Thinking locally: Exploring the importance of a subsidiary-centered model of FDI-related spillovers in Brazil

This paper investigates FDI-related spillovers in Brazil for the period 1996-2005. In contrast to most previous recent studies, which have failed to identify any significant effects in emerging economies, we found that horizontal spillovers did arise in Brazil. However, they did not arise simply as a consequence of general FDI-mediated technology transfer from MNC headquarters, as the standard approach presumes. Nor were they associated with expected inter-industry differences in technological intensity, or with differences in domestic firms’ absorptive capability. Instead, spillovers were associated with the existence of particular kinds of localized knowledge-creation activities undertaken by subsidiaries. We discuss the theory and policy implications that emerge from these results.FDI spillovers, subsidiaries, heterogeneity, localized innovation, Brazil, productivity, innovation

Foreign-owned firms and technological capabilities in the Argentinean manufacturing industry

This deals with the technological development implications of the substantial and long-dated presence of foreign-owned affiliates in the Argentinean manufacturing industry. It put forward the argument that the learning process of foreign-owned firms should be central in the analysis of the technological impacts of inward FDI. In other words, FDI impacts to host economies are dependent not exclusively on the technology and knowledge that multinational corporations are willing to transfer to their overseas affiliates, nor on the absorptive capacity of domestic firms. Instead, the technological learning that takes place within the foreign-owned firms is crucial. In order to shed some light on the level of learning reached by foreignowned firms integrating the Argentinean economy, this paper analyses the technological profiles of MNC affiliates in the manufacturing industry, and compares them with those of domestically-owned firms. This analysis is based on proxies for different levels of technological capabilities, calculated by means of the second Argentinean innovation survey, which was carried out by INDEC, the Argentinean National Council of Statistics, for the period 1998-2001. The analysis suggests that foreign-owned affiliates seem to play an important role in terms of diffusion of technologies generated elsewhere. Yet, the results are not so clear when the local generation of knowledge and technology is considered. In general terms, the analytical exercise made here suggests reasonable development of operational capabilities, coupled with shallow interaction, monitoring, improvement and generation capabilities both by foreign affiliates and domestics firms. In other words, the findings suggest the accumulation of substantial capabilities for using existing technologies, but only meagre capabilities for locally-generated new ones.Foreign-owned Affiliates, Manufacturing Industry, Technological Capability, Diffusion of Innovations, Organizational Learning, Argentina

The Heterogeneity of MNC' Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies

Conventional models of multinational corporation (MNC) related spillovers in host economies assume that they derive from the technological assets created at the headquarters. Subsidiaries' activities in the host economy are not given any role in this process. In this paper, drawing on recent advances in MNC literature, we propose an alternative model. In this alternative model the local innovative activity of subsidiaries plays a critical role in accounting for both the possibility of positive or negative effects. More specifically, we distinguish between three types of subsidiaries: "competence creating", "competence exploiting" and passive; and explore conceptually and empirically the spillover effects of each type. Our results confirm our predictions that, in less advanced contexts such as India, only creative subsidiaries have a positive effect on host country firms; that competence exploiting subsidiaries generate negative effects when domestic firms are more advanced; and passive subsidiaries have no effects. The implications for theory and policy are discussed.Technological spillovers, MNCs, emerging economies, subsidiaries heterogeneity

Exploring the relationship between direct and indirect spillovers from FDI in Argentina

This paper seeks to examine the paradox that despite the growing role of FDI in most economies and growth in their share of employment, exports and innovation (‘direct spillovers’), evidence of technological spillovers to domestic firms in the host economy (‘indirect spillovers’) is sparse. Given the explicit dependence of the development strategies of developing countries on FDI after liberalization, it is important for us to ask: Why are these indirect spillovers not occurring? The evidence examined here shows that for the case of Argentina, there are direct spillovers in the form of human capital development and employment. However, there is no evidence of significant positive indirect spillovers to non-affiliated firms in Argentina. Part of this paradox may be explained by the fact that MNEs have acquired the most technologically competitive of their domestic rivals, and crowded out others. However, we postulate that there are a variety of other economic reasons why FDI may prove to be less useful as a driver of industrial development than has previously been argued. The extent to which direct spillovers result in indirect spillovers is intermediated by a number of factors, associated with the MNE and the nature of its assets and the organization of its global operations; the influence of increased cross-border competition on the distribution, concentration and competence level of affiliates and domestic firms, and the nature and extent of the absorptive capacity of the domestic sector.economics of technology ;

FDI spillovers, absorptive capacities and human capital development: evidence from Argentina

It is nowadays generally accepted that inward foreign direct investment (FDI) is crucial as a source of technological spillovers. One of the objectives of this paper is to review the evidence on the quantity and quality of human capital employed by domestic and foreign firms. We examine whether spillovers accrue from MNE activity, and provide a preliminary understanding of why MNE spillovers remain somewhat ambiguous, particularly in developing countries, paying particular attention to human capital development.economics of technology ;

Developing capabilities in the seed industry: which direction to follow?

Since the 1990s, many developing country policy makers have assumed that plant genetic engineering represents the only technological frontier in seed innovation; that it has been the leading technology for improving seeds and agricultural performance in those countries where it has been adopted; and that it is the area of biotechnology in which domestic capabilities in seed innovation should be accumulated. In this paper we challenge all those assumptions through an exploration of the role that both genetic engineering and other seed innovation techniques have played in explaining dynamism in the seed market, and wider agricultural economy, in Argentina, focusing on the case of soy. We argue that existing analyses of the impact of plant genetic engineering in Argentina either ignore the performance gains from seed innovations based on techniques other than genetic engineering or misattribute them to genetic engineering. Our analysis, based on data of registered plant varieties, evidence of agricultural performance in Argentina, and interviews with company managers and public sector researchers, seeks to distinguish between the impacts that different approaches to seed innovation have had on the soy sector. We argue that, from the data available, non-genetic engineering seed innovations appear to have had a very significant direct effect on farm-level soy productivity, much more so than those based on genetic engineering, and that they offer just as plausible a contributing explanation for indirect effects on productivity that are normally attributed to genetic engineering. Our findings are preliminary, but they stand in stark contrast to the very widely held view that genetic engineering has played a central, transformative role in the revitalisation and internationally competitive performance of soy production in Argentina over the last two decades. They also have a number of potential implications for the allocation of resources and policy support to the seed industry, and, more generally to how technological options should be considered and assessed in strategies for developing technological capabilities. Our analysis is framed by and contributes to an emerging body of research within the innovation literature that challenges deterministic, unidirectional approaches to analysing technological change in emerging economies

Explaining the Diversification Path of Exporters in Brazil: How Similar and Sophisticated are New Products?

A stylised fact of the economic literature suggests that export diversification is good for economic growth and is associated with economic development. In addition, there is evidence suggesting that the level of sophistication of countries’ exports “matters” for growth and development. This paper contributes to this literature by analysing two unexplored dimensions of export diversification: the degree of relatedness (similarity) and sophistication of new products in relation to existing ones. The objective of this paper is to understand the mechanisms through which firms are able to diversify to less related and more sophisticated activities. We do so using a unique dataset that links data on exports, innovation and firms’ characteristics at the firm level in Brazil. The main findings suggest that i) diversification occurs in very closely related activities, where firms have some core competences, ii) most diversification occurs in new products with lower level of sophistication than existing exports, iii) the degree of diversification and innovativeness of the production basket, and the position that the firm has developed in the domestic market appear to matter for diversification towards more or less distant products.Diversification; Relatedness; Sophistication; Trade; Innovation; Brazil

Production Networks Linkages, Innovation Processes and Social Management Technologies. A Methodological Approach Applied to the Volkswagen case in Argentina

The purpose of this paper -as a part of a wider research project - is to analyze the concept of production network from a methodological and theoretical viewpoint based on a three-plane perspective. These dimensions are the linkages among agents, the innovation activities, and the social management technology, including work process organization and the social agreement generation model in force. It is an experimentally methodological approach that tries to go from a theoretical conceptualization of the phenomenon to its empirical evaluation. The questions guiding this research are as follows: What are the variables and dimensions to be observed in the analysis of a group of interconnected firms in order to define a production network? Is it a unique definition or, on the contrary, does it involve a range of alternatives? What are the externalities generated by the agents who belong to one network? What is the relationship between the network’s firms’ technological behavior and their organizational counterpart? How are learning processes in the business firms linked to their own training systems? Has the social management technology some differential role in the learning process and in the development of skills? How do knowledge transmission processes manifest themselves within the “network”? What indicators are useful for the empirical identification of the different means of manifestation of the network according to the theoretical viewpoint adopted? How can those indicators be articulated in order to elaborate typologies intended for the identification of “hybrid” models? How can a complex indicator be built in order to show the different levels of circulation of intangible assets, development of learning processes and work process organization? In the first section, the conceptualization of the production “network” used in this paper is discussed. In the second section, most relevant variables and indicators are presented in order to feature the business firms and the network in terms of: a) type, quantity and quality of tangible and intangible exchanges among the agents; b) innovative capacity and learning; c) social management technology. Then we elaborate a typology of networks based on the consideration of the previous parameters. Lastly, in the fourth section, we discuss how the three dimensions interact in the case of Volkswagen and his forty main local suppliers.Innovation, production process, case study

Learning about ‘engaged excellence’ across a transformative knowledge network

The ‘Pathways’ transformative knowledge network is an international group of research organisations, collaborating to explore processes of social transformation and to share insights across disciplines, cultures and contexts. Working across the domains of food, energy and water, the network is experimenting with new methods of research and engagement that both help to understand – and contribute to – transformations to sustainability. This article outlines some of the early experiences of two hubs in the network (UK and Argentina) and reflects on the lessons learned for ‘engaged excellence’. It also describes how approaches to transdisciplinary research (building on a diversity of academic and non-academic traditions) vary across different contexts, and how wider lessons in this regard will be shared across the consortium into the future

The ‘Pathways’ transformative knowledge network

Transformations to sustainability are increasingly the focus of research and policydiscussions around the Sustainable Development Goals. However, the differentroles played by transdisciplinary research in contributing to social transformations across diverse settings have been neglected in the literature. TransformativePathways to Sustainability responds to this gap by presenting a set of coherent, theoretically informed and methodologically innovative experiments from aroundthe world that offer important insights for this growing field.The book draws on content and cases from across the ‘Pathways’ Transformative Knowledge Network, an international group of six regional hubs workingon sustainability challenges in their own local or national contexts. Each of thesehubs reports on their experiences of ‘transformation laboratory’ processes in thefollowing areas: sustainable agricultural and food systems for healthy livelihoods,with a focus on sustainable agri-food systems in the UK and open-source seedsin Argentina; low carbon energy and industrial transformations, focussing onmobile-enabled solar home systems in Kenya and social aspects of the greentransformation in China; and water and waste for sustainable cities, looking atXochimilco wetland in Mexico and Gurgaon in India. The book combines newempirical data from these processes with a novel analysis that represents boththeoretical and methodological contributions. It is especially international in itsscope, drawing inputs from North and South, mirroring the universality of theSustainable Development Goals.The book is of vital interest to academics, action researchers and funders, policymakers and civil-society organisations working on transformations to sustainability.Fil: Ely, Adrian. University of Sussex; Reino UnidoFil: Marin, Anabel. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina. Universidad Nacional de San Martin. Escuela de Economia y Negocios. Centro de Investigaciones Para la Transformacion.; Argentin