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Institute of Developing Economies>Papers & Publications>Reports>InterimReport>Interim Report 2007>Repositioning Local Firms in Global Value Chains:Perspectives from East Asia and Africa

Repositioning Local Firms in Global Value Chains: Perspectives from East Asia and Africa

Interim Report

Edited by KAWAKAMI Momoko
Published in March 2008

Preface (181KB)

Chapter 1

Market, Modularity, and Entrepreneurship: Rise and　Evolution of China's Mobile Phone Handset Industry / Ken Imai

Chapter 2

Exploiting the Value Chains Modularity: Inter-firm Dynamics of the Taiwanese Notebook PC Industry / Momoko Kawakami

Chapter 3

Dynamic Evolution of "National Value Chains" and　the Growth of Local Suppliers:
The Case of Motorcycle Industry in Vietnam / Mai Fujita

Chapter 4
Transnational Corporations (TNCs) have played a vital role in fostering rapid industrialisation in many developing countries. The Philippines is among the countries which have typically followed a TNC-dependent development strategy. However, the country has been far lagging behind other ASEAN members in economic performance. The present study examines this issue, mainly focusing on the linkage formation between TNCs affiliates and Philippine local suppliers. The creation of linkage is important because most of spillovers are transmitted through the industrial linkages with TNCs. This constitutes a prerequisite for access to international markets through global value chain. Three factors are proposed to determine the overall performance of linkage formation; i.e., outsourcing strategies of TNCs’ local affiliates, local entrepreneurial response, and host government policies. A case study method is employed from author’s fieldwork at Cavite Export Processing Zone, the Philippines. The cases of Penang, Malaysia, are referred just for a comparison. An economic enclave structure is clearly identified in the Philippines, in which only a few locally-owned suppliers have emerged. Extremely weak local entrepreneurship in the Philippines is identified to explain the poor performance of linkage formation.
Chapter 5

Learning Process in Kenyan Garment Industry: Has Technology Spilled over from FDI? / Takahiro Fukunishi

Garment industry has been developed in many LDCs triggered by inflow of foreign direct investment (FDI), and it has contributed poverty reduction through providing employment. Lagging behind them, garment FDI has flown into sub-Saharan African countries since 2000, but the spillover of technology to local firms has been quite limited.

Based on the interviews and original firm data, this paper attempts to demonstrate the learning process of Kenyan garment firms with focus on learning capacity and incentives. While uncertainty of the post-MFA market did not significantly affect local firm’s decision to start export products, relatively high leaning cost discouraged incentive to learn. Although they have capacity to learn, Kenyan garment firms need to perform much more efficiency than South Asian rivals due to the high wage, and then learning cost increased. Although the literature focuses on lack of learning capacity as a problem of technological development, this paper suggests that learning incentives is also important.
Chapter 6

Governance and Capability in Global and Local Value Chains / Yuri Sato