Title: Do Local Suppliers Benefit from Economic Integration? Evidence from Outward FDI from ASEAN
Abstract: In East Asia, goods, services, capital, investment and knowledge are moving more freely than before, and firms have expanded their economic activities across borders. What we have to pay attention to is that, in economic integration, segment markets are integrated and economies of scale work stronger than ever before. Thus, we need to ensure that benefits from economic integration are spread more evenly. There are two concerns, in particular, that arise for developing countries. One is whether or not developing countries can benefit from economic integration. Another is whether or not indigenous firms can benefit from economic integration. What is of particular concern among academics as well as producers and policy-makers is whether the indigenous enterprises in ASEAN countries have benefited from economic integration. This is a legitimate concern, since multinational enterprises (MNEs), with many tangible and intangible assets, have an advantage in production operations with economies of scale, but indigenous technical levels remain low in ASEAN countries (Hiratsuka, 2003). The previous chapter discussed this issue, from the viewpoint of linkages between MNEs and indigenous firms, and concluded that indigenous firms get the linkage effect when MNEs purchase input materials from local suppliers or MNEs sell intermediate goods to local producers. Meanwhile it is possible for MNEs to crowd out indigenous suppliers when both compete in the local market.
Publication Year: 2008
Publication Date: 2008-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 2
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