Harness Gain from MNE Backward Linkages
Experience of Thai Auto-part Suppliers
Keywords:
MNEs, Local automotive-part supplier, Backward linkage spillover, ThailandAbstract
This study, through the use of a field survey, explores the changes in behavior and strategies of Multinational Enterprises (MNEs) in Thai automobile and automotive-part industries, as well as the effects on local part suppliers. The study shows that when MNEs change strategies, especially supplier realization, it does have an effect on some local part suppliers. Under natural backward linkage, car maker and MNEs’ suppliers have increasingly supported existing local suppliers to improve productivity. Therefore, to harness gains from MNEs backward linkage, local suppliers need to have a proper attitude toward technological capability building and to have clear technological capability and human resource development strategies. Additionaly, they need to insist on a long term commitment, to devoting real resources to building up pre-requisites for integrating themselves
with the MNEs production network.
References
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34. Liu, X., Siler, P., Wang, C. and Y. Wei (2000). Productivity spillovers from Foreign Direct Investment: Evidence from UK Industry Level Panel Data. Journal of International Business Studies 31(3), pp. 407-425.
35. Meyer, K.E. (2000): International Production Networks and Enterprise Transformation in Central Europe, Comparative Economic Studies 42 (2000), no. 1, pp. 135-150.
36. Moran, T. (2005). How Does FDI Affect Host Country Development? Using Industry Case Studies to Make Reliable Generalizations. Chapter in book “Does Foreign Direct Investment Promote Development?” edited by Moran, T., Graham, E., and Blomstrom, M., Institute for International Economics Center for Global Development, Washington D.C. April 2005.
37. Moran, T., Graham, E., and Blomstrom, M., eds (2005) Does Foreign Direct Investment Promote Development? Institute for International Economics Center for Global Development, Washington D.C. April 2005.
38. Moran, T. (2006), Harnessing Foreign Direct Investment for Development: Policies for Developed and Developing Countries, Center for Global Development, Washington.
39. Mowery, D.C. and R.R. Nelson, eds. (1999): Sources of industrial leadership: Studies in seven industries, Cambridge: CUP.
40. Nichiguchi, Toshihiro and Erin Anderson (1995): Supplier and Buyer Networks, in: E.H. Bowman and B. Kogut, eds.: Redesigning the Firm, pp. 65-84.
41. Nonaka, I. and Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Foster Creativity and Innovation for Competitive Advantage. New York: Oxford University Press.
42. Rodrik, D. (1999): The new global economy and developing countries: making openness work, Policy Essay nr. 24, Overseas Development Council, John Hopkins University Press, Washington, DC.
43. Rugman, A. and J. d’Cruz (2000). Multinationals as Flagship Firms, Oxford: Oxford University Press.
44. Sirikrai, S. (2007). Competitiveness Analysis: An AHP Approach for the Automotive Components Industry in Thailand Thammasat Review Vol.12 December. pp. 85-115.
45. Smarzynska, B. (2002). Does Foreign Direct Investment Increase the Productivity of Domestic Firms: In Search of Spillovers through Backward Linkages, World Bank: Policy Research Working Paper no. 2924, October 2002.
46. Stiglitz, J. (2002). Globalization and Its Discontents, Penguin Books: London
47. Techakanont, K. (2002). A Study on Inter-firm Technology Transfer in the Thai Automobile Industry, Unpublished Ph.D. Dissertation, Graduate School for International Development and Cooperation, Hiroshima University: Japan
48. Techakanont, K. and Terdudomtham, T. (2004) “Evolution of Inter-firm Technology Transfer and Technological Capability Formation of Local Parts Firms in the Thai Automobile Industry”, Journal of Technology Innovation Vol. 12, No. 2, pp. 151-183.
49. Techakanont, K. (2007). “Roles of Japanese Assemblers in Transferring Engineering and Production Management Capabilities to Production Network in Thailand”. Discussion Paper No.2, Faculty of Economics, Thammasat University, 20 December 2007.
50. Tsou, M.-W., and J.T. Liu (1994). The spillover effect for foreign direct investment: Empirical evidence from Taiwan manufacturing industries, Taiwan Economic Review 25 (2), pp. 155-81.
51. Vorasowharid, N. (2007). Inter-Firm Technology Transfers: A Study on the Thai Automotive Industry. Master of Economics, Faculty of Economics, Thammasat University, Bangkok, Thailand.
52. UNCTAD, (2001), World Investment Report 2001 “Promoting Linkages”, New York and Geneva: UNCTAD.
53. สักกรินทร์ นิยมศิลป์ (2549) อุตสาหกรรมรถยนต์ไทยหลังวิกฤตเศรษฐกิจ : สู่ยุคทุนนิยมเสรีข้ามชาติ" โครงการวิจัยภายใต้โครงการเมธีวิจัยอาวุโสของ สกว. ศ.ดร.ผาสุก พงษ์ไพจิตร เรื่องโครงสร้างและพลวัตทุนไทยหลังวิกฤตเศรษฐกิจ
2. Belderbos, R., G. Capannelli and K. Fukao (2001): Backward vertical linkages of foreign manufacturing affiliates: Evidence from Japanese multinationals, World Development 29, no1, pp. 189-208.
3. Blalock. G. (2001). Technology from foreign direct investment: strategic transfer through supply chains, mimeo, Haas School of Business, University of California at Berkeley.
4. Blalock, G. and P.J. Gertler, (2008). Welfare Gains from Foreign Direct Investment through Technology Transfer to Local Suppliers. Journal of International Economics, 74: pp. 402-421.
5. Blomström, M. and F. Sjoholm. (1999). Technology Transfer and Spillovers: Does Local Participation with Multinationals Matter? European Economic Review, Vol. 43, pp. 915-923.
6. Borrus, Michael and John Zysman (1998): Globalization with Borders: The Rise of Wintelism as the Future if Industrial Competition, in: A. Schwartz and J. Zysman, eds.: Enlarging Europe: The Industrial foundations of a New Political Reality, Berkely: BRIE and Vienna: Kreisky Forum.
7. Buara, M., Rojeca, M. and Starea, M. (2009). Backward FDI linkages as a channel for transferring technology and building innovation capability: The case of Slovenia. European Journal of Development Research (2009) 21, pp. 137–153.
8. Cohen, W. M. and Levinthal, D. A. (1990). ‘Absorptive capacity: A new perspective on learning and innovation’. Administrative Science Quarterly, 35, 1: 128-52.
9. Crespo, N. and Fontoura, P. M. (2007). “Determinant Factors of FDI Spillovers---What Do We Really Know?”. World Development Vol. 35, No.3, pp. 410-425.
10. Dunning, John H. (1993): Multinational Enterprises and the Global Economy, Wokingham: Addison-Wesley.
11. EEPC (2000). Report on Thailand Automotive and Parts Market. EEPC. Singapore.
12. Ernst, D. and Kim, L. (2002). “Global Production Network, Knowledge Diffusion, and Local Capability Formation”. Research Policy 31, pp.1417-1429.
13. Feinberg, S. and Keane, M. (2005) Intrafirm Trade of US MNCs: Findings and Implications for Models and Policies Toward Trade and Investment. Chapter in book “Does Foreign Direct Investment Promote Development?” edited by Moran, T., Graham, E., and Blomstrom, M., Institute for International Economics Center for Global Development, Washington D.C. April 2005.
14. Haddad, M. and A. Harrison. (1993). Are there positive spillovers from direct foreign investment? Evidence from panel data for Morocco, Journal of Development Economics 42, pp. 51-74.
15. Jongwanich, J. and A. Kohpaiboon (2007), ‘Determinants of Protection in Thai Manufacturing’, Economic Papers, September 2007.
16. Kasuga, T., T. Oka, Y. Yamaguchi, Y. Higa and K. Hoshino (2005). The Expansion of Western Auto Parts Manufacturers into Thailand and Responses by Japanese Auto Parts Manufacturers, JBICI Review,11
17. Kathuria, V. (2000). Productivity Spillovers from Technology Transfer to Indian Manufacturing Firms, Journal of International Development 12, pp. 334-369.
18. Kathuria, V. 2001. Foreign firms, technology transfer and knowledge spillovers to Indian manufacturing industries: A stochastic frontier analysis, Applied Economics 33, pp. 625-642.
19. Kohpaiboon, A. (2003). Foreign trade regimes and the FDI-growth nexus: A case study of Thailand. Journal of Development Studies, 40(2), pp. 55–69.
20. Kohpaiboon, A. (2005), Industrialization in Thailand: MNEs and Global Integration, unpublished PhD Dissertation, Australian National University, Canberra.
21. Kohpaiboon, A. (2006 a). Foreign Direct Investment and Technology Spillover: A Cross-industry Analysis of Thai Manufacturing. World Development, 34 (3): 541-556.
22. Kohpaiboon, A. (2006 b). Multinational Enterprises and Industrial Transformation: Evidence from Thailand. Edward Elgar: Cheltenham, U.K.
23. Kohpaiboon, A. (2007). Thai Automotive Industry: Multinational Enterprises and Global Integration. ERTC Discussion Paper No. 2007/4 . Faculty of Economics, Thammasat University.February 2008.
24. Kohpaiboon, A. (2008). MNEs and Global Integration of Thai Clothing Industries: Policy Implication for SME Development. Report submitted to Institute of Developing Economies, Japan.
25. Kohpaiboon, A. (2009). Vertical and Horizontal FDI Technology Spillovers: Evidence from Thai Manufacturing. ERIA Discussion paper No. 2009-08 March 2009.
26. Kohpaiboon, A. (2009). Global Integration of Thai Automotive Industry. ERTC Discussion Paper (2009), Faculty of Economics, Thammasat University.
27. Kokko, A. (1994). Technology, market characteristics, and spillovers, Journal of Development Economics, Vol. 43, pp. 279-293.
28. Techakanont, K. and Takahashi, Y. (2004). Globalization Strategies of Automobile Assemblers in Thailand and Adaptation of Local Parts Suppliers. Bangkok.
29. Techakanont, K. (2007) Roles of Japanese Assemblers in Transferring Engineering and Production Management Capabilities to Production Network in Thailand. ERTC Discussion Paper No.2007/2. Faculty of Economics, Thammasat University. December 2007.
30. Lall, S. (1987). Learning to Industrialize. Macmillan, London.
31. Lall, S. (1996). Learning from the Asian Tigers: Studies in Technology and Industrial Policy, London: MacMillan.
32. Lauridsen, Laurids S.(2004). Foreign Direct Investment, Linkage Formation and Supplier Development in Thailand during the 1990s: The Role of State Governance',The European Journal of Development Research,16(3), p. 561 — 586
33. Lin, P. and Saggi, K. (2005) Multinational Firms and Backward Linkages: A Critical Survey and a Simple Model. Chapter in book “Does Foreign Direct Investment Promote Development?” edited by Moran, T., Graham, E., and Blomstrom, M., Institute for International Economics Center for Global Development, Washington D.C. April 2005.
34. Liu, X., Siler, P., Wang, C. and Y. Wei (2000). Productivity spillovers from Foreign Direct Investment: Evidence from UK Industry Level Panel Data. Journal of International Business Studies 31(3), pp. 407-425.
35. Meyer, K.E. (2000): International Production Networks and Enterprise Transformation in Central Europe, Comparative Economic Studies 42 (2000), no. 1, pp. 135-150.
36. Moran, T. (2005). How Does FDI Affect Host Country Development? Using Industry Case Studies to Make Reliable Generalizations. Chapter in book “Does Foreign Direct Investment Promote Development?” edited by Moran, T., Graham, E., and Blomstrom, M., Institute for International Economics Center for Global Development, Washington D.C. April 2005.
37. Moran, T., Graham, E., and Blomstrom, M., eds (2005) Does Foreign Direct Investment Promote Development? Institute for International Economics Center for Global Development, Washington D.C. April 2005.
38. Moran, T. (2006), Harnessing Foreign Direct Investment for Development: Policies for Developed and Developing Countries, Center for Global Development, Washington.
39. Mowery, D.C. and R.R. Nelson, eds. (1999): Sources of industrial leadership: Studies in seven industries, Cambridge: CUP.
40. Nichiguchi, Toshihiro and Erin Anderson (1995): Supplier and Buyer Networks, in: E.H. Bowman and B. Kogut, eds.: Redesigning the Firm, pp. 65-84.
41. Nonaka, I. and Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Foster Creativity and Innovation for Competitive Advantage. New York: Oxford University Press.
42. Rodrik, D. (1999): The new global economy and developing countries: making openness work, Policy Essay nr. 24, Overseas Development Council, John Hopkins University Press, Washington, DC.
43. Rugman, A. and J. d’Cruz (2000). Multinationals as Flagship Firms, Oxford: Oxford University Press.
44. Sirikrai, S. (2007). Competitiveness Analysis: An AHP Approach for the Automotive Components Industry in Thailand Thammasat Review Vol.12 December. pp. 85-115.
45. Smarzynska, B. (2002). Does Foreign Direct Investment Increase the Productivity of Domestic Firms: In Search of Spillovers through Backward Linkages, World Bank: Policy Research Working Paper no. 2924, October 2002.
46. Stiglitz, J. (2002). Globalization and Its Discontents, Penguin Books: London
47. Techakanont, K. (2002). A Study on Inter-firm Technology Transfer in the Thai Automobile Industry, Unpublished Ph.D. Dissertation, Graduate School for International Development and Cooperation, Hiroshima University: Japan
48. Techakanont, K. and Terdudomtham, T. (2004) “Evolution of Inter-firm Technology Transfer and Technological Capability Formation of Local Parts Firms in the Thai Automobile Industry”, Journal of Technology Innovation Vol. 12, No. 2, pp. 151-183.
49. Techakanont, K. (2007). “Roles of Japanese Assemblers in Transferring Engineering and Production Management Capabilities to Production Network in Thailand”. Discussion Paper No.2, Faculty of Economics, Thammasat University, 20 December 2007.
50. Tsou, M.-W., and J.T. Liu (1994). The spillover effect for foreign direct investment: Empirical evidence from Taiwan manufacturing industries, Taiwan Economic Review 25 (2), pp. 155-81.
51. Vorasowharid, N. (2007). Inter-Firm Technology Transfers: A Study on the Thai Automotive Industry. Master of Economics, Faculty of Economics, Thammasat University, Bangkok, Thailand.
52. UNCTAD, (2001), World Investment Report 2001 “Promoting Linkages”, New York and Geneva: UNCTAD.
53. สักกรินทร์ นิยมศิลป์ (2549) อุตสาหกรรมรถยนต์ไทยหลังวิกฤตเศรษฐกิจ : สู่ยุคทุนนิยมเสรีข้ามชาติ" โครงการวิจัยภายใต้โครงการเมธีวิจัยอาวุโสของ สกว. ศ.ดร.ผาสุก พงษ์ไพจิตร เรื่องโครงสร้างและพลวัตทุนไทยหลังวิกฤตเศรษฐกิจ
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เจริญพร พ. (2010). Harness Gain from MNE Backward Linkages: Experience of Thai Auto-part Suppliers. Thailand and The World Economy, 28(1), 35–83. Retrieved from https://so05.tci-thaijo.org/index.php/TER/article/view/137341
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