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Death of linkages in host countries? A firm-level study on the channels of productivity spillovers in the Malaysian manufacturing sector

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  • Andrew Jia Yi Kam

Abstract

type="main"> Productivity spillovers from multinational corporations (MNCs) to local firms have been an area of keen research interest in developing economics. Claims of positive spillovers in the form of technology transfers have been questionable, in part because of the many ambiguous conclusions obtained. The paper argues that the lack of focus in the mechanisms underpinning spillovers may be one of the reasons for the ambiguity. Using local input–output linkages as the mechanism for technology transfer, this study examines the presence and the enabling conditions for spillovers. Accounting for the variations in firms' characteristics, the findings show that skills-oriented MNCs participating in international production networks transmit horizontal spillovers to local establishments. Vertical spillovers from MNCs are mostly relevant only to lower-skilled establishments. For skilled and export-oriented local establishments, technologies learned from producing for international production networks are more significant than forming linkages with MNCs in the domestic market.

Suggested Citation

  • Andrew Jia Yi Kam, 2016. "Death of linkages in host countries? A firm-level study on the channels of productivity spillovers in the Malaysian manufacturing sector," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(1), pages 65-79, May.
    • Handle: RePEc:bla:apacel:v:30:y:2016:i:1:p:65-79
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    References listed on IDEAS

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    1. Liza Jabbour & Jean Louis Mucchielli, 2007. "Technology Transfer Through Vertical Linkages: The Case of the Spanish Manufacturing Industry," Journal of Applied Economics, Taylor & Francis Journals, vol. 10(1), pages 115-136, May.
    2. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    3. Andrew Jia-Yi Kam, 2013. "International production networks and host country productivity: evidence from Malaysia," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 27(1), pages 127-146, May.
    4. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Technology, Market Characteristics and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 10, pages 160-176, Palgrave Macmillan.
    5. Noor Aini Khalifah & Salmah Mohd Salleh & Radziah Adam, 2015. "FDI productivity spillovers and the technology gap in Malaysia's electrical and electronic industries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 29(1), pages 142-160, May.
    6. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    7. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
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    9. repec:bla:econom:v:41:y:1974:i:162:p:176-93 is not listed on IDEAS
    10. Andrew Jia-Yi Kam, 2014. "Revisiting the productivity growth and spillovers debate: the case of Malaysian manufacturing sector," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(4), pages 656-681, October.
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