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The Contribution of FDI, Technology and R&D to Spillovers in Industrial Development: A South African Firm-Level Investigation

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Author Info

  • Ewert P. J. Kleynhans

    (North-West University, Republic of South Africa)

  • Sibulele Zwedala

    (North-West University, Republic of South Africa)

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    Abstract

    This article studies the contribution of technological and knowledge spillovers towards the competitiveness of South African manufacturing firms. Literature often emphasizes the role of foreign direct investment (FDI), technology, and research and development (R&D) in spillovers, but seldom consider their effect simultaneously. This study focuses on the micro-economic production level and on the interaction of these factors. It determines their influence on the competitiveness, profits and eventual industrial development. The empirical study utilised data from the World Bank’s firm-level survey on South African manufacturers. The study reveals that direct foreign investments and ownership contribute little towards secondary spillovers, which probably depends on absorptive capacity. Technological advancement is not very significant, while research and development are dependent on absorptive capacity to enhance competitiveness, especially with regard to the investment in human capital. International quality certification, foreign licensing and capacity utilisation all contribute positively towards the ability to enhance productivity growth and the competitiveness of firms.

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    Bibliographic Info

    Article provided by University of Primorska, Faculty of Management Koper in its journal Managing Global Transitions.

    Volume (Year): 10 (2012)
    Issue (Month): 4 (Winter) ()
    Pages: 341-359

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    Handle: RePEc:mgt:youmgt:v:10:y:2012:i:4:p:341-359

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    Related research

    Keywords: production; spillovers; FDI; technology; R&D; industrial development; competitiveness;

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    References

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    1. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, vol. 43(4-6), pages 915-923, April.
    2. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    3. Giuliani, Elisa & Arza, Valeria, 2009. "What drives the formation of 'valuable' university-industry linkages?: Insights from the wine industry," Research Policy, Elsevier, vol. 38(6), pages 906-921, July.
    4. Stan Du Plessis & Ben Smit, 2007. "South Africa's Growth Revival After 1994," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(5), pages 668-704, November.
    5. Dahl, Michael S. & Pedersen, Christian O.R., 2004. "Knowledge flows through informal contacts in industrial clusters: myth or reality?," Research Policy, Elsevier, vol. 33(10), pages 1673-1686, December.
    6. Kesidou, Effie & Romijn, Henny, 2008. "Do Local Knowledge Spillovers Matter for Development? An Empirical Study of Uruguay's Software Cluster," World Development, Elsevier, vol. 36(10), pages 2004-2028, October.
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