Rajah Rasiah

Home government policies for outward FDI from emerging economies: lessons from Asia

Purpose – The purpose of this paper is to examine the drivers of outward foreign direct investment (OFDI) from the emerging economies and if there exists a positive role for home governments to coordinate them. The backdrop is the recent increases in OFDI from emerging economies and the emergence of several emerging economy firms, which have caught up to become global leaders in several industries. The paper focuses particularly on experiences from Asian economies.Design/methodology/approach – The paper applies a multi method approach and relies on literature studies, investment statistics, government reports, press reports, company reports, and interviews with public officials.Findings – Extending the motive‐based business theory, the paper first establishes the pronouncement of a third wave of OFDI from the mid‐1990s. Whereas the typical motives have remained important, the technology‐seeking motive has become significantly more important during the third wave. Typical policy prescriptions to liberalize...

The Semiconductor Industry in Penang: Implications for the New International Division of Labour Theories

This paper examines the consequences of the mid-1980s economic crisis on technological change and the international division of labour in the semiconductor industry in Penang. Consistent with orthodox Marxist economists increasing capital-labour ratios targeted at rising productivity through technological deepening the paper argues that the semiconductor industry is becoming more deeply rooted in Penang than before. The focus is increasingly shifting towards industrial deepening through the appropriation of relative surplus value, thereby offering Penang greater opportunities for technological upgrading and high income jobs.

Technological intensities in East and Southeast Asian electronics firms: Does network strength matter?

This paper examines the importance of network strength (NS) on the technological intensities (TI) of electronics firms. TI was disentangled into the categories of human resource (HR), process technology (PT) and R&D (RD) intensities, and the differences between foreign and local firms. The results show that firms in Korea and Taiwan endowed with superior NS enjoy significantly higher skill intensity, TI and RD than firms in Malaysia and Thailand, which have inferior NS. There were no obvious differences in HR practices between foreign and local firms in the four countries. Local firms enjoyed higher TI and RD than foreign firms in Taiwan. There was no statistical difference involving all the technological categories between foreign and local firms in Korea. Foreign firms in Malaysia enjoyed statistically superior TI compared with local firms. Local firms in Thailand showed higher TI and PT than foreign firms. TI and RD of firms are strongly correlated with NS, which showed a stronger impact on TI and RD among local rather than foreign firms. The superior NS of Korea and Taiwan has helped firms participate in higher technological activities and pay higher wages than firms in Malaysia and Thailand.

Are electronics firms in Malaysia catching up in the technology ladder

Using the technological capability methodology, this paper examines the development of technological capabilities and economic performance in a sample of electronics firms in Malaysia. The technological capabilities improved significantly in both the broader category of electronics and in the specialized category of semiconductors as firms upgraded to participate in the higher levels of knowledge intensities. However, the incidence of participation of firms in the highest levels of five and six knowledge-intensity activities was very low, which has slowed down labour productivity growth in the industry. The statistical results show that technological deepening through increments in skills and research and development personnel will raise labour productivity in the industry significantly. Hence, the paper argues that government policy should stimulate firms’ participation in frontier innovation activities to quicken technological catch-up and productivity growth.

The systemic quad: technological capabilities and economic performance of computer and component firms in Penang and Johor, Malaysia

This paper draws on the work of growth pole, lead sector and industrial district, business school and evolutionary exponents to develop the systemic quad as a regional development model to explain differences in systemic support and impact on knowledge activities, technological capabilities, productivity and wages in computer and component firms in the states of Penang and Johor in Malaysia. The results show that Penang has enjoyed fairly strong development of basic infrastructure, network cohesion and integration in the world economy while Johor has achieved strong development only in the first pillar. Consequently, computer and component firms in Penang show higher technological capabilities and incidence of participation in knowledge-intensive activities than firms in Johor. Penang firms also enjoyed higher labour productivity and wages than Johor firms. However, because of poor high tech infrastructure, none of the firms are engaged in level six knowledge-intensive activities in both states.

Government-Business Coordination and Small Enterprise Performance in the Machine Tools Sector in Malaysia

This paper compares the performance of small and medium size subcontractors in the machine tools industry in two different states of Malaysia, Penang and Kelang Valley. It is shown that while Penang has developed a fairly successful small and medium subcontracting industry, Kelang Valley has not. The difference in performance (measured by value-added) is due in part to differences in the extent and quality of government-business coordination. In contrast to Kelang Valley, the relatively autonomous state government of Penang took a pro-active approach to business development and provided support to its small and medium enterprises (mainly Chinese-owned) in the form of public training and market-information exchange.

Garment manufacturing in Cambodia and Laos

This paper uses the systemic quad to examine the strength of the embedding support and firm-level technological capabilities of garment firms in Cambodia and Laos. Although garment exports have surged in both countries, it is argued in the paper that its sustenance will require institutional capacity building. Laos is the more disadvantaged of the two countries as it is landlocked and endowed with too small a labour force. The paper argues that unless the institutional and firm-level technological capabilities are developed further, both countries will find it difficult to retain a significant presence of garment firms once the preferential trade privileges are withdrawn.

Expansion and slowdown in Southeast Asian electronics manufacturing

This paper examines the growth and slowdown in the electronics industry in Southeast Asia. American, Japanese and European multinational corporations relocated operations in Singapore, Malaysia and Philippines in the late 1960s and early 1970s to begin electronics assembly, packaging and testing, which was followed in the late 1980s and 1990s by the relocation of electronics manufacturing from Japanese, European, American, Korean, Singaporean and Taiwanese multinationals to the above Southeast Asian countries as well as Thailand and Indonesia. Whereas Singapore has managed significant upgrading to designing and development activities through the provision of grants, incentives, labs and strong infrastructure coordination, electronics production in the remaining countries has largely remained entrenched in assembly, packaging and testing activities. The failure of Malaysia and Thailand to support technological upgrading has undermined the capacity of these economies to sustain rapid growth of the industry as China, Philippines, Indonesia and Vietnam have a big edge in low wages and the labour force. Hence, while Singapore has managed to upgrade, Indonesia, Philippines and Vietnam continue to enjoy rapid growth in low-end manufacturing activities, Malaysia and Thailand have faced a fall in the significance of the industry since 2000.

Is Malaysia facing negative deindustrialization

This paper seeks to examine whether Malaysia is facing negative de-industrialization by examining value-added, trade, and productivity trends over the period 1990-2005. The evidence produced in the paper is concrete enough to confirm that Malaysia is facing negative de-industrialization. While it is typical, as part of the process of structural change, to see a rise and fall in the share occupied by manufacturing in the GDP, the evidence shows that Malaysia is indeed facing premature de-industrialization, with a trend slowdown in manufacturing value-added, trade performance, and productivity since 2000. Not only has the trade performance of manufacturing been falling, manufacturing labor productivity has also slowed down; with the key sectors, such as electric-electronics, textiles, and transport equipment; showing either negative or low productivity growth since 2000. Malaysian industrial policies have been fairly successful in connecting with the global value chains of multinationals and in developing resource-based industries, but have not achieved the same success in stimulating their transformation to high value-added activities. The lack of effective institutional change, partly explained by ethnic policies, is advanced as the prime reason for the setting in of negative de-industrialization in Malaysia.

Can Garment Exports from Cambodia, Laos and Burma be Sustained?

Abstract This paper examines institutional and firm-level technological capabilities to assess the capacity of Cambodia, Laos and Burma to sustain garment exports over the long term. Although the preferential access enjoyed by products from these countries in the developed markets has helped attract strong foreign direct investment inflows that have supported rapid growth in employment and exports, the empirical evidence shows that institutional support needs to be upgraded if garment exports from the three countries are to be sustained. Burma and Laos show the least potential to benefit among the three countries from this opportunity, with the former experiencing severe political instability and trade sanctions by the USA and the latter landlocked and endowed with a small labour force. The paper argues that unless the institutional and firm-level technological capabilities are developed further, all three countries will find it difficult to retain a significant presence of garment firms once the trade privileges are withdrawn.