Globalization and Technology Absorption : Role of Trade, FDI and Cross-Border Knowledge Flows
Improving the ability of Europe and Central Asia (ECA) countries to tap into the global technology pool is an important mechanism for accelerating their industrial development, worker productivity and economic growth. Trade flows, foreign direct in...
| Main Authors: | , , , |
|---|---|
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2010/05/12817902/globalization-technology-absorption-role-trade-fdi-cross-border-knowledge-flows http://hdl.handle.net/10986/10192 |
| Summary: | Improving the ability of Europe and
Central Asia (ECA) countries to tap into the global
technology pool is an important mechanism for accelerating
their industrial development, worker productivity and
economic growth. Trade flows, foreign direct investment
(FDI), research and development (R&D), and labor
mobility and training, are widely accepted as key mechanisms
for knowledge absorption. Absorption requires tough
decisions and large investments, as firms need to spend
resources on modifying imported equipment and technologies,
and reorganizing production lines and organizational
structures. Case studies of privatized enterprises in Serbia
highlight the important role of foreign investors in
knowledge absorption, whether acquired through capital goods
imports, exporting, hiring consultants and other knowledge
brokers, or from licensing technology. The Serbian case
studies targeted FDI based on acquisition of existing assets
from the government (privatization), or from private owners,
rather than 'greenfield' FDI. The analyses
suggested, in general, that companies sold to domestic
investors were not able to increase exports in a significant
way, while comparable firms receiving FDI did much better.
In addition, more significant changes in product mix and
manufacturing occurred in companies bought by foreign
investors. New directors were brought in from the
multinational enterprises (MNE), the domestic
investors' holdings, from rival companies, or promoted
from within. In companies acquired by foreign investors, the
comparative advantage for R&D was in the adaptation of
products and machinery to local conditions, rather than in innovation. |
|---|