Multinationals and technology development in East Asia and Latin America

DANIEL CHUDNOVSKY; ANDRÉS LÓPEZ

Global Firms and Emerging Markets in the Age of Anxiety

Praeger

Año: 2004; p. 61 - 82

This chapter focuses on the relation between MNCs and the process of technological learning in less developed countries comparing two contrasting experiences: the successful development process of South Korea and Taiwan and the less successful industrialization experiences of Argentina, Brazil and Mexico. The economic success of East Asian countries as compared to Latin American countries is not only reflected in trade performance but also in industrial transformation. In turn, the latter does not refer to the rapid rise of industry in total GNP but rather to the rise of skill-intensive, high-value-added industries that are competitive at world market standards of cost and product specifications. Investments in human and physical capital are not the only factors driving this industrial transformation. An emphasis solely on investment assumes that technological knowledge is fully embodied in machinery and codified in blueprints and that all that less developed countries need to do is to access these and adopt them at relatively low cost, without significant uncertainty regarding the outcome of efforts. In contrast, students of technological change stress the partly codified, cumulative nature of technology, and its imperfect tradeability. Because only part of the technology required by less developed countries is codified in blueprints and machine manuals and much of it is tacit, it requires a painstaking and difficult process of learning by doing and using. This chapter focuses on the way East Asian countries engaged in the difficult process of technological learning from foreign technology and the relative difficulties of Latin American countries in this respect, aiming at highlighting how the differing approaches followed in both regions towards MNCs have contributed to the success of East Asia vis-à-vis Latin America.This paper compares the different approaches towards MNCs in East Asia and Latin America across four dimensions, discussed respectively in four sections. These dimensions include: first, the openness towards MNCs; second, the extent to which the operation of MNCs has been embedded in the national industrialisation process; third, the contribution of MNCs to the absorption of modern technology; and fourth, the strategies of domestic firms to utilise MNCs to overcome technology and market barriers. A final section draws implications for further research.