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Foreign Ownership, Technological Capabilities and Exports: Evidence from 205 Clothing Firms in Sri Lanka

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  • Wignaraja, Ganeshan

    (Asian Development Bank)

Abstract

Sri Lanka was the earliest South Asian economy to introduce economic reforms to attract export-oriented FDI. The rise of clothing production for export, apparently mainly driven by foreign firms, is regarded as a major outcome of the reforms. This paper seeks to examine a range of factors underlying firm-level export and technological performance. Econometric analysis (based on a large dataset of 205 clothing enterprises) indicates that foreign ownership, firm size, human capital, technological capabilities and geographical location are all positively associated with export shares. Furthermore, higher levels of technological capability are associated with larger firm size, university-level manpower and formal research and development. Improving the country's investment climate, facilitating the development of business services markets and upgrading SMEs as subcontractors to foreign firms are important policy lessons for developing economies

Suggested Citation

  • Wignaraja, Ganeshan, 2006. "Foreign Ownership, Technological Capabilities and Exports: Evidence from 205 Clothing Firms in Sri Lanka," MERIT Working Papers 2006-032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2006032
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    File URL: https://unu-merit.nl/publications/wppdf/2006/wp2006-032.pdf
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    References listed on IDEAS

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    1. Ganeshan Wignaraja, 2002. "Firm Size, Technological Capabilities and Market-oriented Policies in Mauritius," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 87-104.
    2. Levy, Brian, 1993. "Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment," The World Bank Economic Review, World Bank, vol. 7(1), pages 65-83, January.
    3. Ganeshan Wignaraja, 1998. "Trade Liberalization in Sri Lanka," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-26267-0, September.
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    6. Rasiah, Rajah, 2003. "Foreign ownership, technology and electronics exports from Malaysia and Thailand," Journal of Asian Economics, Elsevier, vol. 14(5), pages 785-811, October.
    7. Sonali Deraniyagala, 2001. "The Impact of Technology Accumulation on Technical Efficiency: An Analysis of the Sri Lankan Clothing and Agricultural Machinery Industries," Oxford Development Studies, Taylor & Francis Journals, vol. 29(1), pages 101-114.
    8. Saradindu Bhaduri & Amit Ray, 2004. "Exporting through technological capability: econometric evidence from India's pharmaceutical and electrical/electronics firms," Oxford Development Studies, Taylor & Francis Journals, vol. 32(1), pages 87-100.
    9. Henny Romijn, 1999. "Acquisition of Technological Capability in Small Firms in Developing Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-38980-9, September.
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    Cited by:

    1. Tin Htoo NAING & Yap Su FEI, 2015. "Multinationals, Technology and Regional Linkages in Myanmar's Clothing Industry," Working Papers DP-2015-14, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Tin Htoo Naing & Su-Fei Yap, 2016. "Multinationals, technology and regional linkages in Myanmar's clothing industry," Asia Pacific Business Review, Taylor & Francis Journals, vol. 22(1), pages 131-149, January.

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    More about this item

    Keywords

    Sri Lanka; Clothing Industry; Multinational Firms; Foreign Direct Investment; Government Policy; Technological Change;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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