Competitiveness, FDI and Technological Activity in East Asia

Abstract

The objective of this study is to examine the degree to which foreign direct investment (FDI) and technological activity have contributed to export competitiveness and economic growth in East Asia. The links between export competitiveness and its main contributory factors, namely FDI and domestic technological effort which include research and development (R&D), learning-by doing, adaptation and copying have not yet been fully explored. The ways in which these links are forged differ among countries. Some countries have placed less emphasis on FDI and the presence of transnational companies (TNCs), relying instead on building domestic technological capacity through R&D efforts, adaptation and so on. Some others have depended largely on TNC presence for their technology development and upgrading. These differences in the strategies adopted by countries in their technology development pose two important questions. They are: (i) what are the most effective ways in which technology transfer could take place through FDI? And (ii) how to adopt alternative ways of technology development in lieu of FDI?

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