance: Limits to Competition Policy Harmonisation in EU Enlargement

The paper analyses the extent of and the reasons behind limits to competition policy harmonisation in EU enlargement. Our focus is on vertical restraints. First, we compare the relevant legal regimes towards vertical agreements in the EU and in Eastern Europe. We then describe competition policy practice in all ten EU candidate countries and point out differences both between East and West and among the candidates. Finally, we examine a large database of inter-firm agreements in Eastern Europe's car industry and use insights from case studies of subcontracting to highlight instances of non-conformity between (1) East European competition law and practice and (2) EU rules and East European competition law enforcement. The conclusion recommends how to improve competition policy practice, and thus compliance, post-enlargement.antitrust law; EU enlargement; empirical studies

Learning, Upgrading, Innovation in the South African Automotive Industry

This paper addresses the innovation activities of automotive component manufacturers in South Africa. It looks at the technological trajectory of a handful of firms that stand out from the crowd and analyses the results of their endeavours in the context of their interaction with foreign capital, their internal upgrading and R&D agenda, and their interface with South Africa’s national innovation system (NIS). The analysis makes use of eight case studies, and illustrates the conditions under which indigenous innovation in the automotive industries can happen in a developing country. This finding contradicts at least part of the conventional wisdom concerning the location of innovation activities in global car value chains. Results also point to a deficient NIS insofar as there appears to be a disjuncture between the demand for engineering competence in the manufacturing sector on the one hand and output from the tertiary education sector on the other. Open questions that need further attention include among others the overall functioning of the NIS, and changes over time in the perception of local innovation potential by car assemblers. Keywords: automotive industry, developing countries, technology transfer, technology accumulation, innovation. JEL Classification: L62, O31, O32

Subcontracting agreements in Eastern Europe's car component industry

We study the rationale for the use of exclusivity to protect transfer of technology in subcontracting agreements. The legal possibility arises through the EU Notice on Subcontracting. Empirically, the link between exclusive agreements and technology transfer among firms in the automotive supply industry in EU candidate countries is surprisingly weak, although with exclusive-supply or exclusive-buying clauses in subcontracting agreements upstream transfer of technology is more likely. Exclusive agreements are often reciprocal, and are typically passed on. Downstream firms are more likely to face and use vertical restraints. Technology trickles upstream: Multinational final assemblers transfer more technology than lower-tier suppliers