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Technological intensities and economic performance: a study of foreign and local electronics firms in Malaysia


  • Rajah Rasiah
  • Asokkumar Malakolunthu


This article compares technological intensities (TI) and economic performance of foreign and local electronics firms in Malaysia. The results show that foreign firms enjoyed higher labour productivity, wages and export intensity than local firms, though technological intensities between both sets of firms were similar. The econometric results show a strong and positive relationship between labour productivity and technological intensity in all the samples. The higher coefficient of TI in the local sample compared to the foreign sample shows that productivity in local firms is driven much more from in-house technological effort at host-sites than in foreign firms who can access technology from their parent plants. However, the relationship between TI (contributed by differences in R&D intensity) and export-intensity in the local sample is negative demonstrating that much of such effort is devoted to inward-oriented production. Reversing the relationship also produced the same negative relationship in the local sample. Skills intensity enjoyed a positive relationship with TI with similar coefficients. The positive and significant relationship between wages, and R&D and TI shows that the more technology-intensive local firms pay higher wages to attract human capital.

Suggested Citation

  • Rajah Rasiah & Asokkumar Malakolunthu, 2009. "Technological intensities and economic performance: a study of foreign and local electronics firms in Malaysia," Asia Pacific Business Review, Taylor & Francis Journals, vol. 15(2), pages 181-197, April.
  • Handle: RePEc:taf:apbizr:v:15:y:2009:i:2:p:181-197
    DOI: 10.1080/13602380701668700

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    References listed on IDEAS

    1. Rajah Rasiah, 2004. "Foreign Firms, Technological Capabilities and Economic Performance," Books, Edward Elgar Publishing, number 3553.
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    Cited by:

    1. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
    2. Rasiah, Rajah & Tamale, Henry, 2004. "Productivity, Exports, Skills and Technological Capabilities: A Study of Foreign and Local Manufacturing Firms in Uganda," UNU-INTECH Discussion Paper Series 01, United Nations University - INTECH.
    3. Andrew Jia-Yi Kam, 2013. "International production networks and host country productivity: evidence from Malaysia," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(1), pages 127-146, May.
    4. Keshari, Pradeep Kumar, 2012. "FDI and firm level export competitiveness in the Indian machinery industry," MPRA Paper 47069, University Library of Munich, Germany.

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