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Enhancing technological capabilities by internationalization

Enhancing technological capabilities by internationalization. Marjan Svetličič CMO, FDV, Ljubljana June 6, 2003. Strategies of technological transformation. Usual sequence; innovation investment production New technological catching up paradigm;

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Enhancing technological capabilities by internationalization

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  1. Enhancing technological capabilities by internationalization Marjan Svetličič CMO, FDV, Ljubljana June 6, 2003

  2. Strategies of technological transformation • Usual sequence; • innovationinvestment production • New technological catching up paradigm; • Investment (FDI) production (also abroad)  innovation (including abroad) • Internationalization an instrument of new technological transformation strategies Marjan Svetličič, 2003

  3. Why new approach? 1. Technological creation and sustenance is a cumulative process depending on its implementation, adjustments/refinements by firms • Hence links between institutes/universities and firms necessary 2. Technology divided in tacit and codifiable parts • Tacit transferable only by ownersOFDI 3. Spillovers are major mechanisms of sustained endogenous growth models • Spillovers from FDI are stronger than from import of technology (NBER, Spring 2003;38) Marjan Svetličič, 2003

  4. Why outward internationalization? • To gain economies of size and scope (relevant particularly for small countries) • To implement FSAs (out of strengths) including those based on inward FDI (Balakhrishnan) • To complement own FSAs (out of weaknesses), enhance technol.capabilities by free riding on externalities (spillovers) • To follow the client (vicinity, flexibility, adjustments, innovations) • To realize first mover’s, perishable, location based advantages Marjan Svetličič, 2003

  5. Lessons of Slovene (TEs) outward investors • Early internationalization was shock absorbing • Early OFDI precondition for survival also on local market • internationalize or die, fast or gone, • own MNCs are a must • Own D (later R) precondition for success of outward internationalization (also organizational, North) • Management is crucial (visionary, risk taker, against the stream) • Many barriers • External, attitudinal antipatriotic • internal  knowledge, cadre Marjan Svetličič, 2003

  6. Conclusions • Many ways to heaven but: • Heterodoxy limited for small countries • New environment (WTO) limitations • Fallacy of composition, immiserizing growth • Outward internationalization a must for small countries in today's conditions (GLO, transaction costs) • OFDI instrument of restructuring (transition) and technological transformation and competitiveness: • of firms (results...) and countries (Ozawa) • a technology catching up tool • Own MNCs induce innovations and enhance links • OFDI instrument of preparing for EU membership Marjan Svetličič, 2003

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