Foreign investment,industrial restructuring and dependent development in Singapore

Singapore's industrial development and restructuring are very much dependent on foreign investment. Despite the apparent benefits of foreign investment and Singapore's success in export-oriented manufacturing, there are worrisome aspects arising from the large and growing dependency on such investment in the manufacturing sector as Singapore moves toward a developed country status. This article explores some of the consequences of such dependency. In terms of industrial pattern, foreign investment has created and maintained a dualistic industrial structure in manufacturing. Foreign firms and government industrial policies have suppressed and marginalized local entrepreneurship. Export-oriented industrialization has opened the employment doors for women in manufacturing. However, women are predominantly found in low pay, dead end jobs in the assembly line of Singapore's new industrial order. With the implementation of a new wave of industrial restructuring strategies, new capital and technological intensive foreign investments are welcomed and solicited. However, the local labour supply is unable to meet the increased demands. Foreign labour has been called in to fill the gaps. This inevitably distorts labour market outcomes and heightens the income inequality index.     

Globalization and Divergent Paths of Industrial Development: Mobile Phone Manufacturing in China,Japan, South Korea and Taiwan

Globalisation has challenged the way industrial development takes place. Fragmented and decentralised global production and the rapid growth of consumer markets in emerging economies demand a more sophisticated framework to analyse development paths than does the dichotomy of export orientation and import substitution. This article proposes a typology based on (a) specialisation in the global value chain and (b) market orientation to distinguish different development trajectories and then applies the typology to mobile phone manufacturing in four East Asian countries. This study finds that globalisation does not lead to the convergence of development paths, but promotes cross-national divergence depending on countries’ positions in the value chain and market niches. Both Korea and Taiwan emerge as key players in global markets, yet in different parts of the global value chain. Their common orientation toward global markets strikingly contrasts the inability of Japanese firms to translate their domestic success overseas. Finally, Chinese firms concurrently engage in different development paths, making the country’s multi-path approach unique. The implications of these findings are discussed in terms of industrial development in East Asia in an era of globalisation.     

Hard Bargains: The Impact of Multinational Corporations on Economic Reform in Latin America

This article promotes the idea that multinational corporations have independent agency in the process of economic reform in Latin American host countries. Through a number of pooled cross-sectional time series analyses, it shows that accumulated foreign direct investment can affect policy reform in ways unanticipated by earlier theories predicated on the obsolescence of firms' influence after initial investment. The influence of firms varies across different reform areas, and competitive pressures lead firms to press alternately for liberal and illiberal reform measures. The study also considers sectoral issues, and argues that a preponderance of natural resource–oriented FDI can alter the impact of multinational investment on policy reform. Indexes of economic reform are measured against stocks of FDI and a number of political and economic control variables. Evidence shows that the dramatic increase in FDI in the region in recent years has bolstered firms' bargaining power and concomitant policy leverage.     

Moving Up the Value Chain in ICT: ASEAN Trade With China

The rise of China increased competition for foreign direct investment and exports for the ASEAN economies. It also increased ASEAN trade with China. But, are ASEAN countries able to move up the value chain in their trade with China? The objectives of this article are to examine upgrading in the information and communications technology (ICT) value chain through changes in the product quality of parts and components (PNC) exports from ASEAN to China and the influence of these changes on their ICT trade with China. The main findings indicate that there is little or no product upgrading in the most important SITC 776 sub-component of the PNC exports from the four major ASEAN economies (ASEAN-4) to China after 2005. It is also found that improvements in product quality are more apparent for SITC 772 but this product group constitutes a small share in total manufactured exports from the ASEAN-4 to China. Lastly, with little or no product upgrading, exporters from the ASEAN-4 have shifted to exports of non-PNC goods to China. This shift has enabled the overall ICT exports from the ASEAN-4 to China to continue to grow for the period of this study.     

Asian workers in the Gulf states of the Middle East

One of the most conspicuous developments in recent years in the Korean political economy is the enormous increase of Korean investment in Southeast Asia, especially Indonesia. In particular, since the appreciation of the Korean currency (won) in 1987 and the rapid increase of industrial action by Korean workers, more Korean foreign direct investment (FDI) has been carried out by small-and medium-sized firms, particularly in the manufacturing sector. However, many of the Korean firms in the region have already experienced various problems. This article examines the determinants of the new phase of Korean FDI. It also discusses the possible consequences of Korean FDI in Indonesia.     

E-Commerce and Industrial Upgrading in the Chinese Apparel Value Chain

The economic and social gains from electronic commerce (e-commerce) that promote innovation, industry upgrading and economic growth have been widely discussed. China’s successful experience with e-commerce has had a positive effect in transforming consumer-goods sectors of the economy and motivating economic reform. This article looks at how e-commerce reduces barriers to entry and enables firms to move up the value chain by using the global value chain framework to analyse the impact of e-commerce on the upgrading trajectories and governance structures of China’s apparel industry. For large Chinese brands, e-commerce has enabled end-market diversification. For small- and medium-sized enterprises, e-commerce has facilitated entry with functional upgrading as well as end-market upgrading. In the “two-sided markets” created by platform companies, the “engaged consumers” are the demand side of this market, and “e-commerce focused apparel firms” are the supply side of the new market. Consumers and platforms are more directly involved in value creation within this emerging internet-based structure.     

Gorton and the Re‐Making of Political Tradition in Foreign Investment Policy

This article examines the Gorton government's tentative, but significant role in reshaping Australia's approach to overseas investment, focusing on the role of the Prime Minister himself. Prime Minister Gorton and his Cabinet ultimately accepted the need to pursue a more overt form of economic nationalism for political gain. This provided a basis for subsequent governments to offer more direct, national government intervention in foreign investment decision‐making to the Australian polity. Historical accounts and more recent assessments are drawn on to make this case and point to the legacy of Gorton and his government in the political management of foreign investment in Australia. The approach to foreign investment that emerged during Gorton's government demonstrated to subsequent governments the worth of developing a calibrated response that appeared to address populist concerns while still enabling substantive and increasing investment inflows.     

The Possibility of Economic Reform in North Korea

This article argues that North Korea can achieve an economic catch-up after decades of economic isolation and stagnation by promoting an economic opening focused on foreign trade and investment in a sustained manner. An analogy is been made with the case of Fujian Province in China, which has accomplished economic catch-up, mainly due to Taiwanese investments. To realise its potential, it is argued that North Korea treats its foreign direct investment (FDI) from South Korea as intra-Korean investment. The article also discusses the diverse modes of engagement with foreign capital that are available for North Korea, considering its own capability (absorption or management capabilities), rivalry among possible foreign investors, implications for market structure (monopoly or more competition), the nature of target technologies or facilities, opportunity for learning and transfer, and so forth. Finally, the article discusses the economic and political preconditions for such and economic catch-up.     

A critique of the ‘Bureaucratic authoritarian state’ thesis: The case of the Philippines

The article reviews characteristic patterns of domestic resource mobilization, investments and foreign capital inflows in developing Asia and identifies the emerging issues in resource mobilization. It finds that high levels of investments and savings have been an important reason that developing Asia has had better growth performance than other regions of the world. The pattern of resource mobilization has been different across countries depending upon their development stage. Low-income countries tend to rely on concessional official sources as their debt-servicing capacity is limited and their domestic resource mobilization capacity is weak, while higher income countries rely on domestic resource mobilization as well as competitive financing from international capital markets and foreign direct investment.

Development challenges in Asia continue to be high in the 1990s and will require substantial resources. The challenges will in principle have to be met by domestic resources, indicating the need for strengthening the resource mobilization effort. However, the role of external resources will remain important because of limited domestic resource mobilization in developing Asia. Potential shortage in the global capital market implies that developing countries will have to improve their investment environment to induce more foreign private capital, including foreign direct investment. The possible shortage also indicates the need to strengthen the role of multilateral financial institutions.     

Divergent paths,divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in Kazakhstan and Uzbekistan

This article compares two transition economies that have diverged in their progress on important economic reform areas and then seeks to link these differences to their resulting levels of investment and business. For this study, interviews were conducted with firm representatives that had invested or conducted business in Kazakhstan and Uzbekistan in order to determine the areas of reform that were the most important for their investment and business decisions. The analysis indicates a relationship between Kazakhstan's advanced economic reforms in such areas as foreign investment legislation, tax legislation, banking system reform, and higher levels of investment and business. Uzbekistan's lack of progress in these reform areas has affected the level of investment in the country, but not the number of firms conducting business. This was primarily because firms could secure financing for the business through the US Export–Import Bank.     

Sinophobia as Corporate Tactic and the Response of Host Communities

China's State Council has charged that in 2009 BHP Billiton inflamed Australians' fear of “Chinese colour” in order to undermine Chinalco's (Aluminium Corporation of China) effort to increase its share of the Rio Tinto company. Though unproven, this is a serious charge and the more so because it suggests there is a risk that in the future firms challenged by Chinese competitors may emulate the alleged practice. Given this possibility, anti-racists require a sophisticated understanding of how firms might incorporate Sinophobia into their business strategies and how Chinese foreign direct investment is viewed by national and local communities. To further this response, we review the literature on the use of racism as a corporate tactic, discuss the Chinalco-BHP struggle, and provide a study of how one community reacted when offered the chance to host a large Chinese investment.     

The Korean experience in FDI and Sino-Korean relations

The possibility of regional cooperation in the Yellow Sea Rim (YSR) area has been discussed since the early 1980s. In recent years, Korean outbound foreign direct investment (FDI) has increased rapidly and it will be growing much further. In the new phase of the global economy and the post-cold war political environment, Korean firms consider the socialist countries, especially China, to be attractive new partners for trade and investment projects. Foreign investment contributed to economic growth in developing countries. In the early stage of industrialization in the 1970s, the share of foreign firms amounted to about one-tenth of the total manufacturing employment in Korea. Similarly, outbound Korean FDI could also play an important role in the industrialization of the LDCs in Southeast Asia and China. A case study of a Korean multinational corporation reveals that the direct employment effect of Korea’s FDI is extensive in terms of money invested. In spite of the complementarity in economic structure and the phase of development between Korea and China, the prospect of Korea’s outbound FDI is not all clear. However, one can safely assume that the unit scale of FDI projects will increase. Unlike in the past, the large Korean corporations are now preparing more than a few fair-sized projects in China. The positive impact of those FDI will be significant. The YSR cooperation, if successful, could create efficient economic cooperation based on complementarity between Korea and China. The Korean outbound FDI would pave a road to such regional cooperation. This article is the revised version of a paper prepared for the International Conference on Regional Development in the Yellow Sea Rimlands, held February 18–21, 1991. The conference was cosponsored by the Korea Research Institute for Human Settlements, the State Science and Technology Commission of China, and the East-West Center of Honolulu, Hawaii.     

Driving Development? The Problems and Promises of the Car in Vietnam

The private car comes with promises of modernity and comfortable mobility for the growing middle class in Vietnam. Vietnam’s government has also targeted the domestic automobile industry as a “spearhead industry” in an attempt to achieve industrial upgrading. Paradoxically, the government is simultaneously restraining the market for this industry through imposing high taxes and fees on cars, making them available only to a limited number of people. This article discusses the promises and problems of the automobile in Vietnam. It analyses policies related to the development of the automobile industry, and discusses the reasons for the relative failure of the project. The article argues that the failure is linked to weaknesses in Vietnamese development strategies, but also to the potential problems an expansion in car ownership in Vietnam would lead to. The article contends that the car represents a development dilemma between industrialisation and urban mobility, and that environmental, energy and social concerns add to the rationale for limiting car ownership. Furthermore, although forces promoting car-driven industrialisation appear to be gaining ground, the requirements for regional economic integration may challenge the future of the infant automobile industry.     

韩国与日本企业在华投资趋势分析

本文从投资规模、目的、领域和区域分布等方面分析韩国企业与日本企业对华直接投资的变迁过程及其特点。近年来，韩El企业在对华投资目的上越来越倾向于开拓中国市场。对华投资的行业类别上，虽然投资产业集中在制造业的格局没有改变，但是在批发零售业、金融业等非制造业领域也呈现增长趋势。今后，在强化技术开发和零部件采购本地化的基础上，开发建立适应中国消费市场变化的产品与销售体制，积极拓展内陆地区以及二、三级城市市场将是韩日企业需要解决的重要课题。     

“National Emergency” in India

This article challenges a popular assumption that Korea has been refining and perfecting the Japanese foreign direct investment model. In the case of Korea, the pattern of overseas expansion of smaller companies is quite unlike that for smaller Japanese companies. In the former case, the move overseas is quite independent and related to the needs of the individual concern or entrepreneur while the latter usually moved offshore in tandem with larger companies and as part of their sub-contracting networks. Given this premise, major mechanisms behind the successful development of Japanese FDI in comparison with those of Korea will be examined. These include a) the role of the trading companies (sogo shosha), b) the role of the small and medium-sized firms, and c) the patterns of institutional linkages between government and business in the progress of FDI. This cross-examination demonstrates that Korea's trajectory and its dynamics are different from those of Japan, thus Korea's future cannot be predicted by simply looking at Japan.     

Crisis Effects on the Electronics Industry in Southeast Asia

The financial crises of 1997–98 and 2008–09 each had a debilitating effect on Southeast Asian market economies because of the dominance of exports and foreign ownership. However, the 1997–98 financial crisis positively impacted electronics exports, production and employment, due to a booming US economy. The contraction in demand in the US during the 2008–09 crisis reduced electronics exports from Southeast Asia with the exceptions of Indonesia and the Philippines, which were shielded by regional linkages with Singapore, Malaysia and China. Foreign labour repatriation and fiscal stimulus packages helped Malaysia and Thailand rebound quickly from the 2008–09 crisis. In the Philippines, the 2008–09 crisis expanded further the casualisation of labour as retrenched workers from Malaysia and Singapore returned home. State grants encouraged upgrading in Singapore and to some extent in Malaysia, but the liberal approach of Indonesia, the Philippines and Thailand limited them to low-value-added activities. However, Singapore’s and Malaysia’s transnational-based strategy failed to reproduce the technological leapfrogging experience of South Korea and Taiwan. Also, Malaysia’s ethno-patronage policies discouraged upgrading in national firms.     

From Industrial Policy to Regional and Local Locational Policy: Experience from Santa Catarina/Brazil

Abstract — Industrial policy is no longer what it used to be. In the industrialised world and in advanced developing countries alike, the focus has shifted from a top-down, statist approach that sought to create industries to a decentralised, networked approach whose aim is to shape competitive advantages and to create ‘systemic competitiveness.’ This reflects the fact that globalisation and localisation are parallel and mutually reinforcing processes: The firms which do better in a globalised market are rooted in well-developed networks of supporting firms and institutions. The analysis of the case of Santa Catarina, a state which had a strong industrial growth record in the 1970s and 1980s, shows that the relevant actors tend to be slow to move to this kind of pattern. State-level industrial policy mainly consists of participation in a ‘guerra fiscal’ geared to attracting external investment as well as, to a very limited extent, measures aimed at giving financial support to local firms. Yet there is no such thing as an explicit policy at the state level — to say nothing of the local level — designed to support firms by shaping locational advantages. This is due to limitations on the part both of the state and the private sector. As far as the state is concerned, a traditional clientelist and ad hoc style of policy making prevails. In the private sector the business associations (sindicatos and the Federation of Industries, local chambers of industry and commerce and their umbrella federation) are slowly adapting to the new conditions presented by an open economy and far more competitive pressure, though they have thus far lagged in putting more pressure on local and state government to support company-level efforts to increase competitiveness. Within this general picture, however, there are differences between industrial clusters. The most advanced of them, made up of world-class firms manufacturing ceramic tiles, may show the way by strengthening associations, shaping locational advantages, and articulating the demands of companies toward the state.     

Transnational Strategic Networks and Policymaking in Chile: CORFO's High Technology Investment Promotion Program

Once prey to government patrimonial practices, the Corporación de Fomento de la Producción (CORFO), Chile's economic development agency, overcame this problem in the early 1990s. In 2000 CORFO established a High Technology Investment Promotion Program to promote foreign direct investment in high technology and other nontraditional sectors. This article applies concepts of political survival and cooperation to explain how CORFO moved from patrimonialism to technocratic independence. Then it demonstrates that governments possessing technocratic independence but lacking other characteristics typically associated with successful investment promotion efforts can develop transnational strategic networks of individuals, business associations, and universities to facilitate their learning process in order to devise more effective strategies to promote nontraditional FDI.     

The China–South Africa Bilateral Investment Treaty: National rule of law versus international rule of law

This article analyses the primary provisions of the China–South Africa Bilateral Investment Treaty (BIT) and illustrates that this BIT differs in many ways from South Africa’s BITs with Western countries. Given current shifts in international investment policy and law in both South Africa and China, this article suggests that it is necessary to carefully consider the future of the China–South Africa BIT, ultimately arguing that South Africa should adopt differential policies towards the China–South Africa BIT by maintaining or updating the existing BIT between these two nations. An updated BIT could act as a model for future South–South BITs and should integrate new elements which are in line with the development of international investment law, maintain a balanced interest between the host state and foreign investors, and conform to the fundamental realities of the partner countries.     

Local elites,prokurators and extraction in rural Uzbekistan

Examining the politics of local-level extraction in Uzbekistan, this article identifies the emergence of two rent-seeking strategies among local prokurators. Using case study material from Samarkand Province and Navoii Province, it demonstrates how concentrated economic resources under rural elites and dense patronage ties to regional politicians determine the limits placed on rent seeking. As this analysis seeks to emphasize, state capabilities within Uzbekistan's territorial infrastructure, and their effects on extraction, are multi-faceted, highly fluid, and intimately local.