Regional Cooperation of Small & Medium Firms in Japanese Industrial Clusters

This study examines the effects of intra-regional cooperation among firms and institutions on the growth of firms, using the unique data set of questionnaire survey collected in the three major industrial clusters in Japan. In contrast to the existing studies on regional innovations or agglomeration economies, this study explicitly focuses on the detailed contents of cooperative activities with two specific viewpoints: 1) the contents of regional cooperation in each of the three production stages of R&D, commercialization, and marketing, and 2) the detailed types of alliance partners. Our results demonstrate three points: 1) positive correlations are observed between the intensity of regional cooperation and the firm growth rate and R&D expenditure, 2) horizontal cooperation such as alliances with universities and cross-industry exchange organizations has positive significant effects on the growth rate of firms, which is in contrast with the previous studies that stressed only the role of vertically integrated inter-firm linkages in Japan, and 3) contents and partners of regional cooperation are different among the three clusters based on different dominant industries.

Platforms, network effects and small business dynamics in China : case study of the Shanzhai cell phone industry

This paper seeks to argue the significance of platforms on emerging markets through a case study of the Shanzhai cell phone industry in Shenzhen, China. In this industry, value chains are being driven by both the technology platforms and the market platforms. The former include MTK baseband chipset, and so-called Shared PCBA and Shared Mould. The latter include the North Huaqiang Market and the Purchasing and Money Platform. Technology platforms greatly reduced the technological barriers to entry for independent design houses and system integrators, while market platforms markedly improved their poor marketing and purchasing abilities. Due to factors such as social networks, supporting industries, informality and platform governance, strong network effects have been exhibited in the two types of platforms, which have not only fostered numerous start-ups, but have also led to effective exploitation of emerging markets.

International Competitiveness of Manufacturing Firms in sub-Saharan Africa

As the success of East Asian countries has shown, labor-intensive industry is recognized to lead economic growth in the early stages of development, utilizing relatively low labor costs. This same growth process has already started in South and South East Asian LDCs since the mid-1990s. However, the manufacturing sector in sub-Saharan Africa has been underdeveloped and manufacturing exports, in particular labour-intensive goods, have stagnated. This paper investigates the international competitiveness of the African manufacturing sector and its determinants through an analytical survey of empirical studies and a comparison with Asian low income countries. Empirical evidences indicate that primary factors of competitiveness, namely productivity, labour cost and exchange rate are unfavorable in sub-Saharan Africa. Representative arguments attribute the weak competitiveness to problems in the business environment, factor endowment, and the exchange rate. However, careful review shows that labour cost is beyond the range explained by endowment and misalignment of exchange rates have been reduced in Africa. Moreover, comparison with Asian low income countries which have competitiveness in labour-intensive goods shows no difference in the quality of business environment, while the labour cost is significantly lower than sub-Saharan African countries. Although results should be considered tentative, high labour cost beyond endowment and conservative investment behavior emerge as important factors for the weak competitiveness in sub-Saharan Africa when controlling income level.

Local Firms in Latecomer Developing Countries amidst China's Rise -The case of Vietnam's motorcycle industry-

This paper examines the impact of China's recent rise on the development of local firms in latecomer developing countries. Based on a detailed analysis of Vietnam's motorcycle industry, the paper argues that China's impact may go beyond what a trade analysis suggests. Indeed, China's rise induced a dynamic transformation in the structure of value chains within Vietnam's motorcycle industry, bringing about far-reaching consequences on the development and upgrading trajectories of local firms. The implications of the case study for the wider "global value chain" approach is also discussed.

Industrial Clusters in India: Evidence from Automobile Clusters in Chennai and the National Capital Region

This study analyzes the patterns of agglomeration of some modern manufacturing sectors in India, and in particular the Indian automobile sector. It also examines and contrasts the factors that have led to different patterns of cluster development in two leading auto clusters in India-Chennai and the National Capital Region (NCR). Moreover, the study analyzes whether firms in clusters perform better than those that are excluded and whether the relative importance of variables that determine the behavior of firms differs among clusters. Our analyses, which employ a combination of quantitative and qualitative methods, show that Indian industrial clusters are largely concentrated in the three clustered regions: NCR, Mumbai-Pune, and Chennai-Bangalore, across different manufacturing sectors. Our study of the auto clusters in Chennai and the NCR find considerable differences in the patterns of cluster formation, due partly to the historical and policy conditions under which firms, particularly, the lead firms must operate. Moreover, our econometric analyses confirmed that being part of a cluster positively influences the performance of the auto component firms and those belonging to a cluster perform better.

Bank Borrowing and Financing of Medium-sized Firms in Indonesia

The improvement of financial intermediation functions is crucial for a robust banking system. When lending, banks have to cope with such problems as information asymmetry and adverse selection. In order to mitigate these problems, banks have to product information and improve their techniques of lending. During the 1998 financial crisis, Indonesia's banking system suffered severe damage and revealed that the country's banking intermediation functions did not work well. This paper examines the financial intermediation functions of banks in Indonesia and analyzes the importance of bank lending to firms. The focus is on medium-sized firms, and "relationship lending", one of the bank lending techniques, is used to examine financial intermediation in Indonesia. The results of logit regressions show that the relationship between a bank and a firm affects the probability of bank lending. The amount of borrowing and collateral are also affected by a firm's relationship with a bank. When viewed from the standpoint of relationship lending to medium-sized firms, Indonesian banks cannot be criticized for any malfunction of financial intermediation.

Linked versus Non-linked Firms in Innovation: The Effects of Economies of Network in Agglomeration in East Asia

This paper proposes a new mechanism linking innovation and network in developing economies to detect explicit production and information linkages and investigates the testable implications of these linkages using survey data gathered from manufacturing firms in East Asia. We found that firms with more information linkages tend to innovate more, have a higher probability of introducing new goods, introducing new goods to new markets using new technologies, and finding new partners located in remote areas. We also found that firms that dispatched engineers to customers achieved more innovations than firms that did not. These findings support the hypothesis that production linkages and face‐to‐face communication encourage product and process innovation.

Outward FDI from developing countries : a case of Chinese firms in South Africa

Outward foreign direct investment (FDI) from developing countries is increasing. In the research on FDI, it has been considered that only competitive and productive firms can invest in foreign countries. However, since the differences in competitiveness and productivity between multinational enterprises (MNEs) from developed and developing countries have not been explicitly investigated, we cannot say whether MNEs from developing countries can or cannot survive in competition with MNEs from developed countries as well as against competitive and productive indigenous firms in host countries. To examine the activities of MNEs from developing countries, this study investigates Chinese firms in South Africa. It reveals that in order to compensate for the weak brand recognition of Chinese products and to expand sales, Chinese firms have mainly been making products that are sold under the brand names of indigenous South African firms. Chinese firms have expanded their business in South Africa relying on the business resources of indigenous firms in the host country. This indicates that business with indigenous firms is significant for MNEs from developing countries in boosting competitiveness.

Competition between firms in developing and developed countries

We analyze competition in emerging markets between firms in developing and developed countries from the viewpoint of the boundaries of the firm. Although indigenous firms generally face a disadvantage in technology compared with foreign firms, they have an advantage in marketing as local firms. Moreover, they have opportunities to leave weaker fields to independent specialized firms and use lower wages. On the other hand, foreign firms also have their own advantages and disadvantages for growth. Therefore, entry conditions for indigenous firms can vary greatly depending on the situation. We classify these conditions into eight cases by developing a model and showing each boundary choice for indigenous firms.

Undermined climate policies : a study on the impact of regulatory and financial discrimination across heterogeneous firms in China

Firms in China within the same industry but with different ownership and size have very different production functions and can face very different emission regulations and financial conditions. This fact has largely been ignored in most of the existing literature on climate change. Using a newly augmented Chinese input–output table in which information about firm size and ownership are explicitly reported, this paper employs a dynamic computable general equilibrium (CGE) model to analyze the impact of alternative climate policy designs with respect to regulation and financial conditions on heterogeneous firms. The simulation results indicate that with a business-as-usual regulatory structure, the effectiveness and economic efficiency of climate policies is significantly undermined. Expanding regulation to cover additional firms has a first-order effect of improving efficiency. However, over-investment in energy technologies in certain firms may decrease the overall efficiency of investments and dampen long-term economic growth by competing with other fixed-capital investments for financial resources. Therefore, a market-oriented arrangement for sharing emission reduction burden and a mechanism for allocating green investment is crucial for China to achieve a more ambitious emission target in the long run.

IT Clusters in India

One of the facilitating factors that enabled the rise of IT industry in India is the evolution of IT clusters. A study of these clusters can provide interesting insights. The rise of the Banglaore IT cluster was due, among other things, to some of the policies the Indian government took three decades or earlier. It would be difficult to talk of "benign neglect" of the government towards this sector. Different factors worked in the case of Hyderabad. A comparison between the IT clusters in India has much to tell the new emerging IT clusters in India as well as those outside of it.