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

Subsidiary capability upgrading and parent-subsidiary relationship: insights from a Chinese acquisition in the UK

Purpose: - This study aims to explore capability upgrading of EMNE’s subsidiaries in developed countries and how the parent-subsidiary relationship influences such upgrading. Design/methodology/approach: - The study adopts an interdisciplinary approach to capability upgrading of EMNEs subsidiaries in developed countries. It employs a single case study to explore this under-research area. Finding: - the analysis challenges the orthodox view and suggests broad based capability upgrading has taken place in the EMNE acquired subsidiaries ranging from product, process, functional to intersectoral. In addition, the capability upgrading was contingent on the degree of subsidiary autonomy and subsidiary mandates. Originality/value: - This study represents one of the first to examine capability upgrading and parent-subsidiary relationship in the context of EMNEs’ internationalisation activities

Patterns of industrial upgrading in the clothing industry in Poland and Romania

This paper aims at understanding the impact of industrial networks with foreign and other domestic organizations on industrial upgrading of the clothing companies in Poland and Romania over the past decade. The research presented in this paper is based on interviews carried out in ten large clothing companies in Poland and Romania. The paper shows that there are differing structural influences of buyer-driven global networks on the industrial upgrading of Polish and Romanian clothing firms. Taking these global buyers as exemplars to themselves, Polish and Romanian clothing firms follow relatively different upgrading patterns, experiencing more or less the same network relationships with foreign buyers whereas differing networks with other organizations in their countries. As the level of accumulation of knowledge and skills differs among the firms, the pace and level of upgrading differs too. This paper has proposed a stylized pattern but it should not be taken as inevitable since it also tries to show that some firms might skip some sequences. As a consequence, it is not a question of the positioning of the countries on a single upgrading ladder, but more accurately it is different upgrading ladders that have been climbed in each country. There is no single pattern for all of them

Electronics Production Upgrading: Is China Exceptional?

In this paper, we make use of a unique world electronics production data set to assess China’s upgrading trajectory in the global electronics industry. Contrary to existing studies, we find no evidence that China’s electronics production activities are more sophisticated than one would expect from its level of development. We also find little evidence that China is rapidly upgrading into more sophisticated production activities.China, industrial upgrading, electronics

Dimensions of quality upgrading - Evidence for CEEC´s

The impact of trade integration of Central and Eastern European economies in European markets has been studied extensively. Often these studies observe quality upgrading of CEEC exports. In this paper we consider three dimensions of quality upgrading: upgrading across industries, upgrading across different quality segments within industries, and finally, product upgrading within quality segments inside industries. For the analysis we partition industries into distinct quality segments based on EU-15 import unit values. The results for ten CEECs (CEE-5,Baltics and Southeastern Europe) and thirteen industries suggest fundamental differences, both, across country groups and across the three different notions of quality upgrading. The CEE-5 show no evidence of entering a "low-quality trap" in all three dimensions. While there is in general catching-up across industries and inside quality segments, convergence to the EU-level is significantly slower in the high quality segments for the Baltics and Southeast Europe. Thus, the second notion of low-quality specialization may be applicable to these countries.

Trade and skill-upgrading. Firm-level evidence for Belgium.

We use Belgian firm level data over the period 1996-2007 to analyze the impact of imports from China and other low wage countries on firm growth, exit, and skill upgrading. We distinguish the impact of imports into two different channels: industry-level import competition and firm-level outsourcing. We find that imports from China are much more important than imports from other low-wage countries. Industry-level import competition from China reduced firm employment and induced skill upgrading. Import competition from China alone can explain around 30 percent of the total skill upgrading in Belgian manufacturing during 1996-2007. Our IV results confirm the ambiguous role of outsourcing in firm employment growth, but we also find that outsourcing to China will increase the relative employment of non-production workers and is beneficial for firm survival.import competition; outsourcing; China; skill upgrading;

The Fight for the Middle: Upgrading, Competition, and Industrial Development in China

When China acceded to WTO in 2001, there were fears that Chinese firms would lose market share in key sectors to foreign-invested enterprises (FIEs). Although aggregate data often indicate a shift in favour of FIEs, indigenous firms in many cases have slowly increased market share and deepened their technical capabilities. Through an analysis of aggregate data and three sectors, we show how the dynamics of competition between Chinese and FIEs in China's domestic market enhance the upgrading prospects for Chinese firms. China represents a new model of development in several important respects: industrial upgrading efforts are often domestically-driven, within this domestic market there is intense competition between both domestic and foreign firms, and this competition is driving and stimulating the upgrading efforts of domestic firms.China, industrialization, FDI, upgrading, value-chains, emerging markets, automotive

State, Competition and Industrial Change in Ireland 1991-1999

As job losses increased rapidly in 2003 amid calls for increased competitiveness, it becomes all the more crucial to understand the character and causes of such industrial upgrading that did occur in Ireland in the 1990s. This paper argues that despite a continuing reliance on foreign investment, there were significant elements of local industrial upgrading within the Irish economy in the 1990s. Contrary to perspectives which emphasise the learning effects associated with foreign firms, the paper suggests that such upgrading only emerged when and where local and national institutions were established to support relations of innovation and organisational development. The current difficulties in the Irish economy can be traced in significant part to the failure to deepen and extend this emergent system of innovation. The emphasis on ‘competitiveness’ in contemporary policy debate threatens to undermine the public investment, social relations and collective institution building that have been, and will continue to be, central to industrial upgrading in Ireland.

Risks of smallholder exclusion from upgrading food chains

Large agri-industries fuel the upgrading of certain food chains. This chapter presents the risks of smallholders not benefitting from this upgrading. The first risk is that upgrading does not spread to all food value chains, generating territorial inequalities. The second is that the most endowed smallholders are included while the poorest are excluded. The third risk is that those smallholders who are included tend to be in a weak bargaining position against large agri-industries. As a result, most smallholders do not get higher incomes from upgrading food chains

Skill Upgrading and Production Transfer within Swedish Multinationals in the 1990s

This paper studies the link between production transfer in Swedish-headquartered multinational enterprises (MNEs) and skill upgrading in Swedish manufacturing in the 1990s. The analysis distinguishes between horizontal and vertical foreign direct investment (FDI). The increased employment share in affiliates in non-OECD countries (vertical FDI) has a non-trivial, significantly positive effect on the share of skilled labor in the Swedish parents. On the other hand, the skill upgrading in the parents is unrelated to employment changes in their affiliates in other OECD countries (horizontal FDI). The latter is consistent with implications of the newly developed horizontal MNE models.Multinational enterprise; Skill upgrading; Horizontal foreign direct in-vestment; Vertical foreign direct investment